A wellbeing economy is the only option
I recently attended a conference organised by WEALL (Wellbeing Economy Alliance) Aotearoa. WEALL defines 'economy' differently from the current neoliberal approach and that is simply 'the way that we produce and provide for one another'. Attending this conference made me even more aware of how far we have drifted away from what the core purpose of what an economy should be.
A common definition of an economy, through a Google search, is: "A system that involves how people produce, trade and use goods and services". Early economies, and certainly those of most indigenous peoples, are essentially about ensuring that the resources and wealth generated within a community are equitably shared to support the wellbeing of that community. When the needs of that community were met, any surplus could then be traded with other communities for things that they were not able to produce.
Prior to colonisation, the Māori economy was primarily based around hapu where land and resources were considered in collective ownership for the good of all. The elderly and children in their community were especially valued and their wellbeing well catered for:
"In pre-European times, business was aimed at providing for the physical, social, and spiritual well-being of whānau, hapū, and iwi groups as well as protecting and building the resource base. Assets and resources were collectively 'owned', with control and strategic decision making vested primarily in rangatira.
"The mana of a rangatira, and associated whānau, hapū, and iwi, was measured by the ability of the group to produce, manage, and profit from resources in a way that ensured the well-being, health, and prosperity of all. If things were going well, the people were well fed, warm, healthy, and productive."
In Europe, capitalism changed the dynamics of how earlier economies functioned, largely by shifting from hunting and gathering to agricultural settlements and market towns. Initially wealth was viewed as a collective concept, but the act of trade saw goods and services become commodified. When settlements grew larger and towns and cities developed, the sense of connected communities became difficult to maintain and goods and services became more specialised. Individuals with special skills, or produced goods that were highly valued, were able to generate personal wealth when payment (whether by barter or money) allowed them to accrue more than others.
Those who held governance roles for settlements had oversight of the welfare of those communities. What may have been the chiefs or elders of a community became the elected councils and central governments we have today. The wellbeing of their communities were at the heart of their purpose.
In the early colonial history of New Zealand the first European settlements established town or borough councils that oversaw the developing settlements. There was a conscious effort to cater for the future wellbeing of a town through the establishment of schools, hospitals and other civic services like museums and libraries. At great cost, communities invested in building grand civic theatres, rail networks and hospitals that served communities well, many continuing to provide service to the present day.
Invercargill Civic Theatre built in 1906 when the city's population was around 12,000
Up until the 1980s, community wellbeing remained priorities for central and local governments. The provision of schools, hospitals, public transport, communication systems and energy supply existed for the public good and and were considered core services that were paid for through taxation and rates. No public service was intended to produce a profit or dividend other than what was necessary to maintain or grow the service.
The postal service was intended to be an equitable one where it was accepted that it would cost more to provide the service to rural communities and this would be accepted as part of the total budget. Polytechnics and Community Colleges focussed on evening classes originally and provided a mix of both vocational and technical training with non vocational education too. It was based on the idea of life-long learning and enhancing the wellbeing of the whole community. It was just as important to provide learning opportunities for retired people as it was for those at the beginning of their working career. In community colleges the arts were catered for as well as the trades and technical training.
To pay for government services everyone was expected to pay according to their means for the benefit of all. The top tax rate in the early 1970s was 74.25% almost double of what those earning over $180,000 currently pay (39%). Half a century ago New Zealand was often referred to as the Scandinavia of the South because it aligned closely to the Nordic social welfare model that involved high taxation but a corresponding high level of public services.
Interestingly it has been the 1st and 4th Labour Governments that have been responsible for the most radical economic and social changes in New Zealand's history. The 1st Labour Government implemented comprehensive social investments that dramatically improved the wellbeing of its citizens after the post war recession. Even now almost half of our current state housing stock was built by the Michael Joseph Savage government. Forty years later the 4th Labour Government introduced neoliberal economic management that began the shift away from a community wellbeing focus to one of the privatisation of social services, deregulation, user pays, lower taxes and reduced government spending. Efficiencies were achieved through centralising services which reduced the need to employ lots of staff and maintaining regional centres.
