The Netherlands has one-sixth of New Zealand's land area, is four times more populous and is extraordinarily wealthy. What are we doing wrong? Photo / AP
The Netherlands has one-sixth of New Zealand's land area, is four times more populous and is extraordinarily wealthy. What are we doing wrong? Photo / AP
Opinion
OPINION
Shortly before the last election, a Herald correspondent questioned what he called "all the ballyhoo" about immigration given that the Netherlands has one-sixth of New Zealand's land area, is four times more populous and is extraordinarily wealthy. Correct.
However, comparisons between countries uninformed by geography and history are invariably futile.
Shallow ideas about other nations can become embedded in the public mind, are difficult to disentangle, and seep into economic policy formulation - with disastrous results.
Every nation's growth path and development potential are a function of a plethora of factors unique to it so that replicating another nation's development path can lead to very different outcomes in an uncongenial environment.
The comparison of New Zealand, a remote, isolated agricultural export nation with the Netherlands was absurd.
The economic ascendancy of the Netherlands dates from the Middle Ages when the Dutch monopolised the European carrying trade. This spurred shipbuilding and seafaring skills, notably piracy. Crafty Dutch sailors plundered Spanish commerce to reap rich rewards.
In 1580, the Dutch seized Portugal's lucrative East Indies holdings and established the Dutch East India Company, which accumulated unfathomable wealth from spices, porcelain and slavery. This immense wealth (around $10 trillion in today's values or Germany and Japan's GDP's combined) flooded back to Holland. Dutch bankers, abhorring idle capital, profited fabulously by advancing their windfalls to princes, nobility and needy monarchs on stiff terms.
As a result of this feverish, spirited enterprise - unconscionable in today's context - Amsterdam became the world's chief banking and financial capital at the time.
Unrestrained capitalism flourished. And all this centuries before New Zealand became a British colony with the Treaty of Waitangi in 1840.
The striking feature of the modern Dutch economy is the immensity of its productive sector. With a population of 17 million, it has 14 Fortune 500 corporations. For example, Royal Dutch Shell, one of the world's largest, is based at The Hague.
The invariable response to any questioning of immigration is "what about America"? Again, the comparison is absurd. America's vast physical expanse, the unparalleled geospatiality of its immense resource endowments and its vastly different historical evolution totally invalidate comparison with New Zealand.
Powerful forces, in a process extending over 400 years, pulled millions of European immigrants in a relatively even spread of settlement across a huge continental landmass.
Argentina, inspired by the American experience, modelled its immigration policies on America's with disastrous results. The adverse effects from the great waves of European migration that crowded, layer upon layer, into the capital, Buenos Aires, created the conditions that led to the rise of Argentine fascism in the 1930s and the subsequent uncoupling of that country from the world economy.
Argentina has a highly diverse, vibrant and well-educated population of 45 million, over half of which lives below the poverty line.
America needed millions of immigrants to build the canals, railroads and the immense, new industrial enterprises foundational to its transformation from an agrarian nation to global colossus. Argentina, suited only to pastoral agriculture, needed few labour inputs.
Overlooked is Iceland with a population of just 350,000 and a per-capita income (or living standards) higher than America's (350 million), double New Zealand's and eight times Argentina's. No housing crisis there. Nor child poverty.
There is wide agreement New Zealand, in keeping with other developed nations, must raise its retirement age to retain its world-leading, universal superannuation model.
Again, the overlooked factor here is our enormous, untapped development potential, an option closed off to other developed countries. A nation of 5 million and a $500 billion economy would be in a very different situation from the self-extolled "team of 5 million" with its $200 billion GDP.
The problem in New Zealand is our refusal to learn from the experience of other nations and from our own history. Hence, our abysmal economic performance.
John Gascoigne. Photo / Supplied
After a state visit to the Nordic nations in the early 1990s, the chief architect of Singapore's miraculous economic transformation, Goh Chok Tong, concluded that the key to prosperity for small nations like Singapore is to think big and plug into the world.
And, like Singapore, that is the only way New Zealand will ever achieve rich-nation status.
• John Gascoigne is a Cambridge-based economic commentator.
