Why we can’t wait for Paul Callaghan’s country where “talent wants to live”

Apologies for sporadic nature of posts of late.
My energy levels have been pretty low when I return from the coal face and I have then been confronted with sluggish internet thanks to [read following words very slowly] a huge game download by the son.
Among recent posts that I have done, you’ll see I’m a fan of the ideas of Sir Paul Callaghan. He’s one of the best – and clearest – thinkers about the future shape of the NZ economy.
He’s deeply sceptical that our economic salvation will come from squeezing more out of current big ticket foreign exchange earners such as commodity agricultural products, natural resources and tourism.
Our wellbeing, he says rides on how well we can create a knowledge economy, one based on high earnings per worker. Callaghan’s well-worn example is that a McDonald’s worker produces US$9389 of value to the company; an Apple employee creates US$1.3 million.
So we need to create more jobs in ventures that generate high levels of wealth off relatively low levels of investment in raw materials, bricks and mortar and other increasingly scarce resources.
In the long run he’s right. But what happens in the meantime?
The trouble with knowledge-based businesses (in NZ at least) is that they take forever to reach a size that’ll register on the overall level of national wealth.
Fisher and Paykel Healthcare, which has been around since the old parent company entered the respiratory care market in 1971, is only just approaching $500 m in revenue. It’s the highest ranked truly NZ company by size in the knowledge-based business game – it comes in at around the mid 60s in the rankings.
Forty years to hit half a billion by one of the brightest stars on NZ’s business stage.
We haven’t got this much time to sit around and wait for the knowledge-based economy get some traction.
By the time it does, at our present rate of falling behind in wealth, we won’t be a place, where in Callaghan’s words, “talent wants to live”.
Talent will shun us for the same reason it shuns other Pacific paradises – the infrastructure is way too bad compared to alternative places to live, the schools poor and healthcare good only if you can afford it.
To avoid this we need businesses that can generate more wealth if not now, in the next few years.
And that I’m afraid is more cows, mining, oil exploration, tourists…
How we do this is important because I think Callaghan’s idea of creating a country where “talent wants to live”, though very likely elitist, is a good way of figuring out ways through the maze of our economic choices.
Just ask: is it good for talent?
The assumption of many would be that mining ain’t. For sure our clean and green environment is a big talent drawcard, but we need more wealth to maintain that environment.
It’s the poorest countries that have the worst environmental records.
And supporting talent costs money, lots of money. It requires capital, R&D infrastructure, quality education facilities, real broadband…
Finally living in a “poor” country is a turn off.
This isn’t an argument to do nothing. Our natural resources are finite, and some shouldn’t be touched.
We need to be laying the groundwork for creating a knowledge economy by being clever about how encourage talent to say, and new talent to call NZ home.