Neoliberalism has infiltrated all governments' economic management globally, including nordic countries over the last few decades. Sweden has almost abandoned Nordic model of Democratic Socialism entirely and has adopted neoliberalism instead, causing ongoing social unrest. The recent growth of radical right populism, (largely developed from a growing concern of increasing numbers of migrant and refugee populations in Europe and the US) has seen right of centre parties embrace this for political advantage. The Atlas Network supports right wing parties and governments through over 500 think tanks around the world and it receives a good deal of its funding from the Koch family whose wealth has been generated largely by the fossil fuel industry. In New Zealand the Taxpayers Union and the New Zealand Initiative think tank are both partners. The influence of the Atlas philosophy is obvious in the policies of both the National and Act Party as they reflect the Atlas neoliberal vision:
"The Atlas Network vision is of a free, prosperous, and peaceful world where the principles of individual liberty, property rights, limited government, and free markets are secured by the rule of law."
This vision is the antithesis of a wellbeing economy. The vision above needs to be translated to explain what each principle really represents:
Individual liberty, is the ability of each individual to pursue their own interests with minimal responsibility to others, basically individual rights before community wellbeing. This principle is especially popular with those who objected to the COVID mandates that put community health before individual freedoms. Minimising tax also supports individual liberty (tax is referred to as theft by libertarians) and allows people greater freedom regarding how their money is to be spent in their own interests rather than the common good. This leads to the privatisation of many social services and those with the most money can access the most services. The US health system is probably the best example of what happens in a privatised system, it is probably the most expensive and inequitable health system in the developed world and has been ranked last this year in comparison to other countries regarding its performance.
Property rights, Anyone who owns land or resources should be able to use or exploit these with limited regulation. The concepts of guardianship or kaitiatitanga can be considered but not regulated. The farmer activist group Groundswell have the protection of property rights as a key priority and strongly oppose restrictions to their farming operations because of climate change, water quality regulations or the possible influence of mana whenua resource rights.
Property rights, Anyone who owns land or resources should be able to use or exploit these with limited regulation. The concepts of guardianship or kaitiatitanga can be considered but not regulated. The farmer activist group Groundswell have the protection of property rights as a key priority and strongly oppose restrictions to their farming operations because of climate change, water quality regulations or the possible influence of mana whenua resource rights.
Limited government, relates to minimising the ability of local and central government to regulate or legislate limitations around what businesses and individual people can do. This will then reduce environmental protections, climate change mitigation, employment law, health and safety regulations. Two examples of what can result from this approach would be the Pike River Mining disaster and the multi-billion dollar leaky buildings debacle. Reducing the number of inspectors and government checks and balances and leaving businesses to self-regulate can have serious consequences. The ability for the construction industry to self-regulate is again being proposed.
Free markets, are ones that are totally determined by supply and demand with minimal checks and balances. Free markets can be corrupted and manipulated without any regulations and controls and don't necessarily lead to fair markets, monopolies can thrive. In New Zealand we have a number of monopolies or duopolies that dominate markets and can control pricing and supply for their own profit. Our supermarkets and building supplies are dominated by major players who have significant influence in their sectors. Consequently the price of our food and building materials are amongst the most expensive in the developed world. Free trade agreements are also connected to this philosophy and these generally tend to favour the larger economy. The protests against the TPPA were based on real concerns about the potential loss of sovereignty over our land and resources via this agreement. Free markets are not the same as fair markets.
Rule of Law, the rule of law is an essential part of maintaining a civil society but the laws themselves are not necessarily fair or equitable and can be influenced by the ideology of the government of the day. Many of our laws and systems breach human rights. The Atlas Network was very active in ensuring the First Nation's Voice referedum in Australia failed and is also behind David Seymour's Treaty Principles bill. The ideal legal system for Atlas is one law for all that is based on the values of the colonists and large businesses. If Te Tiriti and Te ao Māori were properly recognised in governance all of the Atlas values could be challenged in favour of environmental and community wellbeing.
