[ Interview by Matt Walters ]
[ Illustrations by Joanna Innes ]
A City Issue
Paul Dalziel is Deputy Director of the Agribusiness and Economics Research Unit at Lincoln University, and a professor of Economics since 2002. He has produced nine books on New Zealand economic policy, and more than 10 times that number of referred publications. He’s also a really nice bloke. His work, with Caroline Saunders, on wellbeing economics points to a different approach to the status quo. The Fuller Issue caught up with him in the ether of the interweb to talk more about these heroic ideas.
How has our public understanding and value of welfare changed in the last 77 years?
In many ways there has been a remarkable consistency of views over the generations. There is a strong commitment to ensuring elderly people live in dignity, helped by New Zealand Superannuation. There is a strong commitment to supporting people who can’t be in paid employment because of accident or poor health. There is a strong commitment to health care for young children and universal education to 16. I think that perhaps we don’t value the importance of quality housing as much as we did 77 years ago, and I think we have become less sensitive to child poverty than would have been imaginable even 30 years ago.
Economic policy is much more important than welfare policy for promoting the wellbeing of people.
How do we practically engage with the welfare state?
For most people, the main points of practical engagement are access to education, access to health, and access to superannuation. For some, the welfare state provides an essential safety net at times of great personal distress (after a serious accident, for example, or following the unexpected loss of paid employment). Almost all adults are engaged through payment of taxes that fund the welfare state and, of course, we participate in general elections that determine who governs the welfare state on our behalf.
Has the value of life and the values that make our lives better changed in the last 75 years?
There have been some big changes over the last 75 years. Second wave feminism in the 1970s resulted in fundamental changes in the participation of women in the labour force, and in public life more generally. Māori cultural values are more widely understood and, indeed, generally welcomed in business, politics and community organisations. New Zealand has become a much more diverse society than immediately after World War II and I think there is a greater commitment to respecting that different communities hold and promote different values within the country’s overall democratic traditions.
People, through their own efforts, should be able to access good housing, good health, good education, and good lifestyles.
In 1959, Condliffe, in his book, The Welfare State in New Zealand, states that, “New Zealand has long set human welfare as its broad policy objective. Some elements of that rather vague concept can be identified with reasonable precision.” How has this changed since?
I think we better understand the importance of individual and community agency in promoting human wellbeing. This means that the State cannot provide welfare to people but, in the words of Amartya Sen, our purpose is to expand the capabilities of persons to lead the kinds of lives they value and have reason to value. People, through their own efforts, should be able to access good housing, good health, good education, and good lifestyles – this means that economic policy is much more important than welfare policy for promoting the wellbeing of people.
One of the main principles of wellbeing economics is that the purpose of economic activity is to promote the wellbeing of people. Isn’t that what happens already in NZ?
Yes and no. It would not be remotely possible to achieve the levels of wellbeing we do without economic markets and the institutional framework maintained by the government to support competitive markets. But a large amount of policy is designed around objectives such as maximising economic growth, or increasing the value of exports, or creating jobs regardless of whether they pay a living wage. The “trickle-down” rhetoric behind these objectives has failed to prevent the emergence of child poverty as a serious problem over the last 30 years, and is failing to address the urgent challenge of global climate change over the next 30 years.
The ideal of the welfare state has been slowly unpacked. Is it still ok in our society to expect that a self-respecting job, at wages which enable the worker to maintain his family at the level of living prevailing in the community, is an essential element of welfare? How does this this resonate in the wellbeing state?
This is absolutely essential for a wellbeing state. Analysis by the Treasury in 2013 reveals that over half of single parents in employment are earning wages well below the living wage, and that the principal earner in 25 per cent of two-adult families with at least one adult in employment is on a wage rate below the living wage. These facts create child poverty that welfare policy is too weak to correct. We have to work much harder at creating productive jobs that provide workers with a living wage as the essential precondition for people’s capabilities to foster their own wellbeing.
A widening income gap has damaged our economic performance more than any other country in the developed world.
