Protectionism overseas calls for resilience at home
OPINION: While driving to Picton from Christchurch this week, I was struck by what a difference the Kaikoura earthquake is making to the alternative route to the top of the South Island.
State Highways 63 and 65 between Blenheim and the Lewis Pass are proving a minor bonanza for roadmaking firms on a string of upgrades. Two freshly mangled truck and trailer units at the side of the road on Tuesday underlined the urgency of this work.
The point of this post-holiday reminiscence: that weaknesses exposed by crises breed responses that can add to resilience.
That is a mindset that New Zealanders understand in the context of earthquakes, making this country among the bestinsured in the world and able to rebuild after the Canterbury and now the Kaikoura quakes.
It’s also an approach that New Zealand will need to develop for its global positioning in 2017, when the implications of last year’s geopolitical upheavals will not only start to be clearer, but will also start to spread.
The most substantial events last year were the Brexit vote in the United Kingdom, the election of a populist blowhard as president of the United States, and aggressive global expansionism from both Russia and China.
These are all dramatic indications of the way the political consensus around globalisation, intact for more than a generation, is rapidly breaking down.
Globalisation’s political rejection in the world’s wealthiest, most democratic countries is creating opportunity for less wealthy, less democratic countries to prosper from the fallout.
In the absence of a replacement consensus, policymakers steeped in the dictates of globalisation’s presumption of a high degree of cross-border policy predictability are struggling to keep up.
No wonder, when the US president-elect is advocating punitive tariffs on companies that choose not to ‘‘make in America’’, while the leader of the country’s most successful communist country, China, admonishes the nervous global elite at the World Economic Forum summit in Davos to embrace free trade.
Meanwhile, Europe this year faces two crucial elections – in France and Germany – where the contest is not so much between traditional Right and Left, but between what might be called neoliberalism and neo-nationalism.
The only certainty is that the action is all on the Right-hand side of the spectrum, suggesting slim pickings for political parties of the Left in the democratic west.
The challenge for New Zealand policymakers is managing how increasing nationalism, protectionism and the potential for trade and actual conflicts will affect New Zealand as both a trading nation and an international citizen.
Trade wars rarely have winners but always have plenty of losers.
Already, that is being expressed as an unhappy business of ‘‘making choices’’ between our traditional ally, the US, and our now-largest trading partner, China, when both ties are vital.
However, as Chinese President Xi Xinping noted in this week’s speech at Davos, trade wars rarely have winners but always have plenty of losers. New Zealand would be a staggeringly insignificant casualty to the rest of the world in such a conflict.
To be resilient if that scenario emerges will require policymakers to focus on the things we can control: ensuring New Zealand remains attractive to investors and migrants, including expat Kiwis; pursuing productivity and value over volume in the industries we rely on; ensuring sound public finances and trustworthy institutions; and cherishing rather than trashing our natural resources.
Those basics would stand us in good stead whether or not the world becomes more protectionist, isolationist, or mercantilist. In the current global environment, true havens may yet find their own rewards. –BusinessDesk