Latest / Trumponomics / This Nation Has the Secret to Trump's GDP Goal

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This Nation Has the Secret to Trump's GDP Goal · Trumponomics

• 0:00
  Speaker 1: So Dan, before we get started today, we just wanted
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• 0:41
  Speaker 1: Learn more at bloomberg dot com backslash lanes. Donald Trump
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  Speaker 1: has set his sights on what many economists see as
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  Speaker 1: an impossible goal, getting the U. S economy to grow
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  Speaker 1: at a sustained rate of three to four percent, up
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  Speaker 1: from the current pace of around two The President has
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  Speaker 1: pledged to get there with a mix of deep tax cuts, deregulation,
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  Speaker 1: and renegotiated trade deals. At the same time, he's talked
• 1:10
  Speaker 1: about limiting immigration. That last category could prove crucial in fact,
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  Speaker 1: while much of the developed world is stuck in a
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  Speaker 1: low growth rut, one nation stands out because a boom
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  Speaker 1: in immigration is fueling economic expansion. Today, on benchmark, we
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  Speaker 1: journey all the way to New Zealand, where a flood
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  Speaker 1: of immigrants has stoked torrid growth. What lessons does that
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  Speaker 1: hold for the United States? Let's find out. I'm Scott
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  Speaker 1: landman and economics editor for Bloomberg News in Washington, and
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  Speaker 1: I'm Daniel Moss, Executive editor for Global Economics at Bloomberg
• 1:56
  Speaker 1: in New York. So, Dan, I know this is particularly
• 2:01
  Speaker 1: difficult podcast for you to do. I am here under
• 2:04
  Speaker 1: dures growing up in Australia. Dan, how would you describe
• 2:09
  Speaker 1: the attitude of Australians towards New Zealand. Ever been to France? Yes?
• 2:14
  Speaker 1: I have ever heard them talk about Belgium. I don't
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  Speaker 1: think so. Ever heard someone from France talk about a
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  Speaker 1: resident of Quebec um No, But tell me more, I
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  Speaker 1: think the listener can get the general picture. You guys
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  Speaker 1: probably looked down on them. I would say that sounds
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  Speaker 1: like the way you're what you're trying to say, Dan,
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  Speaker 1: Is that right? Well? I wouldn't be quite so avert. Well,
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  Speaker 1: on that note, since we're off to such a great start,
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  Speaker 1: why don't we bring in Tracy has been putting up
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  Speaker 1: with this for years. Let's bring in Tracy Withers, our
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  Speaker 1: colleague in New Zealand. He's spent almost two decades covering
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  Speaker 1: the economy of his native land as a reporter in Wellington. Tracey,
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  Speaker 1: thanks for joining us today, or actually it's tomorrow where
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  Speaker 1: you are right? Thanks Scott Dan, how are you happy
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  Speaker 1: to be here? Without getting into the details of any
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  Speaker 1: kind of rivalry with Australia, can can you fill us
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  Speaker 1: in a bit about New Zealand's earliest history. I think
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  Speaker 1: I'm struck by some of the similarities to the United States,
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  Speaker 1: and that Europeans did take the land from the people
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  Speaker 1: who were there first. You know, they were immigrants in
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  Speaker 1: a way. How would you talk about it? Yes, Europeans
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  Speaker 1: started colonizing New Zealand And the early nineteenth century, and
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  Speaker 1: the British took it over in an eighteen forty or
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  Speaker 1: assumed sovereignty with a treaty with the local married tribes.
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  Speaker 1: Had been discovered as a nation by the Polynesian navigators
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  Speaker 1: centuries before h and as you as you're saying, it's
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  Speaker 1: there are those similarities. Since then, of course, you know,
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  Speaker 1: the relationship with the Marys has evolved pretty calm. Either
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  Speaker 1: has been the early clashes, the still squabbles over land
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  Speaker 1: entitlement stemming right the way back to that early treaty,
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  Speaker 1: but mostly in modern day New Zealand, the two races
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  Speaker 1: are really totally intermingled. Does that treaty tracy as opposed
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  Speaker 1: to just a complete appropriation explain a lot. Well, there's
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  Speaker 1: certainly different interpretations of the document which continually being tested.
