A love-letter to Brian Gaynor

Here at the secret Economic Illiteracy underground headquarters near Matamata, we don’t have much time for most economic commentators in the media. Despite being avid fans of Morning Report (our best daily source of unintentional economic hilarity from the politicians being interviewed) we’ve never quite figured out why they keep trying to pass off bank economists as actual economists, when it’s obvious they’re paid to air the views of their employers. And the quality of material in the printed media is little better.

Only …. sometimes there’s a column that just absolutely and totally nails it. Step up, Brian Gaynor, who uses actual facts and figures to make a point in the NZ Herald that has been crying out for quality analysis for decades. The headline says it all – “Brian Gaynor: Overseas ownership is holding NZ back” – and if you thought the headline was good, the body of the article is a tour-de-force of condemnation for the dumb-ass right-wing idea that all foreign investment is good. In Brian’s words:

Our politicians, beginning with Roger Douglas and Richard Prebble, sold a large number of the country’s strategic assets to overseas investors. These politicians failed to realise they were establishing a domestic wealth destruction culture as wealth is mainly created through ownership rather than disposal …

Telecom was sold to overseas interests for $4.25 billion in 1990 and since then has made distributions to shareholders, in the form of dividends and capital repayments, of $14.6 billion …

The Bank of New Zealand was sold to National Australia Bank (NAB) for $1.5 billion in 1992. Since then BNZ has distributed $5.2 billion in dividends to its Australian parent and is now worth an estimated $7.2 billion based on its 2010 net earnings of $602 million and a price/earnings ratio of 12. Thus NAB paid $1.5 billion for BNZ and the latter has delivered total shareholder value of $12.4 billion to its Australian owners since late 1992.

The article keeps on getting better and better, as Gaynor points out that it’s not solely about a loss of profits, but the depletion of available investment capital, the cutting off of international expansion opportunities, and the deprivation of the rest of the economy of high-quality investment opportunities.

This is an article that deserves a wide audience, particularly amongst the benighted fools in the National Party who seem determined to asset-strip the country in a second term of government. Go read it now. And take a bow, Mr Gaynor.


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