When I was living in Europe, there was the very real prospect of Jeremy Corbyn, the Labour leader, coming to power in the UK.
A London partner at Goldman Sachs made the memorable remark that, under Corbyn, the UK would be ‘Cuba without the sun’.
Cuba is a Marxist-Leninist socialist republic, considered by many, an authoritarian regime. It is known for its tropical climate and special aromatic cigars.
But that is where the delights may end.
Living a purposeful life in Cuba. Source: BIZ EFDE YOKUZ
This centrally-planned, controlled economy doesn’t seem to work too well.
A doctor in Cuba earns around US $30 a month. But a bottle of water costs $2.
If you’re a farmer and want to slaughter a cow, well that’s not so straightforward. Since the cow technically belongs to the state, you would actually need their permission.
About 80% of people work in the public sector. The private sector is very small. There’s a significant black market.
But this island has a fascinating history and culture. It’s beautiful. So outsiders still want to visit.
To make money in Cuba, one of the most profitable things you can do is rent out a room in your home to a foreigner.
For a single night, you could make what a doctor does in a month. So don’t be surprised if you visit Cuba and your hotelier or taxi driver is a moonlighting GP.
Apart from this, opportunities are rare in Cuba. Most people rely on rations from the government to make ends meet.
The government’s rule and beneficence are where life starts and ends.
Well, if there’s one thing that I can’t stand — that doesn’t work for me — are places where opportunity is curtailed. It’s depressing.
When I lived in Europe, I found there were increasing walls.
- You try to build a business in the financial sector. Regulations are excessive. Necessary approvals to launch your service can take 12 months.
- Property transactions are cumbersome. In Jersey, property use is controlled by the government under a licensing system. Across Britain, you can spend thousands of pounds on legal fees without your house actually selling.
- Small business is cumbersome with barrier after barrier. As a result, high streets tend to be dominated by the same old big names, terrible coffee, and Stalinist service.
It already seemed a bit Cuban, even without Corbyn.
Sure, deregulation and lower taxes could unleash the UK economy. But that didn’t seem to be coming anytime soon.
So, we moved back to New Zealand a few years ago. The land of the free. Well, until 2020. The same level of bleak control Britain has been wrestling with could now be here.
- Professional politicians and lawyers seem to drive the country. They’ve grown the legislative framework and made the lives of ordinary people more complex. And expensive.
- Small business and the vital rural sector have been hit with a raft of compliance legislation.
- More and more people now exist at the mercy of the state as they wait for handouts, subsidies, licences, approvals, or medical operations in the distant future.
- Some enjoy well-paid government jobs in a heavy layer of management that appears unproductive, crowds out private provision, or fails to address shortages at the coalface.
- A recent road trip through Taranaki, down to Wellington, revealed the roads are dangerously potholed.
- Meanwhile, Auckland motorways are so congested, often they don’t function.
- The health system seems ever near breaking point.
Are we becoming more Cuban? More reliant on a feckless state, led by socialists without much business experience. And, as a result, are opportunities drying up? So much so that surveys suggest the young and unshackled are seeking to leave for greener pastures as soon as they can.
A nation focused on small businesspeople, enterprise, and farmers is in danger of becoming one focused on public servants, compliance, and lawyers.
In all my years following the global markets, I have not seen a publicly listed company of lawyers or regulators. They tend not to be the most productive market participants.
Having spent time living overseas on a permanent basis, I love New Zealand. I like the space. The small business owners. The farmers. The doers and the makers. I just want their full freedom back.
Fortunately, as investors we do not have to put all our eggs in one basket. The world is our oyster. So we are actively deploying funds for clients in other developed markets to achieve income and growth from potentially brighter spots. The opportunities right now are strong.
Vistafolio Managed Accounts is our wholesale solution that enables this.
To request a free consultation and to review your eligibility, please apply today.
Regards,
Simon Angelo
Editor, Wealth Morning
(This article is general in nature and should not be construed as any financial or investment advice. To obtain guidance for your specific situation, please seek independent financial advice.)