NZ's Next Top Model....and the winner is Covergirl

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It is easy to get caught up in these reality TV shows. I tend to watch the talent shows, and lately it is NZ's Next Top Model and Australia's X Factor.

It is easy to forget that these shows are legitimate competitions. The reality however is that they are 'managed affairs', in as much as the entrants are selected on the basis of their marketability. It is not about finding the best model, i.e. The one who has the best skills for modelling, or the 'X factor' in terms of best commercial performance. Its about finding the person who best engenders the commercial interests of the production house.

With respect to NZ's Top Model, it is a very good production. But it has to be remembered that these shows are financed by sponsors, and in this case, Covergirl is going to be looking for magazine sales, or engendering makeup sales. How does it do that? Well....a good way would be to create the pretense that the 'competition' is a real competition. Its not. The production house, which is sympathetic to the values of the sponsor, is going to ensure that its interests are primary. Covergirl is looking for new sales, new markets. The best market is ugly girls with low self-esteem who want to think for a moment that they are beautiful in their looks. You could argue that being a Best Top Model is not about looks, but the reality is that such magazines are trying to subjectivise beauty such that anyone can aspire to it. Why? Because if beauty is subjective, the market is open to anyone...which makes everyone vulnerable, and in need of external validation.

By promoting Danielle, an awkward, self-doubting Hobo to the top ranks of the show, she becomes a 'cover girl' for a new market which never thought they had a chance. But also it has the slip-side of making pretentious 'stunners' feel a little vulnerable.

The reason why I think this show is a commercial stunt is:

1. Sponsors need to be appeased - their influence is greatest in the early stages of a show because basically they underwrite its production. This gives sponsors a lot of power.

2. Producers are doing their own casting - so they can pick winners from the start

3. Producers can influence the outcomes of the contestants merely with a few 'judgemental' words, knowing that they are insecure, vulnerable 16-19yo girls with elevated pretensions of being a 'top model'. For example on the last show, Colin says to some of the girls that 'the other girls did not think you would be in the top 3'. It sounds a bit crabby given that she was the most likely to win against Danielle ('the hobo') and Elsa.

Of course the show highlights the importance of presentation, beauty in the physical form, and it also highlights some of the physiological and psychological factors of human nature. These shows are interesting to watch...a display of culture, but one cannot take the results too literally. It is amazing what a bit of make-up and theatrical improvisation can do for a person...but then I guess that is the role of the show....to sell make up and home beauty. Our goal is to sell books...if you are reading..my job is done.

You can see the last episode of NZ's Next Top Model here for the next 14 days only.

The same factors can be seen in X Factor. The commercial variables are the same. There is no particular sponsor advanced, however there is a tendency to have a few 'unknowns' as well as a few proven artists like Altien Childs to keep viewers watching. The trick is to keep us entertained, and both programs do a good job of it, but it helps to retain a sense of reality. Let's now become a victim of crass commercialism.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

NZ Telecommunications - infrastructure you can depend on

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Thinking about immigrating to NZ....think twice. The country has the worst telecommunications infrastructure. Internet connections are slow, expensive, and come with low download limits. Some of you are accustomed to no limits on download. There are several problems:

1. Lack of competition on fibre leaving the country - that will change in the next few years

2. Local nodes - all owned by Telecom NZ - which I guess in a static growth market is holding out for new technology.

The result is that people are having to wait up to 2 years for a broadband landline connection, and are otherwise restricted to 4Gb per month download limits for a mobile broadband service, which is severely restrictive in where you can access it.

Matters are better and worse in rural areas. You will have to pay $49/mth for a telephone rental service, even if you are only using data. You will have more chance of getting a broadband connection though, because fewer people are using them.

If this is enough for you to look elsewhere, and you are looking for a similar place on Earth, you might want to consider Tasmania (Australia). It has the fastest broadband in Australia, with speeds of 100Mbps for the whole island, though it is a small island....so much like one island of NZ, but at least it is stitched on to the mainland, and Melbourne for access to a major city and airport. Don't expect a subsea tunnel however, its a 120km wide trip.

