Importance of Natural Resources

How Did New Zealand Become Rich? – VisualPolitik EN

You probably know Peter Thiel. He was one of the founders of PayPal, the
first investor of Facebook and one of the technological and venture capital most important
gurus in the world. He is obviously a multimillionaire and…a
peculiar guy. One of his achievements is to finance, for
instance, projects to seasteading (building cities in the high seas) or researches to
fight death. Peter Thiel is also known to be the best support
for Trump in Silicon Valley…although in some conversations with journalists he has
already shown…some concerns. And, what the hell, everybody, all of us,
have the right to be wrong sometimes. Don’t you think? The thing is that, in 2011, Peter Thiel got
the New Zealander nationality and said this: “I am happy to say categorically that I
have found no other country that aligns more with my view of the future than New Zealand”. Peter Thiel. The truth is, and you know, this is no surprise
for us in VisualPolitik. We have already said in two more videos how
much we love this country. Not just for the beauty, New Zealand is one
of the most beautiful countries in the world… They are also an example to be followed. Take a look at the statements of the former
Primer Minister Bill English, about his predecessor: “Occasionally John Key come home and complain
he was the only one who didn’t have a jet and how his colleagues were horrified to find
that he as a world leader had to travel on commercial aircraft. But I assured him it was character building
and kept him in touch with normal people. Bill English. Yes, New Zealand doesn´t have an Air Force
One of their own… but, in exchange, it is one of the countries
where it is easier to do business, it is -as we have already seen- the most prosperous
country, one of the least corrupt countries and one of the safest in the planet. And don’t get it wrong, they also have first
quality public services. But there is more, as you know it is one of
the countries with a higher standard of living and one of the countries with the lowest unemployment. Take a look at this chart: This is a country worthy of the name. Now, things were not always like that. THE SUN DIDN’T ALWAYS RISE New Zealand is a top county. But things weren’t always like that…not
at all. What we are going to see now is a real story,
the story of a country that was determined to learn from mistakes, to transform everything
that didn’t work, and to become, this way, a complete model. And, hey, this is definitely not the norm. Placing people first, before any kind of ideology
and electoral interests, is not so common. At least…it is not in most countries. But let´s see what happened. Well, the first thing we have to say is that
New Zealand was always a relatively wealthy country. In fact, by the late 50s, this country had
the third highest per capita income in the world. Not bad, right? However, wait there, because that is the moment
when things started to get worse. Worse enough that, in 1984, the per capita
income was similar to the one in Portugal or Turkey. That´s right. And you are probably wondering what on Earth
happened to fall down in such a crisis. Well…it could be said that the government
went a bit too far. By that time, the government of New Zealand
had intervened the economy so much that it is even hard to imagine now what it was like: There were many, many taxes, they were complex
and really high. So you can get the picture: the highest income
rate was almost 70% and the lowest…almost 40%, easy to say, right? And companies didn´t get any better treatment. The profit tax was 48%, twice as much the
average in the world nowadays. Besides, there were tons of regulations…really,
millions: Price controls for almost any product, currency
controls… As an example, any import required the approval
of the administration and it was really hard for New Zealanders to invest their money outside
the country. “We had foreign exchange controls that meant
I couldn’t buy a subscription to The Economist magazine without the permission of the Minister
of Finance”. Maurice P. McTigue,  a former minister of
the government of New Zealand. Look, the controls and regulations didn´t
only establish minimum wages…they also set a top for the maximum. Yes, you heard it right. Let´s say that a business owner wanted to
pay a bonus to the workers of his company…well, it wasn’t an easy task. Yes, crazy indeed. And, as you can imagine, the state owned and
controlled almost every large national company: media, airlines, insurance companies, banks,
hotels…why? Why was the government managing hotels? So, in other words, the early 80s New Zealand
was the very example of extreme statism. One way or another, almost everything was
controlled by bureaucrats and politicians. The consequences? They weren’t exactly positive. After 23 years of deficit in the government’s
balance, public debt had skyrocketed, there was a two figure unemployment, private investment
was running away from the country and the kiwi youth was massively leaving the country. By that time…doing business in New Zealand
was a complicated thing, only for the bravest…and sure…that way…it just won’t work. However, everything started to change in 1984
when elections took place. A PLAN TO MOVE FORWARD In 1984, under a though crisis context, elections
were celebrated. The winner was David Lange, of the Labour
Party, the left centre party. The new government had a purpose: to overcome
