Saturday, April 21, 2007

Setting National Goals

The Business Council of Australia has published a brochure titled Policy that Counts which sets out reform standards for public policy.

While much in the brochure is laudable, I was struck by its inclusion of a table comparing Australia's ranking on a league table of GDP per capita in 1990 and 2005. This is published because, evidently, "The Business Council has set an aspirational goal for Australia to move into the top-five band of those countries with the world’s highest living standards by 2012."

I have two fundamental difficulties with establishing this as a national goal.

Equity The first difficulty is that I look around the world and I continue to see the horrors of poverty, war and pestilence in other countries. Against that reality I genuinely wonder whether increased relative prosperity for Australians is a worthwhile goal.

I don't want to make a standard "redistributional" argument, that we should be aiming to make others better by making us worse, but I certainly don't think that being in the top five rather than top ten or twenty on this measure is anywhere near as important as raising the absolute level of well being of some of our nearest neighbours. Especially so when the consequence of the latter could well be to advance our own national security. So making the South Pacific a region of prosperity is certainly more important than increasing the GDP/capita in Australia to the top five.

More than GDP Every first year economics student gets taught that GDP is just a measure of output, that it doesn't include some outputs and it certainly doesn't measure happiness in any meaningful way. Discussing this with my wife Marg she told me of a line Little Pattie had used in a recent episode of Talking Heads.

I like it when I feel we're living in a society, rather than in an economy.

Marg I think said it better - when did Australia stop being a society and become an economy.

People actually like "society" - they actually like the sense of belonging, the sense of jointly created stories that is culture and most like family, friends and kinship. And these are things that don't get measured by the GDP, and in fact are things that many feel are under assault from economic policies like a view of the labour market that employeees should treat Sunday as any other work day.

I think if you asked the average bloke in the street which would they prefer - that Australia got moved another notch up in the GDP/capita stakes or that they got to watch their kid play sport on the weekend that they would rightly go for the latter.

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