June 27th, 2011
01:54 PM ET

Why Samoa will lose a day

Come with me now on a long journey to a far off island nation about halfway between Hawaii and New Zealand - Samoa. Its lush volcanic valleys make it a mostly agricultural nation. It has no military whatsoever. It shouldn't be confused with its neighbor, American Samoa.

If you attempted to visit Samoa, do not plan a celebration there on December 30th. Why? Because that day will simply not exist there. The calendar will jump from the 29th of December to the 31st. "What in the World?", right?

Why?

It's actually a smart economic decision.

Samoa is just 20 miles away from the International Dateline.

As the name suggests, this is an imaginary longitude that marks a change in date when we fly or sail or steam over it. That line was created more than a century ago when it was decided Samoa would be 11 hours behind Greenwich Mean Time outside of London and three hours behind Pacific Time in Los Angeles.

The theory went that being on a similar time zone to the Americas would benefit trade and commerce for Samoa.  But the times, quite literally, are changing. Samoa now does most of its business with its neighbors.

But Sydney, in Australia, is 10 hours ahead of London, and - bear with me on the math here - that means Samoa has been conducting most of its trade with a country that is 21 hours ahead of it.

So when it's Friday morning at a Samoan factory, Australian clients are already at the beach on a sunny Saturday. And when the Aussies go back to work on Monday, the Samoans are still at Sunday church - or whatever Samoans do on Sundays.

Come December 29th, that's all going to change. Samoa will leap forward a day, and it will be just three hours ahead of Sydney.

Samoans already made one historic change to align itself with Australia. In 2009, it switched from driving on the right side of the road, as we do, to the left side of the road. Now Samoans can import cheaper cars from next door.

On the one hand, Samoa's Antipodean shift is a story about how economics dictates policy, but it's also a larger narrative about the quiet success of Australia.

Australia's growth rate has averaged nearly four percent for the last two decades, higher than almost every other rich country. It may be on the bottom of the map, but it's on top of almost every livability index. The unemployment rate is low; the deficit is almost negligible; it has strong education, universal health care...one could go on.

So how did it get there?

Self-deprecating Aussies may put it down to good luck. They had good weather, abundant natural resources and a billion Chinese hungry to mine Australia's metals and minerals.

But that's not the whole story.

Australia's real economic rise dates back to the 1980s and a series of forward-thinking reforms.

The government floated its dollar and made the central bank independent.  It maintained a budget surplus and kept inflation in check.  State-owned firms were privatized and industries deregulated.

When the global financial crisis hit in 2008, Australia's banks benefited from a more conservative, regulated approach. They were not overleveraged, so they weathered the storm. Meanwhile, robust trade with China soaked up a potential drop in Australian consumer demand.

Australia has been smart on another issue that plagues American lawmakers these days - immigration.

It has gone from 98 percent Anglo-Celtic population after the Second World War to having a quarter of its current population born abroad. Asians make up 10 percent of the population. Much of the real growth in Australia's GDP can be attributed to immigration and population growth.

There's much speculation about a lost decade for the United States economy.

All Samoa had to do to rev up its economy is lose a day.

I wish we had that option.


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