the crisis and to change the national model. They had to replace everything that didn’t
work and make sure they did it without leaving anybody behind…but at the same time granting
the opportunities not to prevent others from moving forward. So, even though David Lange was the Prime
Minister, the leader of the whole process was the Minister of Finance, Sir Roger Douglas,
after whom they named the process: rogernomics. We already mentioned that plan in a previous
video when we discussed the agricultural reforms that have been so successful
in the country. But the “rogernomics” wasn’t just about
agriculture. There was much more. The plan affected almost every aspect of the
state and set a new political culture. In fact, by the time the right-centre National
Party won the elections in 1990 and took power again, everything had changed and the new
government followed the Labour process. A political philosophy that radically changed
the country between the year 1984 and the beginnings of the 21st Century. Everything we are about to see is not VisualPolitik,
it´s History. Once said that, the first thing the government
did was to declare war to bureaucracy. Ad they did it in three ways: ->First, they did a thorough analysis of
every government department. If what they did was not essential or could
be better done by the market…well, it was the end of it. Following the same pattern, they started an
ambitious plan of privatizations. But the real ones, no those that are all about
giving away public companies to political leaders’ friends. Think about it, what was the state doing wasting
time managing hotels, airlines or telecommunications? Thanks to the competition, the market can
do it much better, with less costs and more innovation. → Second, very interesting. 35 public agencies, that remained public,
professionalize the management and were required to work with market criteria. That was the case of the control of air traffic,
for instance. The result was terrific: Not only did the service improve, this agencies
went from costing the government a billion every year to generate, with taxes and profits,
more than 1 billion dollars. Money that could have a different destination:
education, health or culture. → But that wasn´t all. Since regulations and laws were many and complex,
the government used the best of the country to work towards a goal: simplification and
elimination of those unnecessary. The result of these changes? “When we started this process with the Department
of Transportation, it had 5,600 employees. When we finished, it had 53. When we started with the Forest Service, it
had 17,000 employees. When we finished, it had 17”. Maurice P. McTigue And, hey, unemployment did not increase, it
was reduced. There is a very illustrative story. The one with the deers. Yes, the deers. I didn’t get it wrong. Look, when the British arrived in New Zealand,
the country didn’t have any big animals, so the wealthy families took deers so they could
hunt. And what do you think happened? They run away and became a plague that caused
an important ecological damage. For 120 years, the state had spent a lot of
money trying to fight this plague in order to preserve the local ecosystem. Well, one day, with so much reformation, they
came up with a new idea. Why couldn’t they let the farmers hunt and
raise the deers? And so they did. Not only did they put an end to the plague,
New Zealand is today the world’s largest supplier of deer meat. It makes sense, doesn’t it? It is also interesting what happened with
taxes, that were simplified and reduced… Many were surprised: the tax collection increased
by a 20%. And subsidization were cut, not only in agriculture,
also in industry. But there was more than economic reform. The reforms reached the public services. Take a look at what happened with education,
for instance. The education budget hadn´t stopped growing
for years, but the results were getting worse and worse. Were the kiwi students getting clumsy and
stupid? No way. When the government analised the causes, they
realized that an important share of the budget was not spent in education but in the administration:
quality evaluation agencies, rating firms, dossier agencies and so on. And what did the government do? Yes, they removed it all and gave the schools
the control with a management board chosen by the parents. Also, they allowed the parents to choose the
schools freely, private or public, the government paid for it. And I can tell you the education results improved…significantly. And so they did with everything else. And I insist,  New Zealand is not the wild
west in no way. New Zealand is a prosperous country, with
a very high standard of living and whose public services: education, health, culture…are
among the best in the world. So I wonder…what could be a better example
for Latin America or other European countries like Spain, Italy, Greece or Portugal? Things can be done in a better way but…we
need to leave passions aside and focus on what works and what doesn´t. Anyway, if anything is certain, it is that
the land of kiwis is a great country. Now it is your turn. Do you think New Zealand is a good model to
be followed? Leave your answer in the comments as well
as in the survey. I really hope you enjoyed this video, please
hit like if you did and don’t forget to subscribe to our channel for brand new videos
every Monday and Thursday. Also, don’t forget to check out our friends
at the Reconsider Media Podcast – they provided the vocals in this episode that were not mine! And as always, thanks for watching!