In defence of NZ...I have used both the Telecom and Vodafone services and they are both similarly priced and reliable. Telecom at our purchase point was better because we did not have to commit to a contract. I think that is why Vodafone started losing market share.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

What is wrong with foreign investment

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Infometrics senior economist John Carran has come out in support of liberalised foreign investment rules. Whilst I support liberal foreign investment rules, his arguments need to be considered in context, though I support the conclusion of his arguments.

1. It is true that foreign investment restrictions will alter the perceptions of foreigners; however a great many countries have them, so NZ need not worry. Should NZ worry about foreigners owning 'their' land. No, because they are subject to the same rules as you, and those rules are set by government, who is elected by New Zealanders.

2. He is correct in arguing that restrictions on foreigners buying large tracts of NZ will take the premiums out of the NZ property market for premium farm assets. That is of course a problem for Kiwis selling out, but good for Kiwis accumulating farm assets. We have heard that many farmers are having trouble acquiring land because of the high prices. This is because of foreign buyers, as well as a shift from low value farming like sheep grazing to higher value woodchip plantations. If foreigners are sponsoring such efforts than it is a good thing. NZ might like to place contingencies upon property sales. You can only buy a property if you utilise it for ...., or you can only buy if you earn returns greater than the existing property. This is generally not required. People generally buy farms to improve their utilisation...not with the intent of losing money. This might not always be the case if companies are able to 'mine' tax concessions...but that is a failing of 'other government policies', and not foreign investment rules per se.

3. Carran suggests restricting farm sales will raise NZ's cost of capital. I disagree with this statement because farming is just one industry in NZ, and only a portion of the property sector. It would have only a minor impact. Other sectors of the NZ economy will not be affected. It might also be argued that it would cost NZ more if foreigners were able to profit by acquiring NZ properties when the NZ was low....gaining on the currency...potentially at New Zealander's expense. I think this impact is present, but not so significant. As he indicates, the number of foreign sales is not so significant, and one needs to acknowledge the prospect for transfer pricing if Chinese companies are able to export value by using offshore processing facilities. It has to be acknowledged that if the cost of capital in NZ were to go up, that would actually be a positive incentive to save. After all, it was the low interest rates in NZ which blew out the debt. Of course, this would be a problem moving forward because the debt levels are now excessive. There is no reason to think NZ can't attract foreign funding for technology, oil & gas, though of course those sectors have their own issues. Looking at the broader policy mix, NZ has more to worry about with its attitude to mining, particularly the 'sea bed', though my understanding is that that policy only affects nearshore environments.

4. The suggestion that 'sector' restrictions on foreign investment will impact upon the broader ability of NZ business to attract foreign finance is nonsense. If this were true, this would be a problem because it would mean more NZ business ideas would go offshore for development.

The reality is that foreign investment in NZ land is small. In fact, it might be considered a 'lifestyle acquisition' rather than a commercial endeavour. The obstacle is the low returns, with NZ population growth quite stagnant compared to foreign markets. Australia, the USA, Britain make far more sense. The returns on farming are not great. Might some Chinese firms be expecting a turnaround? Maybe, but at 1% foreign land ownership, need anyone be worried. Foreigners own 9% of NZ manufacturing, 61% of the insurance business, most of the banking sector. Is there reason for concern here? In fact, once foreigners are given improved access to foreign land, NZ might rue the day they could sell their farms for so much more. Foreign land has far lower labour costs. Might we rue the day that NZ is competing with African farming costs. We might be glad we sold. Don't we need to trust that NZ farmers are able to make better informed decisions about their million-dollar investments than us...given our huge stake in their future.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

NZ taxing tourism might cause problems

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Is the NZ government pricing NZ out of the market? The NZ government has recently increases the GST tax rate t0 15%. Clearly the NZ government recognises that NZ is not earning enough, so is not therefore in a position to pay for services. Consumption taxes are one way to go to rein in budget deficits....but are they the best way to go. There are reasons to wonder.

1. Tax on spending: We might argue that NZ'ers spend too much....but really the greater issue is that they earn to little, that they cannot sustain those expenses.

2. Tax on tourism: One of the growth markets for NZ has been its tourism industry. Is that inclined to stay true if the government takes the easy steps of hiking consumption taxes, and then offsetting them with tax breaks for the lower income earners.

