A story in the New York Times has made me realise I was being a little bit self centred about who benefits from schooling local. It’s not just white middleclass kids from the likes of the BigCake household.

It’s also probably going to be Pacific Island and Maori kids, and maybe their benefits are even greater.

They too are not being prepared for the real world in schools that are cocooned from demographic realities. As one kid interviewed in the NYT said: “You see one race, and you’re going to be accustomed to one race.”

The NYT comments:
“Decades of academic studies point to the corroding effects of segregation on students, especially minorities, both in diminished academic performance and in the failure to equip them for the interracial world that awaits them.”

One ticklish issue here is teachers as role models – most teachers are white.

It is if you are selling, but not if you’re a buyer, particularly a first-home buyer.

On top of this, the media regularly run stories on how NZ house prices are over valued in terms of people’s ability to pay for them, so surely falling prices are a good thing on this score as well.

The latest example of a journalist slanting a housing story is a Dominion Post piece on latest median prices in the Wellington region.

“Median house prices in Wellington hit the skids in April, but there is some good news – the national median has risen 1.4 per cent from a year ago.”

Maybe the journos writing about falling housing prices own homes and see the value of their investment falling, so from their perspective it is bad. It also probably reflects Kiwis’ unrealistic belief in housing as an immutably positive form of investment.

Or maybe the journalists are wannabe real estate agents who like seeing their commissions ticking up.

More neutral coverage would be good.

[Declaration of interest – Own a home and not planning to sell. Have two children who I’d like to see being able to afford to buy their own home.]

The exchange rate as a barrier to exporting figures strongly in a 2011 Stats NZ survey of Kiwi businesses.

Of businesses that currently generate overseas income, 37% said exchange rate volatility was a barrier. Only slightly lower was concern over the exchange rate level.

The next highest worry, and still over 30% of  these respondents, was low demand and increased competition, followed distance from markets.

It’s a different picture for businesses that do not currently generate overseas income, but are interested in doing so.

The biggest barrier for half this group was limited experience in expanding beyond NZ, followed by limited market knowledge and limited access to finance.

As Stats comments:

“[This group is] hindered by internal factors they have some control over, but businesses that currently generate overseas income are hindered by external factors they have no control of.”

In his pre-Budget speech to Business NZ, he said:
“…the most important thing we as the Government can do for the economy, and therefore boost jobs and incomes in New Zealand, is to be responsible managers of the public purse.”

This would be a bit of a shock to those of us with more aspirational ideas about how a government can lift economic growth (and therefore jobs and incomes).

It’s in stark contrast to the previous Labour Government’s transformational rhetoric and to a lesser extent the aims of National’s original Economic Growth Agenda and current Business Growth Agenda.

But really National’s “modest and sensible” approach is just the party being true to form (and itself).

And perhaps the times.

He writes of a “provocative possibility” that the competitive spirit capitalism engenders can sometimes inhibit the creativity it requires.

Obsessive competition among businesses has trumped value-creation. “In this and other ways, the competitive arena undermines innovation.”

I can’t get Ports of Auckland out of my mind here.

The NZ Initiative is the result of the “merger” of the Business Roundtable and the NZ Institute – both had very different world views, so it was always going to be interesting to see who came out on top.

Looks like the former. The media have already made up their minds with the NZ Herald and NBR both describing the new organisation as ‘libertarian’ – ie “believ[ing] that economic activity must be actively liberated from the bondage of needless political constraints in order to achieve true prosperity”.

The BRT saw the fight for NZ’s prosperity in this light, but came to look stuck in a sterile, closed system, late 20th century rut. The Institute meanwhile was more alive to the open system possibilities of the early 21st century.

Basically I just don’t think the former, with its focus on public institutions and individual responsibility, has the leverage to get NZ out its economic rut.

The new think tank will be led by economist Oliver Hartwich from the BRT-like Australian Centre for Independent Studies.

According to the media release his work and publications covers a wide range of public policy topics, including housing affordability, transport, local government, infrastructure, welfare reform and global economic issues.

This looks to me to be a BRT-style agenda.

Hartwich is also prolific, so my pick is we’re going to see and hear a lot of him.

But, yeah, it’s early days so we’ll have to wait and see how this baby goes.

Okay this topic especially appeals to BigCake as it covers two issues close to his heart – how NZ makes its living from the world and communications (PR/media/marketing type comms that is).

