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.
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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!