Reader Comments

  1. NZ financial institutions are entirely owned by Australia. Lucky for Australia since they don't make much any more and only produce actors and cheap wine All major manufacturing is foreign owned. GDP proves nothing GNP shows tremendous capital leaving NZ to go to other nations.

  2. I live here, I've grown up here it's an absolutely beautiful place. Always things to see and do, sure our gas prices are high (in nzd) sure our grocery prices are high BUT, you're never too far from things to see or do. Our diets and things we eat are simple but work, it's a prosperous place for those looking to kickback, live and enjoy. The only bad thing that's happened to our country (after the removal of severe beaurocracy) was the foreign rights to purchase property…. If we had regulated this market and restricted properties to be purchased from overseas this place would be absolutely perfect…. This is where the "housing crisis of New Zealand" quote comes from. Stock brought up by overseas residents (not overseas citizens as they make up less than 5% of the market). We are talking about the (permanent/earned residents) that act as surrogates for their overseas family buying into property at a severe rate (28%) might I add. These overseas residents who use family funding from overseas to obtain property at a reduced rate (renting back to the members who helped contribute to their 20% lvr owner occupied situation) when in fact they are in debt to those who helped them buy in the first place has been completely crippling on our housing stock. Sure, kiwis might rent might not when the capital gain on a property exceeds income growth to the point where their deposit saving can't keep up…. THIS is what needs to change. We have responded far too late to this as Auckland suburbs show, as Wellington suburbs show AND Tauranga. Not good, we can't revoke rights to property that is already owned but we can sure as hell stop any further growth from this type of activity. I thought I would add this to the video as the video has perfectly orchestrated the change New Zealand made but left out a huge gap in housing.

  3. 64% own a home ? That is a lot more than a US where home ownership is like a religion. And, the 6 times yearly wage, that depends where you live…. in small towns maybe and that is with 30 years mortgage. I think the comments lack perspective of what financial reality is in other "rich" countries. The term does not imply each individual is swimming in cash but that a country has mod coms and institutions and children don't beg for food on the street

  4. Absolute shite. New Zealand was once a wonderful place where a man could support a family, pay off a mortgage with one income, have regular holidays around the country, have enjoyable hobbies and generally have a good life. Not any longer. Only the highest paid get to have these privileges now, prices have increased out of all proportion to people's incomes. Only a third of the population can now afford a house, most of them being sold to foreigners who pay their way in with borrowed money, and are clueless once they arrive, barely able to speak English. Our government is supposed to protect our rights and our currency, instead they have sold our family silver for a pottage of pease. Half of our land is now owned by foreign investment companies. The poor people left on welfare have had their incomes slashed by stealth, they are now 20% behind where they were ten years ago. All of our politicians are hopelessly corrupt and will do anything for foreign currency. We are little better than a banana republic, and most of our young people have lost all hope of succeeding in life. We have one of the highest suicide rates in the world. Roger Douglas was an absolute cunt, as were all of the Labour party who let him get away with sabotaging this once fine country. Reminds me of an old joke: If a king rules a kingdom, a duke rules a duchy, and an emperor rules an empire, who rules a country?

  5. How about that… a government that works FOR and is responsible to the people.. No corruption… You can get away with that in a small country isolated from the rest of the world by thousands of miles of ocean..

  6. Ummmm this is propaganda right? There is a strong consensus in the business community that China has essentially bought-and-paid-for New Zealand, with substantial evidence to back that up. At least that's how investors feel.