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  Speaker 1: As I said, in modern day New Zealand with with
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  Speaker 1: issues around rights to land. This government has been settling
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  Speaker 1: with some of the Mary tribes on some issues. It's
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  Speaker 1: it's it underpins a lot of how New Zealand's legislation
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  Speaker 1: has written. It is quite important that that the Mary
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  Speaker 1: rights and a lot of areas are recognized and the
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  Speaker 1: governments of the day except that now, as I think
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  Speaker 1: most keywi's do now, as that's interpend a lot of
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  Speaker 1: the history. How did we get to the point in
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  Speaker 1: the present day where New Zealand has seen such a
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  Speaker 1: desirable place to live, to buy property and so on.
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  Speaker 1: How much did Lord of the Rings have to do
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  Speaker 1: with it. But certainly I think Lord of the Rings
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  Speaker 1: as a as a window into her beautiful New Zealand.
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  Speaker 1: It can be there's lots of space here. Clearly there's
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  Speaker 1: green Bush and all those sort of attributes that that
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  Speaker 1: movie portrayed. But I think for a lot of people
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  Speaker 1: that's a nice makes it a nice reason to visit
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  Speaker 1: New Zealand. Maybe not necessarily stay. I think, you know,
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  Speaker 1: you look to other things an immigrant would checklist security,
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  Speaker 1: stable government, good public services, as we discussed, racially, pretty tolerant,
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  Speaker 1: and in a country that's prepared to sort of you know,
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  Speaker 1: stand its ground and stand up in the world, like
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  Speaker 1: for example, our campaign to be nuclear free, which put
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  Speaker 1: us offside with our alliance for the United States for
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  Speaker 1: some some years. So all of those things make in
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  Speaker 1: a pretty compelling case for immigrants who may be coming
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  Speaker 1: from places where there's geopolitical tension and and and risks
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  Speaker 1: around security. Let's talk about the economy now, since so
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  Speaker 1: many people are coming to New Zealand that is helping
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  Speaker 1: fuel economic growth. We've actually seen three GDP growth in
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  Speaker 1: New Zealand for the last several years, kind of at
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  Speaker 1: the average pace. That just happens to be the goal
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  Speaker 1: that Trump administration is talking about achieving here, although a
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  Speaker 1: lot of people are really skeptical about it, especially since
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  Speaker 1: the attitude toward immigration has been more towards limiting than welcoming.
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  Speaker 1: For New Zealand, where would where do you think the
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  Speaker 1: growth rate would be without such strong immigration in the
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  Speaker 1: last few years? Well, do you have corect since started?
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  Speaker 1: I think the economy has grown about nine p the
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  Speaker 1: population has gone up five point five A little bit
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  Speaker 1: more so, the per capita GDP numbers are down in
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  Speaker 1: the low one since one point one percent a year
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  Speaker 1: over the last three years. So there's no doubt that
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  Speaker 1: the immigration boosts has underpinned the growth through demand for housing,
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  Speaker 1: spending by the new people and so forth. Given the
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  Speaker 1: benefits to the New Zealand economy, and admittedly it's much
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  Speaker 1: much smaller than say the UK economy, let alone the
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  Speaker 1: US economy. As in New Zealand, what do you make
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  Speaker 1: of the immigration debates that have royaled UK and US
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  Speaker 1: politics in the past twelve months. We don't have a
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  Speaker 1: difficulty with new people coming here. In a lot of
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  Speaker 1: industries we need the talent from the dairy industry struggles
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  Speaker 1: sometimes our biggest industry in terms of the primary production
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  Speaker 1: struggles to get people to milk cows. We've got in
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  Speaker 1: parts of the country Filipino families milking cows. Um massive
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  Speaker 1: earthquake in christ Church and twenty eleven, A lot of
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  Speaker 1: the rebuilding which is still going on was done by
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  Speaker 1: British Irishman Irish people coming down and helping Chapigan building
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  Speaker 1: houses and new commercial buildings. So we didn't have the
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  Speaker 1: train people to do those sorts of things. And that's
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  Speaker 1: still the case in a lot of more sophisticated industries
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  Speaker 1: software development, film, et cetera. So um hm, we need
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  Speaker 1: people can bring with it tensions and put pressure and infrastructure.
