Foundation for Economic Growth - Newsletter

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Last Updated: Aug 15th, 2008 - 11:26:43

Newsletters : 2005 Newsletters : 1 July 2005
Thought for the Day


Squeezing our money out of politicians is more difficult than squeezing blood from a turnip. To paraphrase an Oscar Hammerstein love song, once they have found a way to take our money, they never let it go.

Cal Thomas
Jul 1, 2005, 10:48

 Newsletters : 2005 Newsletters : 1 July 2005
Letters to the DomPost
This is election year. We must make every effort to engage the press and the politicians and the public in THINKING about what we want as a country. Are we content to act as the supplier of talent to Australia. Slowly sinking behind their standard of living while consoling ourselves that we live in "God's Own".

The biggest growth we have seen in the past generation is in the number of politicians - almost double! The health budget has grown by $3,000,000,000 per annum over the last 5 years yet our number of operations per head of population has actually gone down! We hire more politicians and they grow more bureaucrats and spend more money. People who cannot afford private health insurance suffer. Such is socialism.

90% of the population voted in a referendum to reduce the number of politicians to 100. It is time to make referendums binding on politicians when the vote is carried by more than a 60% majority. Then we would start to get proper control over the lunatic fringe who now seem to run this country.

In chatting to John Key after the last meeting he informed me that National were going to introduce compulsory binding referendums. I couldn't believe my ears but he certainly seemed to be serious. This would be a major step forward in turning New Zealand into the Switzerland of the South Pacific rather than the declining Socialist Republic of Aotearoa.

Anyway, we are now embarking on a letter writing campaign to help get our message across. Here are this week's lot. Why don't you join in?
Jul 1, 2005, 10:19

 Newsletters : 2005 Newsletters : 1 July 2005
The End of the Rainbow

By Thomas L. Friedman
(c) New York Times
Dublin

Here's something you probably didn't know: Ireland today is the richest country in the European Union after Luxembourg.

Yes, the country that for hundreds of years was best known for emigration, tragic poets, famines, civil wars and leprechauns today has a per capita G.D.P. higher than that of Germany, France and Britain. How Ireland went from the sick man of Europe to the rich man in less than a generation is an amazing story. It tells you a lot about Europe today: all the innovation is happening on the periphery by those countries embracing globalization in their own ways - Ireland, Britain, Scandinavia and Eastern Europe - while those following the French-German social model are suffering high unemployment and low growth.

Ireland's turnaround began in the late 1960's when the government made secondary education free, enabling a lot more working-class kids to get a high school or technical degree. As a result, when Ireland joined the E.U. in 1973, it was able to draw on a much more educated work force.

By the mid-1980's, though, Ireland had reaped the initial benefits of E.U. membership - subsidies to build better infrastructure and a big market to sell into. But it still did not have enough competitive products to sell, because of years of protectionism and fiscal mismanagement. The country was going broke, and most college grads were emigrating.

"We went on a borrowing, spending and taxing spree, and that nearly drove us under," said Deputy Prime Minister Mary Harney. "It was because we nearly went under that we got the courage to change."

And change Ireland did. In a quite unusual development, the government, the main trade unions, farmers and industrialists came together and agreed on a program of fiscal austerity, slashing corporate taxes to 12.5 percent, far below the rest of Europe, moderating wages and prices, and aggressively courting foreign investment. In 1996, Ireland made college education basically free, creating an even more educated work force.

The results have been phenomenal. Today, 9 out of 10 of the world's top pharmaceutical companies have operations here, as do 16 of the top 20 medical device companies and 7 out of the top 10 software designers. Last year, Ireland got more foreign direct investment from America than from China. And overall government tax receipts are way up.

"We set up in Ireland in 1990," Michael Dell, founder of Dell Computer, explained to me via e-mail. "What attracted us? [A] well-educated work force - and good universities close by. [Also,] Ireland has an industrial and tax policy which is consistently very supportive of businesses, independent of which political party is in power. I believe this is because there are enough people who remember the very bad times to de-politicize economic development. [Ireland also has] very good transportation and logistics and a good location - easy to move products to major markets in Europe quickly."

Finally, added Mr. Dell, "they're competitive, want to succeed, hungry and know how to win. ... Our factory is in Limerick, but we also have several thousand sales and technical people outside of Dublin. The talent in Ireland has proven to be a wonderful resource for us. ... Fun fact: We are Ireland's largest exporter."

Intel opened its first chip factory in Ireland in 1993. James Jarrett, an Intel vice president, said Intel was attracted by Ireland's large pool of young educated men and women, low corporate taxes and other incentives that saved Intel roughly a billion dollars over 10 years. National health care didn't hurt, either. "We have 4,700 employees there now in four factories, and we are even doing some high-end chip designing in Shannon with Irish engineers," he said.

In 1990, Ireland's total work force was 1.1 million. This year it will hit two million, with no unemployment and 200,000 foreign workers (including 50,000 Chinese). Others are taking notes. Prime Minister Bertie Ahern said: "I've met the premier of China five times in the last two years."

Ireland's advice is very simple: Make high school and college education free; make your corporate taxes low, simple and transparent; actively seek out global companies; open your economy to competition; speak English; keep your fiscal house in order; and build a consensus around the whole package with labor and management - then hang in there, because there will be bumps in the road - and you, too, can become one of the richest countries in Europe.

"It wasn't a miracle, we didn't find gold," said Mary Harney. "It was the right domestic policies and embracing globalization."
Jun 30, 2005, 13:16

 Newsletters : 2005 Newsletters : 1 July 2005
Education is too important to be left strictly to educationalists
In Canada there is an organisation called AIMS - Atlantic Institute for Market Studies. They have the same ideas and philosphy that we have. They have been around for some time and are well organised. This is an interesting speech from an ex-governor about the massive change that is roiling the world economy at the moment. We have no choice but to understand what is happening and to get involved as soon as possible. The "Head in the Sand" theory of dealing with market forces is no longer adequate.

Education is the key. [ Visit Website ]
Jun 29, 2005, 11:43

 Newsletters : 2005 Newsletters : 1 July 2005
Simian economics - Monkey business-sense
And now for something on the light side. Economics is known as the dismal science but this piece of light hearted but interesting scientific investigation is great fun. How different are we really from our simian ancestors????
Jun 27, 2005, 13:00

Can we fix it?