The problem is that in the context of a stronger NZD, tourists might reflect on NZ beyond the 'pretty pictures' and see that the country offers no job prospects, higher costs of living (because tourists are unfairly burdened relatively) and decide to go elsewhere. It is not even that NZ is 'so expensive', it is that its pretty expensive already to get here, and its at the 'arse end of the world'. We might ask where the government is positioning itself. The NZ is too small to interest most business people. It is increasingly expensive for students any young adults. Its so far away for busy travellers and the NZD is higher than average. So we might ask... Is NZ pricing itself out of the market?

Shouldn't the government be trying to raise the earnings potential of NZ jobs? There are signs that they are doing this. I can see that they are getting rid of disability pensions, and requiring people to show proof of working, or trying to find work. This government is the best government NZ has had in a while...but is it acting quick enough? Is its reforms as comprehensive enough? On some levels they are very good, but on some issues they make a poor case.

1. Binge drinking - too pissed

2. Speed limits - too cautious and non-intellectual

3. Consumption tax - reactionary

4. Regulation- very poor

5. Infrastructure - its building roads when it should be building fibre networks. The population is hardly growing...why build roads? This creates jobs in the wrong areas.

The trend is good...its just the rest of the world is moving as well, and NZ is at the 'arse end' of it. It needs to do it better. We need to recognise that costs are going up everywhere, and there are many ways to travel around a country. The best way to travel around NZ is to go to a car auction and buy a van...sleep in the back of it. Sadly, that route might become illegal given the complaints over 'stranded turds' in picnic and car parking areas around NZ. Not pretty. I guess one of those 'negative externalities' arising from tax or cost changes and new technology.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Kiwibank tells people to buy a home

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The CEO of Kiwibank is encouraging NZ'ers to buy a house if they can afford it. The logic I guess is:

1. The property market is NOT going to fall significantly

2. The opportunity cost of buying vs renting favours buying

3. If you can afford it - you may as well buy

This is not a bad argument, but I would suggest that there are a few factors to consider:

1. Whether you are sure a certain area suits you

2. If you are going to have a job in a year

3. If there is a chance you might be going overseas in future, i.e. Going to Australia for 30% higher wages

The outlook for NZ is not bad, so there are no compelling reasons for a collapse in property prices. There is unlikely to be a significant rise in interest rates because the Chinese are not buying US treasuries in order to make profits; they are doing it to finance investment and US imports. I would however raise a cautionary note. The US and Germany are currently complaining about China's currency management. They argue that China's currency is up to 40% undervalued. The problem for the US is that China is using demand for its exports to finance the US deficit. You might think that the US will be more competitive China raises its currency (yuan). The reality however is that the US does not compete with China so much as Japan, Korea, Taiwan and Germany. The implication of their threatened trade war could have implications for global interest rates....so that is one threat....however it might be a decade before anyone acts on these threats. China is likely to budge a little if matters heat up...though not by much. The Kiwi house buyer might therefore want to keep some buffer in their interest rate outlook, and they ought to pay off their home as quick as possible. Chinese demand for NZ imports will bear some relationship to how much they can export, and their currency competitiveness. Though I would argue this factor might be less significant than Western governments assert because China is very much a processing centre. The raw materials it imports are cheaply converted into exports. So if the currency rises, its raw material purchases get cheaper. In truth, the larger the Chinese market grows, the more competitive it will become, so this will also have a beneficial impact. In truth, the US and Germany are just impatient for the day when China will be able to afford its products.

There is no reason that will change because the Chinese economy is growing faster than the USA. Of course at some point the strategy will make less sense. i.e. When Chinese demand for US 'sophisticated' products is higher than Chinese exports to the USA. At that point, we can expect the US to claw back market share. That will be another 15-20 years off yet.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Paul Henry not to blame - go after TVNZ

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There is a typical over-reaction to the current news of a TV presenter Paul Henry making some pretty controversial statements on his Breakfast TVNZ program in NZ. The host is supposed to be provocative and with respect to this show, political correctness goes out the window. The program really does appeal to the red-necks who hark back to the old days of NZ pride. Those days will not be revisited for probably another 2 decades, however it does auger well for better TV content is such persecution of minorities is not encouraged, and not given a voice.