In essence the Atlas economic philosophy is based around the long debunked 'trickle down' theory that if you look after businesses and the 'wealth creators' in the first instance, everyone will thrive. In actual fact it is the opposite that really works, if you look after the people first, businesses thrive. If everyone's wellbeing is considered first, they generally have a higher disposable income that allows for greater spending, especially in the domestic economy. Low wages and minimal spending power leads to the mass production of cheaply made goods that are low quality and disposable. High quality, locally made products become unviable when competing in a free market global economy. Even our oceans are being impacted by an overproduction of cheap plastic goods.
The most common measure for an economy is GDP . This just measures the value of anything produced that generates income and has nothing to do with how the economy impacts on people or the environment. Neoliberal governments see the best way of increasing GDP is through focussing on growing income and government spending and taxation tends to favour businesses and making a buck in the short term. Anything that isn't regarded as having a direct connection to economic growth is seen as wasteful spending. Minister for Science innovation Judith Collins has slashed funding for all humanities and social science research. Without this research we will be ineffective in ensuring our economic activity produces the best outcomes for all. This cold hearted approach is like deliberately removing humanity from economic management. We are being forced into becoming servants of the economy when it is really supposed to serve us.
Fast-tracking new developments without the constraints of the RMA and Te Tiriti obligations will help enable quick profits and GDP increases. Managing central government like a business is also a right wing approach and 'balancing the books' is a major part of that. It is much easier to balance the books if you spend less (often through keeping to unrealistic, arbitrarily determined budgets).
Bill English was celebrated as a good economic manager through his ability to produce balanced budgets and government surpluses. His $1.8 billion 2015/16 surplus was generated by underspending on services and capital assets like the $1.5 billion of deferred maintenance on state houses. This short-term approach just passes on the costs to the following government or future generations.
Free markets, are ones that are totally determined by supply and demand with minimal checks and balances. Free markets can be corrupted and manipulated without any regulations and controls and don't necessarily lead to fair markets, monopolies can thrive. In New Zealand we have a number of monopolies or duopolies that dominate markets and can control pricing and supply for their own profit. Our supermarkets and building supplies are dominated by major players who have significant influence in their sectors. Consequently the price of our food and building materials are amongst the most expensive in the developed world. Free trade agreements are also connected to this philosophy and these generally tend to favour the larger economy. The protests against the TPPA were based on real concerns about the potential loss of sovereignty over our land and resources via this agreement. Free markets are not the same as fair markets.
Rule of Law, the rule of law is an essential part of maintaining a civil society but the laws themselves are not necessarily fair or equitable and can be influenced by the ideology of the government of the day. Many of our laws and systems breach human rights. The Atlas Network was very active in ensuring the First Nation's Voice referedum in Australia failed and is also behind David Seymour's Treaty Principles bill. The ideal legal system for Atlas is one law for all that is based on the values of the colonists and large businesses. If Te Tiriti and Te ao Māori were properly recognised in governance all of the Atlas values could be challenged in favour of environmental and community wellbeing.
In essence the Atlas economic philosophy is based around the long debunked 'trickle down' theory that if you look after businesses and the 'wealth creators' in the first instance, everyone will thrive. In actual fact it is the opposite that really works, if you look after the people first, businesses thrive. If everyone's wellbeing is considered first, they generally have a higher disposable income that allows for greater spending, especially in the domestic economy. Low wages and minimal spending power leads to the mass production of cheaply made goods that are low quality and disposable. High quality, locally made products become unviable when competing in a free market global economy. Even our oceans are being impacted by an overproduction of cheap plastic goods.