    You see with the hands off, bureaucracy free system, which indeed has created great economic growth, it also made it super easy for foreign powers through the free market to heavily influence the government, that's exactly what China has done. Would have been nice to mention that, and don't get me started on the pollution in their National Parks, ouch. So perhaps not painting a utopian picture on something that's far from it would be wise.

    Now don't get me wrong, New Zealand is a wonderful country, perhaps one of the most beautiful countries in the world, and the people are genuinely fantastic. Also it has the best vineyard on the whole planet, Craggy Range 🙂 They also have a space-faring private company that can rival SpaceX. Good stuff indeed. Just don't try to sell us something that comes across as pure propaganda. Have a nice day.

  7. I have to add my disappointment that the footage of the riots were about protesting against South African Apartheid when their (white only) rugby team toured NZ in 1981…nothing to do with economics at all and everything to do with NZs unrestrained rights to free speech and protest and our disgust at institutionalised racism.

  8. Due to an over reliance on agriculture and tourism the nz economy lacks the economic diversity to weather price fluctuations on basic commodities, there's a lack of investment in R&D, overregulation in construction and planning has caused a lack of housing supply and choice, and performance in GDP per capita is low compared to Ireland, Norway, Denmark and Finland, due to lack of economic diversification.

  9. New Zealand is NOT rich!. That is a big lie!. As the wages go up, the prices hike up with it, and people think MORE money is better!.

    Hohoh no fucking way, more money translates into more corporate greed, and this translates into less and less survivability!. Economic growth is BAD for countries like us!. We NEED to have a levelled economy because of the fact we are a small country!. A country like ours cannot have the economic graph going up like 50°+ nearly straight up like America can!.

    We are NOT America!. They can get away with a huge jump in economy, but countries like us and Britain? No way!. Like people go over to Auzzie because of the illusion of more money!. Nah nah, more money equals higher cost of living and 9 times out of 10 they come home!.

    Plus you have to deal with Auzzies nutty bias against Kiwis and racism towards Islanders and everyone else in between!. So economic growth is BAD!.

  10. STOP using the 1981 riots as footage, this was about the springbok tour and apartheid in South Africa NOT economics. Also, we have growing child poverty, lowering education standards and lowering of health standards in remote communities. You guys need to sort your shit out.

  11. Agree only the one of the most beautiful countries. the rest of data and info…. well No. No No. The commenters below know truth.

  12. David Lange and the Labour Government came in 1984 and implemented their cut-throat deregulations to every sector imaginable. Double figured unemployment rates occurred directly as a result of the Labour Governments policies, aka Rogernomics. The human cost was never considered by them. NZ voted them in again in 1987. The current NZ prime minister is too young to remember those days and is no doubt unaware of the human cost of Labour's policies. I never had a chance of being in secure employment, hence I left NZ after graduating university. I was brought up in NZ but have never worked there. A lot of sectors disappeared and never returned, especially technology related ones. They say that the economy is good, and I suppose it is compared to the mid to late 80's. I believe that deregulation itself was not wrong, but the way the Labour Government implemented it was wrong and nearly bankrupt the country in 1989. Of course they didn't take responsibility and blamed it all on Robert Muldoon's think big projects…

  13. Most of my Kiwi work mates in Sydney say that employment and wages are a lot tougher across the Tasman. I don't know if your facts are correct about NZ.

  14. (Great job on the video!). Some countries might benefit greatly from the economic restructuring that's taken place in New Zealand. Although New Zealand can rightfully take pride it's transformation and subsequent accomplishments,, we still have one of the highest suicide rates in the OECD. "New Zealand's youth (15–24 years) suicide rate was (2026) the highest among the 34 OECD countries" So one of the most important challenges that New Zealand can turn to face will be to try to make life more fun and rewarding (in short hopeful) for "kids". I love this country (that I was fortunate enough to be born in) ~ but I've known too many suicides to imagine that I live in paradise. Peace and Love! 🙂

  15. Rogernomics is the worst thing that has ever happened to my country. In 1984, New Zealand became No Zealand. From Wikipedia:

