Transcription
New Zealand is especially favored. I visited once in the 1980s, and I looked at the green grass, and the sheep, and the cows, and the wind, and the horses, and the people, and I was quite sure if I go back there in a hundred years, it'll be more sheep, more cows, and more people.
In 1965, Lee Kuan Yew visited New Zealand and saw something remarkable. A country with one of the highest living standards on Earth, built almost entirely on farming. But he also saw something troubling. A nation becoming too comfortable with its success.
Today, New Zealand ranks among the lowest in the developed world for wages. Young Kiwis are leaving in record numbers. And the country that once sat at number three for GDP per capita has fallen to number 28. A decline acknowledged by ministers who note they have fallen behind Singapore.
And Lee Kuan Yew was an extraordinary man. What he did for Singapore, a country that in the 1960s was a recipient of foreign aid from New Zealand, and today has twice the GDP per capita that we do. So what happened? How did one of the richest countries in the world end up here?
Let's rewind to 1950. New Zealand was the third richest country on the planet, richer than Canada, richer than the UK, and yes, even richer than Australia. For a nation of farmers selling sheep and dairy, it was extraordinary. The secret? Grass and Britain. You see, New Zealand had the perfect climate. Mild temperatures, high rainfall, grass growing year-round. They could produce premium meat and dairy cheaper than anyone else in the British Empire. And thanks to imperial preference, they had guaranteed access to British markets with little to no tariffs.
Lee explained it like this: "For many years, the younger sons of the gentry, who did not inherit their father's estates in England, went out to own huge farms in New Zealand, rearing sheep and cattle and growing wheat for the mother country. It was a gracious way of life that gave them a high standard of living."
New Zealand developed an advanced system of welfare benefits that gave the people one of the best standards of living and a high quality of life before World War II. After the war, they became wealthy. It was the ultimate economic cheat code. New Zealand didn't need to industrialize. They didn't need to diversify. Britain bought everything they produced, and the money kept flowing in.
But this created a dangerous problem: complacency. While Australia was building mines and factories, New Zealand stuck with farming. As Lee observed, "they held on to this agriculture-based society for longer than was wise. The Australians industrialized. They did not."
Then came 1973, and everything changed. Britain joined the European Economic Community. Overnight, New Zealand lost its guaranteed market. British shoppers could now buy subsidized European butter and lamb instead. New Zealand's exports had to compete on the global market, and they weren't ready. The government dumped money into farm subsidies, essentially paying farmers to produce goods that had to be sold at a loss overseas.
Then came Prime Minister Robert Muldoon's "think big" projects, massive government-funded industrial schemes meant to make New Zealand self-sufficient. The results were mostly catastrophic. Government debt exploded from $4.2 billion in 1975 to nearly $22 billion by 1984, with the country suffering from a combination of slow economic growth, high inflation, and rising unemployment all at once.
And the human cost? Brain drain. Kiwis were moving abroad for opportunities and salaries double or triple what they could earn at home. As Lee put it, "their bright and ambitious young people left in large numbers for Australia, Britain, and America."
The government eventually tried to fix things by slashing subsidies and privatizing state assets, but the damage was done. Lee observed, "In the 1980s, New Zealand set out on a different course to develop an economy to offer opportunities for the talented so that they need not immigrate. They also brought in well-educated Asian immigrants and they began to market the natural beauty of their countryside, promoting tourism on a large scale. It was a belated effort to compete."
And unlike Australia, which could fall back on vast mineral wealth, New Zealand had no backup plan. As Lee summarized, "Without a large store of gold, diamonds, coal, uranium, and other minerals that provide Australians with a comfortable living, New Zealanders did not have the lucky country mindset."
Fast forward to today. New Zealand faces a housing crisis, low wages, a high cost of living, and an ongoing exodus of talent. Over 700,000 Kiwis now live in Australia, with many more looking for opportunities elsewhere.
One Redditor summed up the situation: "The equivalent of the entire population of Hamilton left the country last year. We are pushing young Kiwis overseas and giving them very little to be hopeful for here, especially if your parents don't own property. I personally know a fair few people with concrete leaving plans this coming year as well. We are a regressing nation betting on a zero-sum game and sacrificing our future. We will end up being one of those nations that have more ethnic expats than nationals."
New Zealand's geographic isolation, the same factor that once made it a safe, stable outpost of the British Empire, has become a liability. It's harder to build world-class markets and tech hubs when you're this far from everywhere else.
Lee's assessment was blunt: "Would I like to be New Zealand? Not really. I think it's not an exciting, happening economy. Yes, they grow the world's best grasses, good for horses and cows and sheep, but a dull life."
But while Lee noticed New Zealand's decline, he never stopped respecting the country or its people. Through his past dealings, he saw them as dependable, principled, and honorable, stating, "In my experience, the New Zealanders can be depended on to honor their undertakings." His critiques weren't personal, but observational.
For Lee, New Zealand wasn't just a case study in economic decline. It was a cautionary tale for Singapore itself. Both were small island nations. Both lacked vast natural resources. Both depended heavily on global trade. Given these fundamental similarities, Lee advised that New Zealand, like Singapore, should take advantage of the growth of Asia by utilizing their growing Asian migrant communities as a necessary bridge to economic opportunity.
He stated, "I have noticed many changes in New Zealand since I first came here in April 1965. New Zealand has become more diverse and more interesting. In particular, I see a growing Chinese community of Malaysians, Singaporeans, and Hong Kongers. You also have Vietnamese. They can provide you with useful links to their former countries. As you absorb more business and other immigrants from East Asia, you will more easily plug into these high-growth economies."
New Zealand today is still searching for its place in the modern economy. The real question is whether they'll adapt before the next generation decides the grass really is greener on the other side.
There are aspects of Lee Kuan Yew that all of us would immensely admire. He turned a third-world country into a first-world country with a higher per capita standard of living than we enjoy in this country. And then he finished the discussion by saying, "And you know what? There are still two big fat countries in our region." Which was a challenge that I think he was making to Australia and to New Zealand about where are you in terms of social and economic progress? We've come from nowhere to be an icon for many throughout the world.