The most common measure for an economy is GDP . This just measures the value of anything produced that generates income and has nothing to do with how the economy impacts on people or the environment. Neoliberal governments see the best way of increasing GDP is through focussing on growing income and government spending and taxation tends to favour businesses and making a buck in the short term. Anything that isn't regarded as having a direct connection to economic growth is seen as wasteful spending. Minister for Science innovation Judith Collins has slashed funding for all humanities and social science research. Without this research we will be ineffective in ensuring our economic activity produces the best outcomes for all. This cold hearted approach is like deliberately removing humanity from economic management. We are being forced into becoming servants of the economy when it is really supposed to serve us.
Fast-tracking new developments without the constraints of the RMA and Te Tiriti obligations will help enable quick profits and GDP increases. Managing central government like a business is also a right wing approach and 'balancing the books' is a major part of that. It is much easier to balance the books if you spend less (often through keeping to unrealistic, arbitrarily determined budgets).
Bill English was celebrated as a good economic manager through his ability to produce balanced budgets and government surpluses. His $1.8 billion 2015/16 surplus was generated by underspending on services and capital assets like the $1.5 billion of deferred maintenance on state houses. This short-term approach just passes on the costs to the following government or future generations.
Successive New Zealand governments' focus on GDP as an indicator of a strong economy has perverse outcomes. Property is now New Zealand's largest industry and through $50 billion of activity last year, makes up 15% of GDP. It is also one of our most unregulated and unproductive industries that adds little to our collective wellbeing. We have no effective capital gains tax so few of the profits get fed back to support many of the public services the industry relies on and landlords have recently been provided with 100% tax relief (worth $2.9 billion). This has allowed a small percentage of New Zealanders become extremely wealthy and made our housing the most expensive in the world for ordinary New Zealanders. Owning or renting a home has pushed many households into extreme levels of debt by international standards,
Government Debt as a percentage of GDP is currently 42% and this is actually not bad compared to most other developed nations. Standard and Poors gives New Zealand a long term local currency rating of AAA and AA+ for foreign currency. New Zealand's credit rating is one of the best in the world, we can borrow far more with little impact to our rating. The US, UK, Japan and France all have lower credit ratings than us. It is our private debt where we should have huge concerns.
New Zealand household debt as a percentage of gross income is currently 165%. When considering our collective household debt against our GDP, and comparing us with other countries, we come out very badly. Out of 85 countries we ranked 80th in 2022 for the level of our debt. Much of this is due to borrowing for our expensive housing.
If we view our current economy through the lens of the WEALL definition, 'the way we produce and provide for each other' and assessing our governments ability to ensure equitable sharing of our wealth and resources, how are we doing with regard to the basics?
FOOD: We have a poorly regulated duopoly and very expensive food. For a country that is a major food exporter it is shameful that almost 20% of our children live in households that have severe to moderate food insecurity. Māori children are 1.8 times more likely than non Māori to suffer from food insecurity. The Public Health Advisory Committee spent a year researching the ability of our food system to support public health and determined that it wasn't functioning well. It's report Rebalancing Our Food System contained 13 recommendations and when presented to the Minister of Health, he stated it wasn't a priority for this government.
HOUSING: The 2023 census was able to establish that 112,500 people were suffering from severe housing deprivation. Given that around 355,000 people weren't included in the census and many of those may have been housing deprived, the number could be much greater. The March '24 Housing register recorded 25,500 households in desperate need of a home. New Zealand has the most expensive housing in the world and the current government has decided to scale back Kāinga Ora's building programme. Despite the government celebrating fewer numbers in transitional housing, rough sleeping numbers are growing around the country.
HEALTH: Even the Health Minister has admitted that our health system is in crisis. We have long wait times for life saving treatments, staff shortages, inequitable services for different communities, failing infrastructure (hospital buildings and equipment) and funding shortfalls. Rather than lift budgets to meet need, this government is attempting to further cut costs and staffing and reduce commitments to new hospital builds.
