INVISIBLE EARNINGS

An extraordinary article in a recent Economist put the foreign exchange revenue yielded from British courts at an amount slightly higher than all of New Zealand’s export earnings from all sources.

In one sense this is dismaying as it reflects the mainly corruption-caused inadequacies of the vast majority of foreign nations’ judicial systems. So by consent between the litigating parties they resort to British courts, untainted by any influences and with high intellectual standards.

Additionally, some plaintiffs run successful debt cases against governments and corporations which have seizable assets off-shore.

This was the basis of our using the Privy Council as our ultimate Appellant Court up until a couple of decades back, until sadly Helen Clark wiped it; a huge mistake.

New Zealand is a small population country where in many cases, if only by repute, litigants are known to the judges, who may then allow their personal prejudices to influence their decision. Trust me, it happens repeatedly.

These fee receipts in Britain come under the category of invisible earnings, that is the sale of intangible services and are a reflection of a highly sophisticated economy.

Britain’s traditional invisible earnings stemmed from its colonial days, such as insurance premiums, bank dividends and the like, but in recent years they’ve diminished in the face of global competition. But in their wake numerous new services have arisen, notably finance, now Britain’s largest foreign exchange earner.

When New Zealand outgrows the unsophisticated Lutherian belief that selling a pound of butter is more admirable than selling a service, we will make considerable economic progress.

6 Comments

The late Prof Sir Paul Callaghan wrote an excellent book on this, “From Wool to Weta”. He also did a presentation called “Beyond the Farm and Theme Park”, of which there is video online. He came up with better insights about the path to national prosperity, than most economists are capable of.

Glad to see Sir Bob making the argument for lower-weight “export” income sources, of course fee income is about the best you can have, royalties payments, digital downloads, etc. High-tech, high-value manufactured products are the next best thing; Sir Paul C made a convincing argument that NZ has no idea how much it owes to our top 20 high-tech manufacturing firms, who can dispatch an airfreight pallet-load as valuable as a container-ship load of animal carcases or dairy products.

I hope you all realise how much our future export income will be placed at risk by this woke insistence on confusing our international brand name, New Zealand, by the addition of, or replacement by, Aotearoa. As someone who spent the latter half of my working life persuading the world of the unique qualities of New Zealand wine, I am very much aware not just how well the name New Zealand is known in the over 100 countries where our wine sells, with its label proudly identifying its country of origin, but I am also confident that in 20 or 25 years time that name, New Zealand will rank alongside Champagne as a synonym for unique and desirable quality and style. Can we get back to the simple, well known name that identifies us: New Zealand.

    I don’t think the Te Reo speakers care whether we export or not. Same with the watermelons who would be irritated about the prospective payout of $8 per kg of milk fat because the cows flatulate or might crap in a waterway.

Only trouble is if you move to producing services and don’t produce any goods (whether food, clothes, machinery, housing construction materials, books and educational materials, furnishings, electrical goods, vehicles etc etc etc) then you leave yourself vulnerable to the whims of those who do produce the goods e.g. China and the CCP, the EU etc etc. i.e. seems like a good idea – but may have unintended negative consequences. Also to optimise the diversity of skills in the population it is often better to produce a diversity of both goods and services – some people are naturally gifted at service provision – others are much more capable of producing goods. And as NZ is a country with some of the best natural climate and geographical attributes for producing primary products it would perhaps be unwise not to continue to exploit that advantage – albeit with some diversity into the production of other goods and services where kiwi ingenuity and innovation gives an edge.

    As we have done so successfully with our wines.

      Yes- true. And wine is to some extent both a primary product (it comes from growing a crop) and a service (it takes both skill and technology to produce and market a high quality product). And a product that I do my best to imbibe as often as possible!!!! Cheers!!

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