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  Speaker 1: UM I get. It's relative to what's happening in and
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  Speaker 1: other parts of the world. It's it's not too severe.
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  Speaker 1: So when you think about the number of people that
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  Speaker 1: have come into New Zealand, you're you're talking about the
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  Speaker 1: population has increased about five percent the last three years.
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  Speaker 1: I think. Um I saw that you wrote that the
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  Speaker 1: population grew about two percent in the twelve months through March,
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  Speaker 1: about a hundred thousand people. But if you put that
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  Speaker 1: in perspective, that kind of growth would be something like
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  Speaker 1: seven million people in the United States or twenty nine
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  Speaker 1: million people in China. So I can imagine the kind
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  Speaker 1: of strain on resources that an influx of people would be.
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  Speaker 1: How are all these people finding places to live? What's
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  Speaker 1: happening to the housing markets, schools, to transportation and so on. Well,
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  Speaker 1: certainly there's there's a lot of pressure on and half
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  Speaker 1: of the immigrants the last year through match that was
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  Speaker 1: about seventy two thousand knit immigrants, half of them a
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  Speaker 1: in Aukland, which is our biggest city, and that's really
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  Speaker 1: starting to heave under the strain in terms of roads,
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  Speaker 1: the congestion, and the government has finally put its hand
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  Speaker 1: up in terms of spending on things like schools and
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  Speaker 1: other infrastructure that's needed, but it's going to take a
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  Speaker 1: long time to get Auckland sorted. On the other hand,
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  Speaker 1: there's there's plenty of space than other in other cities,
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  Speaker 1: but Auckland being the the place where most immigrants would
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  Speaker 1: see themselves more likely to get jobs, attracts a lot
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  Speaker 1: of them. One of the one of the points about it,
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  Speaker 1: of course, is that the net immigration figure that we
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  Speaker 1: quote includes far fewer in New Zealander is actually leaving,
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  Speaker 1: leaving in the country. It's always been a right of
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  Speaker 1: passage for young New Zealanders to leave the country and
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  Speaker 1: they still do. But the last decade, thousands of New
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  Speaker 1: Zealanders would go to Australia, the big brother across the
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  Speaker 1: the seed, to get jobs and say the mining industry.
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  Speaker 1: And as that industry is slowed down, then those people
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  Speaker 1: aren't leaving and many are coming back. So four years ago,
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  Speaker 1: for example, net thirty five thousand Kiwi's New Zealand citizens
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  Speaker 1: left to go to Australia. The latest year there was
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  Speaker 1: so that's contributed a lot to the to the pickup
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  Speaker 1: and immigration, and that the people just have not left.
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  Speaker 1: It sounds like a really source part for you down
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  Speaker 1: So Tracy, let's just take a step back. You've used
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  Speaker 1: the term kiwi a couple of times in this broadcast.