CLIMATE CHANGE: This is the greatest existential threat of our time and all countries should be doing as much as possible to mitigate the impacts that they are responsible for. New Zealand may have a small population in a global sense but our emissions per capita place us amongst the worst 10% of countries in the world. Our current government has reversed many climate change initiatives put in place by the previous government and has decided to reopen off shore oil and gas exploration. This decision caused us to be awarded a Fossil of the Day Award at COP 28.
Jack Tame's Q & A interview with Prime Minister Chris Luxon revealed how the polices being implemented by his government are failing many New Zealanders and most especially our poorest. Luxon was not able to say that our poorest are better off in relation to others. Economic forecasts were poor and he could not produce evidence otherwise. Luxon's willingness to allow the Treaty Principles Bill to be to pass first reading has been the most damaging hit to Crown/Māori relations in recent history and one of the most divisive ever. The fact it had not been a bottom line issue for Act exposed the weakness of his negotiating skills and his personal disdain for Māori.
This government's approach to economic management uses the same simplistic, tired playbook used by previous National led governments and each time it has not created the prosperity claimed. The rich get richer and poor get poorer and important infrastructure (other than their roads of national significance), gets neglected. The promised tax cuts were nonsensical, and few rational economists supported them. The government had to borrow to pay for them and those in most need of financial support got the least and the already wealthy got many times more. Most would have preferred that the almost $15 billion worth of tax relief had been invested in our health system instead.
This government's approach to economic management uses the same simplistic, tired playbook used by previous National led governments and each time it has not created the prosperity claimed. The rich get richer and poor get poorer and important infrastructure (other than their roads of national significance), gets neglected. The promised tax cuts were nonsensical, and few rational economists supported them. The government had to borrow to pay for them and those in most need of financial support got the least and the already wealthy got many times more. Most would have preferred that the almost $15 billion worth of tax relief had been invested in our health system instead.
In conclusion I want to offer an alternative view of what should underpin a strong and sustainable economy that will achieve the wellbeing of all. I have largely adopted what Russel Norman articulated many years ago:
- Building and maintaining capital assets for public good that were seen as important in our earlier history, involved considerable investment, but had long-term value. This refers to our social housing stocks, transport infrastructure (this includes public transport, our railways and ferries), our energy supply, communication systems, Education and health systems (and supporting infrastructure) and community infrastructure like waste management and water supply to name a few.
- Protect and enhance our natural capital. These are our natural landscapes and biodiversity and includes our soils and water systems that our economy depends upon. Extractive practices only benefit short term gain and regenerative approaches ensure that future generations can benefit through responsible guardianship.
- Support and care for our social capital. Our economy is dependent on those who can contribute and their ability to do so is enhanced by ensuring all of us are well housed, well nourished with accessible food, having a health system that is responsive and allows us to be as physically capable as we can be and an education system that supports all of us all to realise our full potential. All work should be valued, whether it be in the voluntary sector, in essential caring roles or supporting the disabled. Properly investing in supporting those who are struggling costs less than picking up the pieces at the bottom of the cliff. Prisons are an expensive way of managing poor mental health and the impacts of child abuse. Properly investing in universal basic services can save money over time and provides a good return on that investment.
Of course the real nuts and bolts of managing a wellbeing economy will involve systemic change and a different approach to governance. Max Rashbrooke's book Government for the Public Good (2018) pragmatically explains how things can be done. New Zealand economist Girol Karacaoglu has given a lot of thought into how we can create government policy for intergenerational wellbeing in his 2021 book aptly titled Love You. Endless growth is unsustainable on a finite planet and Tim Jackson's visionary book Prosperity Without Growth (2009) is still worth a read. With regards to economic theory Kate Raworth's Doughnut Economics (2017) makes perfect sense as an alternative to our current unsustainable mess.
I was also inspired many years ago by Jeanette Fitzsimons' 2013 lecture focussing on the economy of enough. With emissions from private jets increasing by almost 50% over the past few years and when those who use those jets responsible for 500 times more carbon dioxide annually than those using commercial flights, some people need to take Jeanette's advice:
Have a willingness to say "I have enough now, the rest is for others, or for nature."
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