Recently, New Zealand Prime Minister Jacinda Ardern put out a national budget which prioritizes the “well-being” of citizens, rather than focussing on traditional bottom-line measures like productivity and economic growth. It has been praised by progressive economists as a more humanistic reimagining of a functioning economy, rather than traditional emphasis on economic growth, GNP, and dorductivity meassures.
At the London Economic, Jack Peat wrote in praise of PM Ardern. He had previously written about ditching economic growth as measuring a healthy economy and that a hyperfixation on robust growth as an "unnecessary evil."
So, does an increase in output mean an increase in shared wealth? In some ways it does. Expanding businesses create jobs, and growth in some aspects leads to progression which can build a channel for equitable distribution. However, in many aspects increased output favours the minority.
A classic example is the American Pie. According to the Centre for Budget and Policy Priorities the top one per cent of Americans control 43 per cent of the financial wealth, while the bottom 80 per cent control only seven per cent of the wealth. For a country home to multi-billionaires such as Bill Gates ($66 billion, or $66,000,000,000), Warren Buffet ($46 billion) and Larry Ellison ($41 billion), it still has an unusually high amount of people living in poverty (17.3 per cent, compared to the OECD average of 11.3 per cent). Huge chunks of the American Pie are distributed to a minority slice of society, with the poorest left grappling for the crumbs.
But high production doesn't really favour anyone, wealthy or poor. Economic growth means more houses being built on green lands. It means more CO2, more factories, more energy consumption, inflation etc… The desirability of production over distribution really evades me, but we seem more chained to it today than we ever have been.
The editorial praises Ardern's efforts and focus on shared care.
As part of the framework Ardern has set aside more than $200 million to bolster services for victims of domestic and sexual violence and included a promise to provide housing for the homeless population.
New guidance on policy suggests all new spending must advance one of five government priorities: improving mental health, reducing child poverty, addressing the inequalities faced by indigenous Maori and Pacific islands people, thriving in a digital age, and transitioning to a low-emission, sustainable economy.
Take a look at the biggest problems faced world-wide and you would be hard pushed to find examples that are more grave than the ones set out in Ardern’s provisional proposals. Rising inequality, a mental health crisis and climate change are all significant threats, but as long as other major economies prioritise economic growth over wellbeing New Zealand may become a lone wolf trapped in an increasingly hungry bear pit.