Innovation and prosperity

I’ve been wondering about bullocks and wetas

On the previous page we looked at the importance of per capita GDP and its solid connection with innovation and prosperity.

In the early days of New Zealand’s European settlement, the bullock cart had a major role in developing our economy. It was the same in Europe until a little more than 1000 years ago. The ox and the plough made it possible to grow far more food than was possible using a digging stick.

The bullock (aka the ox) is slow and plodding but he’s also tough and durable, so he was just the ticket for taming virgin land. He’s the bulldozer to the draft horse’s tractor. Appropriately, the word bulldozer comes from a “dose” of bull. Like New Zealand’s prosperity, the poor old bullock was rendered redundant by technology.

Replace the ox with a horse and you double the amount of land you can till, but there’s a small problem for the horse. The traditional ox harness will strangle him.

Over a millennium ago, the farmers of Europe got around this problem when they adapted a brilliant idea from the Arabs, who used something similar to harness their camels. We call it the horse collar and it’s one of thousands of technical innovations that have allowed teeming humanity to multiply to 1000-fold in 10,000 years.

Adoption of the horse and its collar quickly doubled food production in Europe, better nutrition enabled more babies to survive and the population also doubled. At about the same time, the Europeans also nicked the idea of the horseshoe. This new innovation allowed the horse to work in all weathers and in more difficult terrain; that, in turn, resulted in yet more production, more forest destruction, and even more babies surviving long enough to reproduce.

Our journey to becoming a blight upon the face of the Earth was well under way.

The horseshoe had another consequence; it allowed people to travel longer distances. They could ride their draft animals to work and could therefore live further away from the workplace. So the burgeoning population became concentrated into larger settlements; villages grew and towns developed. There was more time for leisure and more non-agricultural jobs were created in services, the arts and bureaucracy. We were on the road to suburbia and megacities.

Those two clever but simple innovations enabled the centre of European civilization to move north to where there was more rain in summer. That in turn allowed an extra crop to be planted each year and the addition of nutritious and—more importantly—nitrogen-fixing legumes to the farmers’ crops which hitherto were dominated by grains.

Technology, along with its twin, innovation, was the key.

Back to the future

Fast-forward 1000 years. In New Zealand the rough country was tamed, roads were built,and the poor old bullock was displaced by the horse. Farming took off. Then in the 1880s we had a stroke of genius which enabled exponential agricultural growth and serious wealth creation.

In Dr Paul Callaghan’s presentation “Beyond the farm and the theme park” he shows a picture of the ship that you see below and he asks the audience if they know its significance. If there are oldies like me in the audience someone is sure to know. It’s the SS Dunedin. In 1882 she sailed from Port Chalmers for England with the first ever cargo of refrigerated mutton and lamb. The Times of London wrote:

“Today we have to record such a triumph over physical difficulties, as would have been incredible, even unimaginable, a very few days ago…”.

A world transformed

That wasn’t hyperbole; it was a pretty big deal. The voyage made a profit of £4700 and New Zealand was on the way to unprecedented prosperity. Farmers flourished, they built impressive weatherboard mansions and the great sheep stations came into being. The trickle-down effect worked very well and New Zealanders by 1900 had the highest income in the world.

The New Zealand shipping company was the biggest shipping line in the world and it was totally New Zealand owned.

It was all due to technology and innovation. Sadly, it’s been downhill ever since.

Unfortunately for our prosperity the world has changed. Economics is based on scarcity and most food commodities have become steadily less scarce. Advances in technology around the world have led to more people being able to grow their own for less and to a slow but steady decline in commodity prices. We have temporary respites when shortages drive up prices but the long-term trend is ever downward. So we can no longer fill ships with chilled mutton and laugh all the way to the bank. In order to maintain the prosperity we had in the first half of the 20th century we need more innovations on the scale of the SS Dunedin and we need them continually.

It’s not happening. At least, not at a sufficient rate to maintain our prosperity relative to the rest of the world.

Our political leaders don’t get it

In Dr Callahan’s talks there are always people in the audience who can identify the Dunedin. When he asked the same question of the members of a Parliamentary science and education select committee, none of them knew.

And that is the root of the problem. These people don’t see the big picture. They don’t understand Economics 101. They don’t have a broad enough general knowledge.

In order to regain our prosperity we need technology. We need much more research and development funded by both industry and government. But our politicians don’t understand or they are too caught up in the present and in winning the next election to give a damn.

We will never catch up with Australia by growing agriculture and tourism. This country does not have the capacity to grow those two sectors—which are our major earners—sufficiently to close the gap. I’ll explain why in the next installment coming soon.

The enterprises which will make us rich again are the likes of Weta Workshops and Tait Electronics. But we need 100 of them, or we need a couple of Nokias and Samsungs. The gap is just too big and the kind of people who will make it happen are migrating to Australia at the rate of 100 a day.