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  Speaker 1: Can you explain what a keiwi is and what it's
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  Speaker 1: shorthand for? A kiwi is is our native flightless bird,
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  Speaker 1: which is nocturnal, so very few of us have actually
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  Speaker 1: seen one, but we've adopted that as our shorthand. Perhaps
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  Speaker 1: the world adopted it as a shorthand description for for
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  Speaker 1: New Zealanders as an aside, it's also what we referred
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  Speaker 1: to as our dollar, so currency traders will will know
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  Speaker 1: that the key we is is one of the top
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  Speaker 1: ten traded currencies. So it's just a little fairy animal
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  Speaker 1: with no wings. Really, then, where are you going with
• 12:22
  Speaker 1: this line of questioning? Then I'm just making sure that
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  Speaker 1: as this is a global podcast, everyone knows what we're
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  Speaker 1: talking about. New Zealand. Tracy has also attracted some attention
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  Speaker 1: lately for a different kind of immigration, high net worth,
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  Speaker 1: very very high net worth individuals setting up shop in
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  Speaker 1: New Zealand, fearful of the end of the world. Can
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  Speaker 1: you talk about that? I think there has been some
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  Speaker 1: of that. It's inaccessible and as I said, earliest stable
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  Speaker 1: government secure a place with modern facility. So as as
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  Speaker 1: a I think the word bolt hole has been used
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  Speaker 1: as a as a place for high n with people
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  Speaker 1: to come to from other parts of the world. Either
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  Speaker 1: it's a holiday to have the remote large away from people,
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  Speaker 1: or for some I guess it's also an option as
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  Speaker 1: a complete change of lifestyle. Either they clearly they would
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  Speaker 1: need to be able to continue there their careers here
• 13:35
  Speaker 1: or there may be in a in a stage with
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  Speaker 1: their careers A past. I think of someone like Tiger
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  Speaker 1: Fund founder Julian Robertson, who spends a lot of time
• 13:44
  Speaker 1: out here and has built built resort lodges and high
• 13:49
  Speaker 1: quality golf courses. Um James Cameron, the movie producer who
• 13:54
  Speaker 1: is now living here with his family, but is still
• 13:57
  Speaker 1: making the next Ever Time movie here in Wellington in
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  Speaker 1: conjunction with Peter Jackson's Water People. So it's got attributes
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  Speaker 1: and after all, it's only a short flight back to
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  Speaker 1: the United States. And don't forget there is a connection
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  Speaker 1: with the United States and Trump here. The founder of Papal,
• 14:24
  Speaker 1: Peter Chill, who got his New Zealand citizenship in eleven. Uh,
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  Speaker 1: that was that a big story there, Tracy well Sadly
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  Speaker 1: it wasn't in twenty eleven because very few people knew
• 14:38
  Speaker 1: about its sharpened the focus on whether it's too easy
• 14:45
  Speaker 1: to get New Zealand citizenship. That was an interesting story
• 14:50
  Speaker 1: when it did emerge. The the idea that in his case,
• 14:54
  Speaker 1: he was putting some seed money into some of our
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  Speaker 1: emerging software companies. On the highest profile one is Zero,
• 15:03
  Speaker 1: which is an accounting software business that started here and
• 15:07
  Speaker 1: again in Wellington and is now growing rapidly and wanting
• 15:11
  Speaker 1: to take on into it. In in the United States,
• 15:16
  Speaker 1: I think we do prize our citizenship quite highly. And
• 15:20
  Speaker 1: there were some people saying was it just being bought.
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  Speaker 1: There's no real resolution to that question, So tracy for
• 15:31
  Speaker 1: those who cover central banking very closely, and let's face it,
• 15:35
  Speaker 1: that's us. New Zealand had a unique role to play.
• 15:38
  Speaker 1: Talk to us about that. Then the New Zealans inflation
• 15:43
  Speaker 1: really got out of control in the late nineties and
• 15:46
  Speaker 1: the government of the day felt that there had to
• 15:50
  Speaker 1: be more disciplined around the fight against inflation, and they
• 15:55
  Speaker 1: brought the Reserve Bank of New Zealand Act and to play,
• 15:59
  Speaker 1: which was the first time a government and its central
• 16:03
  Speaker 1: bank had had legislated for price stability, and since the
• 16:08
  Speaker 1: Reserve Bank of New Zealand became the pioneer inflation target.
