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More Foreign Exploitation

Entry 1728, on 2015-07-16 at 22:27:17 (Rating 4, News)

No one likes political correctness... except maybe when being politically correct supports a position they want to take. And we all want to know the truth, don't we? But what if the truth is inconvenient or contradicts some poorly defined social norms?

A major controversy which has erupted recently here in New Zealand concerns foreign investment in housing, in particular investment from China. There is no doubt that the lack of affordable housing is a major problem in many places and that foreign investment contributes to the severity of the problem, but who is really to blame?

Foreign investment certainly isn't the only contributor to high house prices, and might not even be the biggest factor, but it does undoubtedly make a difference - I don't think anyone denies this.

Of course claims that Chinese investors are causing social problems can easily be attacked as being xenophobic and racist. But that is really just too easy. A better question might be: is it true?

There are no official stats on this, but the Labour opposition has acquired some house sales data which they analysed and concluded that Chinese people who don't live here buying houses is a significant problem. Because the analysis was of a statistical nature and involved a few estimates and assumptions it can be questioned but I don't think the opponents of the findings are skeptical for rational reasons.

In every case I have seen the doubters have political or commercial reasons for denying the findings. Plus there are the usual unthinking objections based on political correctness (because it isn't considered acceptable to criticise a group identified by ethnicity or culture).

In hindsight the Labour Party might have been better off to present their findings in a different way but it's hard to see how they could have done that, considering the analysis was based on identifying people based on their name (a technique which isn't exact but seems to have considerable merit according to what I have heard).

I am deeply suspicious of all foreign investment for the following reason: why would a person invest in another country instead of their own? There is only one reason really: to exploit conditions in the other country for their own financial benefit. Some foreign investment is helpful but I think it is likely that most of it is bad for the country being invested in. After all, if the foreign investor is making more money where does that come from? The country where the investment is made, obviously.

I have no objection to Chinese investment specifically, it just happens that China is the country of origin of most of these cases. I am just as cynical regarding Australian investment in our banking system, Americans buying up large properties, etc.

If Chinese investors want to build new houses here and sell them at a reasonable profit I can see some merit in that. If Australian banks want to set up here and offer good services without exporting excessive profits back across the Tasman that is somewhat acceptable. But if any group wants to "invest" (I use quotes because most investment is just exploitation) here and make little, if any, positive contribution while causing a major social problem then I just can't see how that is a good thing.

How do we stop it? Well I would like to see capitalism completely dismantled and replaced with a fairer, more efficient system, but that's not going to happen any time soon. So maybe all foreign investment should only be allowed if a significant advantage to our country can be demonstrated. Yeah, that's not going to happen tomorrow either. Maybe it should be as simple as you can only buy a house if you're going to live in it. Hmmm, probably also unacceptable to the ruling elite.

So that last rule could be modified to: you can only buy property here if you live in the country. That's not enough to solve our bigger problems but at least it's a start.

There's one other point which should be made on this topic. If I wanted to buy property in China I wouldn't be able to. Specifically, I couldn't buy land at all, and I could only buy property if I had lived or studied there for at least 12 months. Similar rules apply in many other countries. No wonder foreign investors (or, more accurately, exploiters) think we are such suckers!

Comment 1 (4397) by richard on 2015-07-17 at 14:42:21:

All very well said Owen. Any government prime responsibility is to act (with integrity of course) in the best interests of its own citizens, especially their future generations. NZ is doing a poorer job at that than ever before, with recent actions (or lack of action in this example). Am genuinely intrigued to read more about the 'fairer, more efficient' system you have in mind though... A difficult balancing act to be sure, but complete dismantling?

Comment 2 (4398) by OJB on 2015-07-17 at 14:54:28:

Ah yes, you have identified the weakness in my criticism of our current economic system: what to replace it with! I'm thinking at least initially a more moderate form of what we already have where free markets and rampant capitalism are controlled for the good of the majority rather than being allowed to run rampant.

Basically what I'm saying is that, contrary to the opinion of many supporters of neoliberalism, greed ISN'T good!

Comment 3 (4399) by Anonymous on 2015-07-20 at 12:24:09:

A very good article in the Hearld this morning relating to House prices and Chinese investment in NZ and worldwide.

Comment 4 (4400) by OJB on 2015-07-20 at 22:30:26:

Not sure which one that was. Found several on that particular topic. What were the major points made in the article?

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