Aardvark

[Bruce Simpson]

This column is archived at: http://aardvark.co.nz/daily/2010/0203.shtml

What the hell happened to our promised "knowledge wave" and the knowledge-based economy that was to flow from it?

How come, a decade later, we're actually exporting knowledge-based jobs offshore instead of creating that KBE we were promised?

Who is (ir)responsible for the utter failure of the KBE plans that were spouted back at the turn of the century?

Is it too late to rescue our plans for a knowledge-based economy -- or do others have too much of a headstart for us to become a key player?

If we could *really* get a KBE going in NZ, would that encourage skilled ex-pats to return?

If you're a skilled ex-pat, would you come home if we had the right environment to create and grow new KB-industries and jobs therein?

With dairy prices falling and harsh environmental taxes due to kick in soon, do we have any option but to revive our plans to build a KBE?

Did you alert others in the sci-tech world to today's column?

[Plato]

It is NEVER too late for a good idea....

"Everything that can be invented has been invented."
- Charles H. Duell, Commissioner, U.S. Office of Patents, 1899

A classic misquote (I believe) but none-the-less a valuable indicator of the old adage "There are none so blind as those that will not see"...

The world's "next big thing" could be right around the corner in New Zealand.

It just takes inspiration, a little perspiration and some good old kiwi ingenuity to make it happen.

Why does everyone always rely on the Government for a hand-out or the inspiration? Sure - I agree they waste a snot-load of money on things that are a pure waste - but a really good idea will fly all by itself.....

[Bruce Simpson]

[scribble]

[garymason]

A KBE is difficult. It would much easier and more affordable to embrace the groundswell of loony behavior.

A huge market exists with a faith based economy (FBE). TV shows and movies of paranormal and fantasy are booming along with charlatans offering readings, tarot and communicating with spirits etc. Regardless of available facts people still cling to their gods and faiths. Lets make some money off the gullible.

I wouldn't have any problem with prostituting the nation over climate change if it was profitable. Tourist would flock in. Even skeptics would come along for a laugh and a good time bringing their tourist dollars.

NZ should declare itself: Organic, Psychic and Spiritual. Build more temples for all faiths. We could all wear crystals and consult horoscopes and laugh all the way to the bank. Maori elders and medicine men could dot the hillsides for pilgrimages.

Is that lateral enough thinking for everyone?

[Peter]

Too easy Gary.

Do you think we could also offer lottery winnings to every tourist arriving here, as long as they then pay for the ticket and all costs and leave before they realise there was no prize.

We could promote Kiwibank as having many disaffected directors wanting to move millions of acquired funds offshore into anyone's account who wants to
fork out up front.

To deal with these businesses we could have a special currency, so we could actually give away loads of the stuff to people overseas and do them on a crazy exchange rate.

Knowledge can be a wonderful thing, eh.

[Chinga]

>Just what could/should government do to promote a KBE?

Lay fibre across the pacific.

We're being held back for the same reason we've always been held back. The government allowing telcos to fleece us blind for decades.

Landlines, international bandwidth and cellphones.

We're bleeding from every orifice.

Ever since the days when the new owners of Telecom decided to drop the regional free calling that was put in place prior to the sale, and the government let them charge old age pensioners $5 a month rental on Alcatel phones made in Masterton that cost Telecoms about $2 each.

RIPPED OFF.

[edwin]

[Chinga]

Well, you know how there are only a few STD codes in NZ?

03 04 06 etc?

They were all set to become free calling areas, but the new owners out the brakes on THAT!

Ask any old telephone tech.

So now a call from Wellington to Upper Hutt is free, but a call from Carterton to Masterton costs $.

[edwin]

[Chinga]

>o we're no worse off now than we were before the sale

Ah the old no progress is OK argument.

I guess you wouldn't moan is we were paying the same toll rates were were in the 70's too.

It was all ready to switch over but the new owners REVERSED the decision.

[Gokiwi]

On going learning (which supports a knowledge economy) has never been much valued here. Even the cheep night classes got cut. Govt dont seem to realise that learning anything (even if its only spanish or yoga) help keep people learning & advance the quality of staff.