The great depression, falling agriculture export prices, and growing unemployment were some of the reasons for the policy development of a welfare state. What is causing another way to be put forward now?
Globally, one of the big driving forces is rising inequality. Thomas Piketty’s book really caught people’s attention because he addressed inequality trends that are evident just about everywhere around the world. Here in New Zealand, the OECD recently argued that a widening income gap has damaged our economic performance more than any other country in the developed world. It will take conscious policy choices to change these trends, starting with the way we invest in the health and education of the next generation. This is why child poverty is such a seriously damaging blot on our policy landscape.
Could a wellbeing state work?
Absolutely. If you excuse the pun, a wellbeing state works because it would focus on work: investing in people so that they develop valuable workplace skills, and working with industry to create jobs that use those skills to deliver value to consumers and living wages to workers.
How tightly can this be connected to the economy?
It must be embedded at the heart of the economy – participation in the labour force is the way most of us access the material resources we need to create lives we value and have reason to value.
Work and working is not just a welfare issue but also a wellbeing one. Where is focus most needed in the system to increase positive and wellbeing-based participation in the labour force, and where are these jobs going to come from?
I think just about everyone agrees that the key concept is skills formation and utilisation. The OECD calls skills “the global currency of the 21st century”. The way regions organise themselves to develop skills relevant to their industries will be a major factor in both attracting skilled jobs and retaining skilled residents which, in turn, will be the most important contributor to wellbeing. The old distinction between unskilled and skilled work is breaking down; modern technologies mean that just about all jobs require job-specific skills that create opportunities, but also put new demands on individuals for lifelong learning.
In an increasingly urbanised environment, what particular benefit could wellbeing economics bring to our everyday lives?
Wellbeing economics provides some important insights into the role of local government – including city councils – in promoting the social, economic, environmental, and cultural wellbeing of their communities and their ratepayers. This means rethinking the relationship between local and central government, which I think in this country is too much dominated by central government.
In light of this, many of the world’s citizens in the coming years will live in small to medium cities (SMCs), rather than metropolises. What are the steps SMCs need to take to create a climate for wellbeing, whilst being tied to limited tax income and reduced roles outside of infrastructure, waste and refuse collection? Does it rest on the local city hall/the residents to use a new way of communicating or a new way of working?
There are some very interesting questions about the connections between the large metropolises and smaller cities. In New Zealand, for example, Auckland is obviously our largest city, but Wellington, Christchurch, and Hamilton are all quite a bit smaller than might be expected given the size of Auckland. I don’t think there is any simple solution; each city must find ways to build on its own particular strengths to create opportunities that will attract residents.
Andrew Dean, in his book, Ruth, Roger and Me, talks about the ideological and generational shifts that have consequentially left younger generations without the benefit of the state welfare that previous generations were able to receive. What are the practical steps that we can take to move towards a better way of doing things in the current climate, and a possible move towards a wellbeing state?
I think there are already some profound changes taking place within many New Zealand families as a result of the shifts Andrew Dean analyses. Grandparents are more likely to be involved in regular childcare, for example, to allow both parents to be in paid employment while their children are young. People with financial security are helping their younger relatives with the cost of tertiary education. This is reinforcing some of the inequality trends, of course, but it does emphasise that the practical steps do not all belong to the State.
So there is hope?
There is hope, I think, but also anxiety. The way income distribution is widening, the risks faced by people are also increasing. If something goes wrong in a person’s life, it can be overwhelming, so I think there is still room for looking for new ways to ensure social security without stifling individual enterprise.
From an economist’s perspective, what can we do as individuals to make our city a better place?
My answer to that question is heavily influenced by the research of Nobel Prize winner, Elinor Ostrom. Her research is too rich to summarise in a short paragraph, but a key is the co-production of community services where ratepayers (households and businesses) and the Council work together to build places where residents have the capability to create lives they value. The more we get out and about and discover what our city and its natural environment might have to offer, the better our city will become.