    Over 15 years, New Zealand's economy and social capital faced serious problems: the youth suicide rate grew sharply into one of the highest in the developed world;[46][47] the proliferation of food banks increased dramatically;[48] marked increases in violent and other crime were observed;[49] the number of New Zealanders estimated to be living in poverty grew by at least 35% between 1989 and 1992;[50] and health care was especially hard-hit, leading to a significant deterioration in health standards among working and middle-class people.[51] In addition, many of the promised economic benefits of the experiment never materialised.[52] Between 1985 and 1992, New Zealand's economy grew by 4.7% during the same period in which the average OECD nation grew by 28.2%.[53] From 1984 to 1993 inflation averaged 9% per year, New Zealand's credit rating dropped twice, and foreign debt quadrupled.[54] Between 1986 and 1993, the unemployment rate rose from 3.6% to 11%.[55]

  16. The troubles for new zealand started in the early 70s when the uk, new zealands then biggest trade partner joined the eu, they suddenly lost alot of business where australia saw the warnings 15 years prior and diversified into asia for trade and weren't affected nearly as bad. New zealand offset some of the problem by doing boom deals with the soviet union and switching from mostly sheep wool to dairy, the 1980s deregulation and privatization was hard but necessary

  17. I am a kiwi and NEW ZEALAND is becoming as corrupt as any other place. the water is toxic and the rich are shiting on the lower classes. i love this channel but the facts on nz you have is only what you are being feed.

  18. New Zealand became rich due to WW2 and Korean war when there was huge demand for wool to make into army garments. It was a gradually downhill after that.

  19. Total Bullshit – NZ is billions in debt – just like the rest of the western world, mostly to China. Our politicians can't win elections without corporate money – so corporate own our governments – corruption everywhere, from selling driving licences with no test – selling passports – government employees or contractors have been caught doing both of these.

  20. Hi Simon
    So everything’s rosey in New Zealand yet—— they have the highest suicide rate in the developed world. Why is that? I think your report lacks depth.

  21. I'm a New Zealander living in the UK what I'm so proud of is that through all the change New Zealanders remain positive and inventive they are cured of subsidies and are self-reliant.

  22. Maybe speak to some Kiwi's who have moved to Oz for work. They aren't hard to find. There are over 600 thousand of them.

  23. Kiwis like the rest of us have dickless politicians that are corrupt as judas. Look at the marketing role player they have in charge now. Frightening to say the least, plenty of kiwis in Australia that won't go home.

  24. new zealand is wealthy because of the rich soil and good honest hard workers, nothing to do with scumbug politicians mate are you fucking nuts

  25. Key was never in touch with ordinary people.

    …unless by 'in touch' you mean the brief physical contact as he removes the wallet…


  26. The Government was managing Hotels:

    True* ….

    Four(?) Hotels – *all set up by the Tourist Hotel Corporation (THC) – a government entity set up by the Labour government of 1972-5.

    My trust in your research and diligence have just plummeted of a cliff like those over Milford Sound.

  27. Absolutely disingenuous of you to use footage of the Springbok Tour Protests (and heavy-handed Police goonery) of 1981, in a video ostensibly about economic restructuring.

    Absolutely distinct issues.

    In fact the confrontations shown happened precisely because Rob Muldoon refused to intervene and prevent the Springboks from touring NZ.

  28. Are you off to Canada for the fruit harvest this year?

    You've gotta be the best Cherry Picker I've ever seen…



  30. I come from New Zealand and haven't lived there for 13 years, the taxes are almost 50% of your income and petrol is extremely expensive, food is expensive, salaries are low….marijuana is a good price.

  31. Why the heck is this comments section filled with leftwing university students complaining about how terrible NZ even tho many of them probably know fuck all about the history of NZ and what other countries are really, like.

    Go out and do some traveling to say Romania, Hungary, Nigeria, and India and then make your conclusions about how 'terrible' NZ is.

  32. The 84 election and new David Lange lead Labour government was quite a surreal transition period for NZ. Lange was voted in as a way of getting rid of Muldoon who will go down in history as NZ's worst political leader. No one expected what came next especially from a political party that was so openly supportive of left leaning policies. I still find it hard to believe what actually happened during the next decade in NZ politics.