I work (as lead marketing) for a company that is exporting SaaS (software as a service) US, Quatar, Singapore, Ireland, Aus, Italy, etc. If i relied on the govt to help export i would be a fool. Trade & Export dept is a waste of time.

As a country we spend money on training people early & then support no on going training. & Yes also the lack of support for online trainig (like bandwith costs & lack of speed) is a big drain - come to that so is potential latency for our overseas customers

[Newsjunkie]

Gary, a maori medicine man connected to the world running his 'content' business on the latest network infrastructure designed and marketed from here ... is a 'knowlege wave' business.

The proposed land tax is not going to kick start any knowlege wave industries. It will raise rents and business cost and inflation as the whole economy scrambles to pass on the new tax cost. Lower interest rates would be one way of getting small and medium sized kiwi businesses owners to have the courage to back themselves and their ideas. At high interest rates they just opt for safe property investment.

When you look back to .com boom and the story of NZs only techwreck the Telemedia company it shows that joe public investor has an appetite for knowlege wave businesses. Maybe most of our potential knowlege wave business people just dont have the skills to offer their business to the public? The knowlege wave also runs into difficulty in developing depth when the success stories eg navman get sold/moved overseas.

Obviously there is a place for government. Agriculture in NZ does well not because we have a great climate for grass. There is historic government and industry partnership of investing in the science and management of farming. Numerous government research farms and institutes plus two universities devoted to agriculture. The result, a world class knowlege industry with a NZ ownership structure ie Fonterra can't be sold overseas.

When Canada wants to kick start a pharma industry they pick a location and invest a billion dollars in a cluster of start up companies. The United States for all its private enterprise ethos 'subsidise' their science industries from the military and space budgets. Singapore and Korea have massive government investment in private companies.

The deer, forestry, petrochem and film industries got underway in NZ only with government assistance or subsidy. The pure private enterprise model couldn't do it. Some tweaking to R&D grants and tax rebates will help private industry be more competitive but that will not be enough. Industry needs to know government is committed to areas of expertise for the long term. Not picking winners but making winners.

Increase the national spend on R&D from 1% to 5%. Choose areas of science in which NZ is world leading. Put a billion dollars after each of them. Only fund NZ companies. Once the companies are up and going transfer the shares to every individual tax payer and require that institutional shareholdings must be NZ resident.

"What is a good idea? One that happens is. If it doesn't, it isn't." Paul Arden

[paulw]

Hey Bruce,

Weren't you the one last week moaning about the Gov giving money to the NZ movie industry. Surely this is part of the "Knowledge wave" ?? These technical people could have of course gone off shore to make their money.

Also you say that people are investing in property rather than NZ companies. We I for one am not stupid enough based on what I have seen of NZ companies over the past 15 year to put a penny into the stock market and the like.
Honi Key and co seem to have this thing that if they introduce a land tax then people will put money on to businesses. Fat chance of that and if de did introduce a land tax he's on his way out next election..

Catch up to Aust by 2015 ~ 2020 I don't think so..

[Snufkin]

[rainman]

I don't hold much hope for a KBE in NZ. Geography isn't destiny but it's pretty close, as the old saw goes. Look at Mexico - y'know, that low tech country where we exported our whiteware manufacture to - they run a positive ICT trade balance and are way up the ranks in ICT export performance relative to NZ. In fact, we're second from the bottom on the OECD list, with Australia "winning" that particular race, stone last. Needless to say, both NZ and Aus are nett ICT importers. That Mexico's fortunes have little to do with being right next to a very large (albeit currently somewhat broke) economy is pretty hard to believe.

Problem with this line of thinking is that it leads to the conclusion that trying to get away from industrial globalism is likely to be in NZ's best long term interest. However, that ship has, of course, sailed.

[barryl]

[Gokiwi]

The idea that property is not linked to export earnings is over simplistic and wrong. 2 Key reasons

1) The ability to have a movable workforce is an important competitve advantage. Any one who has lived in Amsterdam knows that jobs are easy to get but accomodation is impossible. Companies have to employ high paid housing experts to find their staff accomodation. This ties up resources and makes people unkeen to move, thus reducing the ability of companies to find great staff for export ops.

