A values-led economy is the only humane way forward. It’s not about people versus profit. And it goes way beyond GDP.
One of the sacred tenets of neoliberal capitalism is the need for deregulation in service of short-term growth. But what if that’s based on a false premise?
New Zealand’s public sector is currently haemorrhaging thousands of jobs to ‘rein in public spending’. This is causing ripple impacts throughout the economy. The analogy used is that of household economics. Borrowed too much? You have to slow down and pay back, especially if your income isn’t rising.
It kind of makes sense. But a growing number of experts are calling that whole concept into question. They’re arguing that bold, carefully targeted and costed investment is not only possible, it’s mandatory to face the challenges before us.
Not least among them is Ganesh Nana, economist and former chair of the Productivity Commission. He took up the theme in a recent conversation with SBN Network Lead Vincent Heeringa at an SBN event. He took aim at the treatment of the ‘economy’ as some kind of living entity. That its ‘invisible hand’ is somehow able to drive decision making and problem solving:
“There’s this sort of sense of the economy needing to be nurtured at the expense of people and planet. At the heart of that messaging or narrative is a fundamental misunderstanding of what the economy is. The economy shouldn't be portrayed as a living being. It’s not a living being. It doesn't bleed. It doesn't have any ethics. It doesn't have any morals. It doesn’t have any objectives. The economy is an artificial construct that people have put together. It’s up to us to provide the rules and provide the morals and the ethics for that economy to function.”
And the national economy is not like a household budget in some pretty crucial ways.
“When the government is in debt, it’s actually borrowing from you and me,” he explains. “If it’s borrowing from me, it means I’ve got a financial asset, and the government has got a debt. Those two balance out. The nation as a whole is not any worse or better off from a financial perspective.
“The problem we should be worried about is when you and me and the government borrow from overseas. That does have an impact on the national debt. It’s that national, some people call it the external, debt of the nation that we should be more worried about.”
This shifts the emphasis. Not this singular focus on cutting taxes. Instead, using taxes to help drive the sustainable innovations that will secure export dollars and our way of life.
This warning formed the basis of a recent open letter to the government by a host of the nation’s economists. This included Ganesh, alongside experts from Auckland, AUT, Victoria and Massey Universities and more. In it they claim that: “reduced current and projected spending is needlessly exacerbating the current recession”.
Signatory Rob Campbell is chancellor of AUT University. He recently said: “I’m not too interested in a flash new motorway or bridge making my trips faster over increasingly polluted land and water. I would rather have better social housing for those without housing than better returns for those with lots of houses. But whatever your own preferences your chances of delivery are made worse by the current fiscal stance.”
This approach was at the heart of the Living Planet Framework, which now seems to be gathering dust and cobwebs at the back of a slimmed down Treasury, like so much other good work across the ministries.
These concerns are also driving the Wellbeing Economy Alliance, globally and here in Aotearoa New Zealand. It’s on a mission to redesign the economy around the wellbeing of our people and te taiao. Which is really what we too are trying to do at SBN.
Founder and CEO Rachel Brown says: “We believe we are owned by future generations. It makes our work have a long-term view. We get our inspiration from nature. We believe there is a better and fairer way using circular, regenerative framing and learning from and being a good partner to Māori.”
“The economy should work for people and planet - not just for profits in the moment. This requires a shift. Away from quick returns. Towards long-term vision, grounded in a commitment to sustainability, equity and shared prosperity.”
These are the economics we need. And the experts are saying it is time for a reset.
As Ganesh said: “There behind every number, behind every data, behind every chart or graph, there's a set of people, there's a community with a story that needs to be told.”
We agree.