  33. When Rogernomics was implemented it came with tremendous social costs and IMO Roger Douglous should never have been awarded with a knighthood.

  34. The STATE are the people, the Government is a body of administration. And really? The State (you mean Government) owned everything and so this happened ….
    Shows The Anti Apartheid Springbok Rugby Tour Riots, that occured because the government didnt own the Rubgy Union and they wanted the Bok to Tour.
    Strange how you showed a result of them owning everything was the riots that occured because they didnt own something?!?!?!?!?!?!?!??!?!?!?!

  35. In this video, it's easy to view your discuss for Donald Trump yet marvel at your obvious pride in how rogernomics turned your country around. Trump is trying to do in America what Roger Douglas did in New Zealand, but on a much larger scale.

  36. As a Kiwi, we are a nation, removed from the rest of the world by the obstacle of distance, the size of Great Britain, with the population of Melbourne living here. Our climate is perfect ( on average , between 0 – 30 degrees C ) Education, healthcare etc is free.
    no-one is more than 87 km from the ocean.bla bla bla.
    And yet we have the highest youth suicide rate in the world.
    Rogernomics did work, however, as is happening everywhere else, the rich got really rich, really fast and everone else is paying for it. Go figure. There must be a happy medium, surely.

  37. @narendramodi sir I think you can follow this model, you are the only person who can be hoped to do something like this in India or even better.

  38. How fucking amazing is this! While watching a crash course economics video I noticed a brief mention of new zealand and thought "seems cool, I wanna learn more". I typed "New Zealand Economy" into the search bar and BOOM, one of the first results was a professionally written, filmed and edited video about the economic history of New Zealand! The internet is a wonderful place.

  39. I lived through the changes. 10 years of cold, bleak depression. While we have a rock star economy now, way too many people have been left behind. Our economy is high cost and low income for most. It is very much the rich getting richer and the poor living on the streets and in garages because they can't afford the rent. There is too much power in the hands of business and corporations, particularly international corporations like Starbucks, McDonalds, KFC and others who pay very poorly. So much he didn't mention. The taxpayers saved failing banks who had too many bad mortgages on their books. We pay 2 – 3 times for our power than overseas people do. I thinks its time for VisualPolitik to do another review. Maybe dig a little deeper.

  40. mate you are full of shit,who is this clown,im from n.z and i wouldnt have a clue what the hell you are going on about

  41. We have loads of kiwis coming over to Australia to work, cause jobs over there low paid, the soft kiwis just take what they given, and in capitalism economy model, if you don't fight you don't get better pay,
    And now Australia start to be following the same path,
    So sad..Hehehe.

  42. I can say this because I love in nz. The country in regards to the landscape is beautiful. The people as in the kiwis and the maori are both crap. The white kiwis because they are boring as fuck. The maori because they have more hands out than in Indian god. Don't move here. It's been heading to hell since the 80s

  43. we did have national strikes several times during the Moldoon years ! can't remember what they were all for though .

  44. Not true.NZ is nothing like you say.only the very wealthy can buy a house.Our rents here are incredibly high. Working conditions are terrible for the average person.the government is incredibly left leaning and does nothing but look after the ethnic group in the world beats their babies to death more than the Maori population. No other ethnic group is more violent than maori.they make up about 10% of the population, but about 65% of the prisoners.

  45. I gotta say there's another country in the world but larger and wider than New Zealand. However, this country carries one of the most inflated social welfare in the world. In fact, 7 of 11 most well-payed jobs at this country are related with civil servant. The average time to open a business from zero is THREE MONTHS, which leads most of regular people to give up and try to apply for a low wage job instead.
    And, this country does not tax fortunes and inheritance (the big ones).
    I feel this country has a lot of same aspects that New Zealand had in its 70's and 80's.
    Well, that's my country, Brazil and, after years and years with government just giving subsidies for rich people and letting global companies leading an oligarchy here we said "ENOUGH".
    Although, our new president is another dumb populist who has no idea how to do politics. But I feel somehow we'll let all of those unnecessarily bureaucracy and those populists behind.


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