The question you might ask is - was it his fault? Or does the greater responsibility lie with the host. Was he not employed to be provocative. Previously on his show, the host had disparaged gays, and other minorities. Does this not reflect on a section in the NZ community whom TVNZ is obviously targeting. Only TVNZ knows how lucrative this market is. It must be retaining the program for a reason. mind you - his attitudes need not reflect their racial views. He might simply resonate with viewers because he speaks his mind.

Collectivism is the dominant global value system. Do not expect racial prejudice to disappear as long as that remains a reality. Collectivists have a group identity, whether its NZ or Indian pride, and NZ has a higher proportion of collectivists than NZ, because its ideological base and lower literacy rates support that premise.

The bigger issue is - who is responsible. I actually think it is the TVNZ executives who ought to lose their job. They have committed the greater indiscretion by allowing the show to continue in its current mode. They ought to have reflected on the content, and adopted some standards. Did the program need to be live? It was very careless of them to have enabled this 'shock jock'. I think he was doing as he was paid to do. He ought to be counselled into changing his ways, but ultimately it is TVNZ which ought to be subject to reprimand here, not the TV host. This is not however the focus on media journalists. They chase the bone.

One has to ask what is the problem? Racial prejudice in NZ? What is new? Is it new to India either? Come on...there is no story here. Its no more significant that my neighbour being prejudiced. Ask yourself how many racists are in 'collectivist' India, not withstanding a significant number of individualists there.

I think it is hard to censure every thought you make on TV, on a live program. The response of the govt-owned broadcaster, was more serious because they had the opportunity to reflect on his comments.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Wanganui has a great outlook

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An article in the Wanganui Chronicle cites real estates saying that foreigners are taking a growing interest in NZ property. There are compelling reasons for taking an interest in NZ....though also some negatives. The positives are:

1. Economic reform - there are some efforts to improve the administration of the economy. i.e. some cost cutting. Some streamlining, like reforms to the Building Code.

2. Local government elections - locally this can be an important issue for expanding population, or retaining people. For instance, Wanganui is one city which would benefit from a turnaround in population. It is a full-service town losing people to the major cities and abroad, unless the new govt can create jobs. It has a better chance than most towns. Elections are being held in Oct-2010.

3. Commodity prices - NZ is a major producer of commodities, and thus it is a pretty hard currency in an era when China and India have an insatiable demand for them. This will tend to support the currency...as long as consumption is controlled, or interest rates are raised to curtail a blow-out in spending.

4. Rural areas offer lifestyle values, but also significant improvements in services. The depth of entertainment in Wanganui is restrictive, but there are a great many good cafes, a full range of good restaurants, e.g. Chinese, Korean, Japanese, Indian, Thai, Greek, Turkish, Italian, and of course 'meat and potatoes' NZ cosine.

There are however negatives:

1. Population stagnant: The reality is that in recession a lot of NZ'ers are going to Australia in search of jobs, and increasing integration has limited capacity to create 'manufacturing jobs. NZ does however have the ability to export services to Australia, so few NZ'ers need to move to Australia. There is already a 30% wage differential between the countries, so NZ has a growing competitive advantage. At some point this will prove a strong advantage to NZ.

2. Nothing else comes to mind. There is more..there n

The implications for NZ are clear. At some point it will do very well. We might even see a lot of expatriates return. These rural towns will attract more people. People will find value in the rural acreage as lifestyle blocks and subdivisions; however there is also value in cities like Wanganui. I need only compare the prices in cities like New Plymouth and Stratford to Wanganui. Wanganui is cheap because of depopulation. The time will come when it will start to grow its population. The city has a large 'service catchment', it is well-situated between Auckland and Wellington, it is a weekender from Wellington, it has a lot of resource upside from oil & gas and iron ore, as well as agriculture. It is one of the more appealing towns in NZ. It has an 'undeserved' reputation for gangs. I've lived here 2 years and saw the first person who even resembled a gang member last week.

The town is lovely, the people are friendly, and the beach is ok. The city has the nicest gardens. I kind of wish you don't come because I might have to compete for the use of the park services. It is a windy place, but that makes it 'fresh' for a breezy walk around town. I'm only complaining because I'm from Australia, and I still like it.

Other great value I feel is a place like Port Stephens to Taree in NSW, Australia, and maybe Tasmania if you don't mind being isolated from mainland Australia.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com