2) Housing does not directly earn export dollars, but then again neither do dairies, courts, florists, petrol stations etc in fact most businesses. They do provide the same infrastructure for exports as in 1) above, but if we were to hit housing then we should hit all non direct export companies.

[paulw]

Speaking of KBE. Here's an item today from CNet in the US.

'Avatar' Oscars could make Weta household name" Whole article

http://news.cnet.com/8301-13772_3-10444621-52.html?tag=nl.e703

Extract

""There's a relatively small number of places that can do a lot of work," Cohen said, "and Weta is in that group. They have to always stay busy, because if they're carrying any staff, they have to pay them."

That's definitely an issue for Weta, but the company has been able to keep a core group of several hundred artists tied to New Zealand. In part, that's because the company has been working on one mega film after another: the three "Lord of the Rings" films back-to-back-to-back, then "King Kong" and then four years on "Avatar."

But even as it's focused on those main projects, Weta has also been working on others as well. For example, it worked on "District 9," "The Water Horse," Jackson's own "Lovely Bones," and others, all while "Avatar" was in production. And it is already working on "Tintin" and "The Hobbit"--films that will be coming out in the next couple of years."

[Sophocles]

[Perry]

I'll ask the questions again: who gets to define
the 'value' of the land that gets taxed in the
sky-pie land tax idiocy? No one seems to be
able to give a reasonable answer.

The ever-repeated rhetoric about property
gets tedious. Do you want the red shed oper-
ating out of a tent?

People invest in residential rental property
because it's easy. Changing Basel II would
be a good start to altering that. Go to a bank
and seek to borrow money with a house as
security - no problem. Try that with a business
idea and plan - there's the door. (Unless one
has a house to offer as security!)

And ask anyone about SME compliance costs:
it'll bring tears to their eyes and maybe yours.
Stop rattling sabres and sticks and get out the
bag of carrots.

[gordy]

How about this for an analysis?

The existing big businesses in NZ do not want a KBE. They are perfectly happy with a low wage workforce that knows, just enough, to get the job done.

And since they are such a BIG part of the economy they tend to have the ear of government.

For handouts of course.

A KBE is an exciting thing. NZ is a very lost cost economy in which to run a business compared to many others. Some small business owners might think it expensive but compared to a LOT of other jurisdictions it is a dream.

The trouble with KBEs is that they required skilled workers, who tend to want good pay. After all, what is the point of picking up complex skills if there is no reward?

This isn't a problem for the KBEs set up by those same skilled workers. they understand you need good people so you pay them better.

No, the real problem comes when you have MBAs, of the accounting ilk, try to set up and run a business. I am sure these people have a good idea but they often have limited vision when it comes to something new. Especially new tech. And, when thing take a bit longer, or turn for the worse, they tend to over react and get the big financial control tools out and get rid of just the people they need to get through to the other side. That, or they send a very clear signal that enables the best to get out the door first for the best jobs elsewhere.

Ok, I am being unfair to accountants and MBAs. Or am I?

If you want to build a KBE you need good people and you need to pay (http://www.joelonsoftware.com/articles/fog0000000050.html) them well. In return they should generate a bigger multiplier on your investment than a cow does when you make powder from its milk. If they don't you need a better idea. This country is saturated with enough milk farms already.

[Peter]

A major problem with KBE in a small country is it is always difficult to retain those with knowledge in the country. There is a natural gravitation to larger countries.

[gordy]

[BlueShift]

[Peter]

[garymason]

The people are supporting a FBE! Check the poll:

http://www.stuff.co.nz/oddstuff/3295546/Busting-out-the-ghost-theories

[Sophocles]

[makonz]

I have to say that as a new business trying to get underway in NZ its tough here in NZ.

People talk rhetoric about support for new ideas but investors and people with capital will only back guaranteed winners and new ideas are well down the list. They will also try to put all the power in their court and not give the entrepreneur a chance to breathe.

NZ traditionally rides off the back of more advanced nations for great ideas that arent agricultural. While that makes us nice and stable it doesnt make us slightly innovative and leaves us alsorans.

Government should never be blamed for this, its a private enterprise function and I think the blame lies squarely on the risk averse, traditional business culture run by our conservative business leaders.

Look beyond the square. Things can succeed from out of left field. Open your eyes to opportunity and give it support.

[edwin]