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  Speaker 1: Of course, today it's a common, common strategy that central
• 16:19
  Speaker 1: banks have adopted around the world, but in those days
• 16:22
  Speaker 1: it was it was pretty unique that said a really
• 16:26
  Speaker 1: rigorous inflation target enshrined that the central bank would be
• 16:31
  Speaker 1: independent of government. It even went sir faris to say
• 16:34
  Speaker 1: that if the governor of the day failed to reach
• 16:38
  Speaker 1: his target as or her target, then the follower follow
• 16:44
  Speaker 1: through could be termination of the of the role. Of course,
• 16:47
  Speaker 1: it never happened, but it certainly brought a discipline that
• 16:51
  Speaker 1: helped drag inflation way way back as the unities developed,
• 16:57
  Speaker 1: and it's certainly provided untold decades of central bank coverage
• 17:02
  Speaker 1: of Farder for Bloomberg, central bank coverage all over the
• 17:05
  Speaker 1: world as other central banks adopted inflation targeting schemes and tracy.
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  Speaker 1: As inflation has stayed low, not just in New Zealand
• 17:15
  Speaker 1: but really throughout much of the developed world. Is New
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  Speaker 1: Zealand also playing a pioneering role in questioning the inflation
• 17:24
  Speaker 1: target I think we we've discussed it. It's like, as
• 17:30
  Speaker 1: you say, like most central banks, we record out in
• 17:34
  Speaker 1: New Zealand when global inflation stayed remarkably low, and as
• 17:40
  Speaker 1: we discussed earlier, three growth rate. The last three years,
• 17:45
  Speaker 1: inflation is only just returned to two percent, which is
• 17:49
  Speaker 1: the middle point of the current reigns to the Reserve
• 17:52
  Speaker 1: Bank targets. Our current Governor, Graham Wheeler, who finishes this
• 17:57
  Speaker 1: term later this year, has been a staunt defender of
• 18:00
  Speaker 1: inflation targeting. Some some opponents have argued that it's driven
• 18:06
  Speaker 1: the currency higher than it should have otherwise been. Um,
• 18:11
  Speaker 1: I guess that debate will go on, won't it. My
• 18:14
  Speaker 1: favorite moment in recent New Zealand history was the Cricket
• 18:18
  Speaker 1: World Cup final third delivery of the game. I might
• 18:22
  Speaker 1: add when Tracy, what happened? Mitchell Stark bowled the New
• 18:26
  Speaker 1: Zealand captain for zero and it was basically all over.
• 18:30
  Speaker 1: That sums it up. Then that's exactly what happened. I mean,
• 18:33
  Speaker 1: you're joined. You don't want to draw comparisons for the
• 18:35
  Speaker 1: Rugby World Cup final in the All Blacks manage to
• 18:39
  Speaker 1: defeat Australia, not at all? All right, Well, gentlemen, there's
• 18:44
  Speaker 1: nothing like a good sports rivalry to keep the conversation
• 18:48
  Speaker 1: going forever. But we're going to have to end it there. Tracy,
• 18:51
  Speaker 1: thanks so much for joining us today. Benchmark will be
• 18:55
  Speaker 1: back next week and until then, you can find us
• 18:57
  Speaker 1: on the Bloomberg terminal, Bloomberg dot com, our Bloomberg app,
• 19:01
  Speaker 1: as well as on Apple Podcasts, Podcadcast, Stitcher, or wherever
• 19:05
  Speaker 1: you might enjoy finding your podcasts. While you're there, take
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  Speaker 1: a minute to rate and review the show so more
• 19:10
  Speaker 1: listeners can find us and let us know what you
• 19:12
  Speaker 1: thought of the show. You can follow me on Twitter
• 19:15
  Speaker 1: at at scott Landman Dan. You are at Moss Underscore Echo,
• 19:21
  Speaker 1: and our guest Tracy Withers is at Tracy w Withers.
• 19:25
  Speaker 1: Benchmark is produced by Sarah Patterson. The head of Bloomberg
• 19:28
  Speaker 1: Podcast is Alec McCabe. Thanks for listening, See you next time.