Using export to describe how NZ businesses sell products and services overseas is now basically wrong – it’s not an accurate description of the current state of our commercial interactions with the world.

Maybe 50 years ago when the vast majority of overseas income was earned by plonking stuff in the hold of a boat and kissing it goodbye.

But last year about 20%, or $12 billion, of ummm exports were services, not goods. About half of that $12b was tourism earnings and another 15% or so education.

The rest includes consulting and the apparently rapidly growing “architectural, engineering and technical services” worth about $500 million.

So we shouldn’t use exports as a grab all term for selling stuff to the world. Be specific – it’s exports of goods and services.

But even then there’s a problem with export.

The word reflects an obsolete mindset. It implies doing the hard yards in NZ – milking the cows, felling the trees, butchering the sheep – and then “sending out” milk, logs and meat to the world to do the rest, including extracting the best value.

It’s not how our best and brightest businesses operate. For them, the focus is on the international market investigating what the world wants and how to get people to buy, not on domestic production.

As an aside to this to this not particularly pressing naming issue, our young globally aggressive businesses don’t like being called exporters.

HT – Ganesh Nana at BERL for wading through the stats to dig out the service numbers.

But distance can also be a plus.

Team NZ boss Grant Dalton pointed out at the NZ International Business Awards ceremony that if he takes the time to get on a plane, travel for 24 hours or more, just to get to a meeting, then the other side of the table are going to be impressed.

They will make time for you, and listen attentively, because they know NZ is on the other side of the world and appreciate the commitment – sort of a comparative advantage for Kiwi businesses competing against local offshore ones.

A related one is just being Kiwi. We’re pretty good at dumping on ourselves as a nation, but a number of award winners noted that being from NZ  lifts you out of the ruck of the international marketplace.

We are liked and respected.

One business mentioned how, at an international trade show, someone passing their stand heard a Kiwi accent and decided he had to drop in to say “hello”. A business deal of course followed.

We’ve just lost the most visionary, clever and determined advocate of the latter with the death of Sir Paul Callaghan.

For sure he’s been a big influence on BigCake’s thinking.

One of the publicly neglected Government “aspirations” is to lift exports from 30% of GDP to 40% by 2025. Is it hard to see how we are going to do this by forever squeezing more cows on to a limited (by world standards) amount of land.

Sir Paul calculated we’d need 300 or so more companies of Icebreaker’s size to get there. Or if you want to go down the tonnage route, 3-4 more Fonterras (by BigCake’s rough calculation).

So, there’s a compelling argument to pile more eggs into the knowledge export basket, but how many?

I’ve posted before that I think that our immediate future, wealth wise anyway, still depends on the tonnage sector.

We can’t afford to sit around and wait for new Icebreakers, Orion Healths, F&P Healthcares to achieve international sales that’ll make any difference to national wealth.

Fisher and Paykel Healthcare, which last year had its 40th anniversary, is still only around $500m in revenue.

We need the primary produce sector (and probably mining and oil) to bridge the gap till the new tech companies get real traction.

But NZ needs very careful about how it does this.

A good policy guide would be another of Sir Paul’s ideas – NZ as a place where talent wants to live.

Will the new export ventures that will help us span the gap till we do have a knowledge economy damage our ability to retain and attract talent?

By my count, and not factoring in the impact of the new Ministry of Business, Innovation and Employment , it’s 34 compared with an OECD average (in 2009) of 17.

Next highest are the UK and Canada with 26-27 each.

The super efficient Swiss have just seven.

The creation of the Ministry of Business, Innovation and Employment will take out four agencies: the Ministry of Economic Development, the Department of Labour, the Ministry of Science and Innovation and the Department of Building and Housing.

So that’ll bring us down to 31.

Clustered around the central core is a mini universe of government agencies beyond count (for me anyway). There of 15 Offices of Various Stuff alone.

Why we have so many government agencies is not clear – looking at the OECD stats there doesn’t appear to be any pattern around country size, population, history or culture.

It’s all pretty random.

It must be pointed out that our profligacy in creating agencies has not hurt the efficiency of our government sector. But there doesn’t look to be any connection between efficiency and the number of agencies.

We’re up with Finland, Denmark and Sweden in efficiency. These countries are clustered around the average for the number of agencies. However, agency-loaded Canada is next best.

Hat tip – 2011 Economic Indicators report