Public ideas
Beyond GDP: public policy is, or should be, about wellbeing
One outcome of the floods in northern New South Wales will be a boost to GDP. That’s because, with so much property destroyed, there will a boost in spending as individuals and governments replace houses, furniture and public infrastructure.
Or, staying in northern New South Wales, a consequence of the recently completed Pacific Highway upgrade to freeway standard will be a reduction in GDP, as crash repairers, insurance companies and car dealers lose out.
These are just two examples of the absurdity of reliance on GDP as an indicator of wellbeing. In fact, when economist Simon Kuznets developed a set of national accounts in 1937, including GDP, he never intended it to assume the prominence it has taken on in later years. The corporate equivalent, the value of turnover, hardly ranks as a significant entity in corporate accounts.
There are two attractions of GDP, however. One is its lack of ambiguity, because it picks up the value of all monetized transactions within a country. These transactions are well-recorded, but by definition they miss non-monetized transactions, such as bringing up children. And GDP records things we’d be better off not having to do, like replacing houses in Lismore, or operating on people who have been injured in car crashes. But at least it lacks ambiguity. (I will get on to its other attraction at the end.)
First year economic students have been aware of this limitation for years, when they are set the politically-incorrect assignment “why does GDP fall when a man marries his housekeeper?” Policymakers, too, should be aware of its limitation.
Well aware of this limitation, early this century hard-nosed economists at the ABS set about developing indicators of wellbeing. They knew that they could not come up with a single quantifiable indicator like the GDP, but they could look at changes in indicators that most people associate with desirable or undesirable outcomes, such as infant mortality, air quality, and crime, and they did not forget traditional economic indicators such as real income per head. They also realized that it would be folly to use some weighting system to consolidate all of these into a single indicator. The relative values you and I put on access to green space versus ability to enjoy a Bach concert are almost certainly different. You can read the way the ABS was thinking in 2006 in a paper under the authorship of Dennis Trewin, then head of the Bureau.
The outcome was an ABS series Measures of Australia’s Progress, which developed a set of indicators under four large categories – society, economy, environment and governance, and 26 sub-categories. The website is still there, frozen in 2013, which was when the newly-elected Abbott government, intrinsically hostile to any indication of public sector innovation, and particularly offended by left-wing indicators such as “learning and knowledge” or “informed public debate” (two of the 26 sub-categories), made sure that the series was terminated.
For the last couple of years the Centre for Policy Development has been engaged in a major project to bring a disciplined approach to wellbeing to our policy processes. Their paper Redefining progress: global lessons for an Australian approach to wellbeing, encompasses the earlier conceptual work done by the ABS and others, but rather than developing specific indicators as the ABS did, it has concentrated on ways indicators of wellbeing can be incorporated into policymaking.
Treasurer Chalmers’ first budget, to be presented in October, will include a wellbeing statement. Warwick Smith, one of the significant contributors to the CPD paper, describes the way Chalmers is likely to make such an incorporation: Beyond GDP: Chalmers historic moment to build wellbeing in The Conversation. Chalmers is following in the footsteps of Iceland, Finland, New Zealand and Scotland which have established wellbeing reports in their annual public budgets. Also writing in The Conversation Peter Martin provides more detail of the process: “Wellbeing”: It’s why Labor’s first budget will have more rigour than any before it.
Such a reform is overdue. Over many years the Commonwealth budget has morphed from an economicstatement, explaining how the government allocates resources for the public interest, to an arid fiscalstatement, concerned only with financial flows and disconnected even from the physical aspects of people’s wellbeing.
Smith and Martin both draw attention to the way former Treasurer Frydenberg has ridiculed the notion of a wellbeing budget. Perhaps he has lost sight of the limits of fiscal metrics. That’s what happens when people get too involved with finances: that start to think that “money” and “wealth” are the same thing.
Unfortunately GDP will continue to have political salience, even though it is boosted by population growth, because it is the business sector’s favourite indicator. As an economic metric related to people’s wellbeing, at least their material wellbeing, GDP per-capita has more relevance, and GNI per-capita (Gross national income) is even more relevant. But GDP without normalising for population dominates, because firms like a growing market, and governments like an indicator that denotes growth even if there is no growth in people’s wellbeing.
The infectious ideas of the far right
Trumpians down under
It you are free and in Sydney on the weekend of October 1 and 2 you may be tempted to attend the Conservative Political Action Conference, where for tickets ranging in price from $119 to $7000 you can be enlightened and entertained by Nigel Farage, Tony Abbott, Warren Mundine, Matt Canavan, Ian Plimer, Alan Jones and a host of other luminaries.
The CPAC cannot yet tell you just where the conference will be held. There have been reports that it will be held in Luna Park, which would be a fitting venue for such a gathering, but Luna Park management has directed CPAC to desist from suggesting it will be held there, because it doesn’t have a reservation, and has asked them to remove “all Luna Park Sydney branding and material from their website and social media channels”. CPAC’s secrecy apparently arises from a fear that Sydney’s well-armed Bolsheviks, thousands of people from the LGBTQIA community, and hordes of militant liberals, will storm the conference and precipitate a revolution. Or, more probably, from a desire to portray the “left” appear as a threat to free speech.
We don’t know CPAC’s specific agenda for this meeting: their website simply says “agenda coming soon”. On last week’s roundup there was reference to a CPAC gathering in Dallas last month (“Liberalism’s tenuous hold”, under “Public ideas”). That gathering seemed to be an anti-liberalism-anti-secularism-anti-democracy hatefest, and a bonding session between Trumpian Republicans and right-wing extremist movements in Europe. They managed to get Hungarian dictator Viktor Orbán as a keynote speaker, but it looks as if at the Sydney conference Europe’s right will be represented by Nigel Farage, who seems to share with Orbán contempt for the European Union’s secular and liberal culture.
Victoria’s parliamentary inquiry into extremism
A gathering of Nazis in the Grampians, and strident anti-vaccination-anti-lockdown protests in Melbourne, led the state Legislative Council earlier this year to set up an inquiry into extremism. The committee, chaired by Fiona Patten of the Reason Party presented its report last month.
Although the inquiry was prompted by Victorian events, its terms of reference and findings had national and even global implications. Among its findings:
Global and domestic populist movements, particularly the mainstreaming of anti-immigration and anti-democratic ideas, are risk factors for legitimising the rhetoric of extremist movements.
and
Far right extremism is not new in Australia or Victoria, but there has been a re-emergence of far-right extremism, most notably from 2015 and 2016 onwards.
Notably ASIO reported to the inquiry that young people, including minors, are increasingly being radicalized. Although both groups and individuals were found to be capable of carrying out ideologically-motivated terrorism, the main risk is from individuals acting alone. Social media, the spreader of conspiracy theories, and encrypted communication apps were identified as means used by extremists for recruitment and for the spread of hate and propaganda. There was also evidence that misogyny and anti-feminist sentiment – “hyper-conservative ideals of masculinity and gender norms” – are common features of far-right extremist movements.
Declining trust in government and in mainstream media was a noted contributor to radicalization.
The committee made a number of recommendations, mainly to do with helping young people avoid extremism. These centred on education, particularly building digital literacy skills so that the internet can be used as a source of reliable information, and general support for young people at risk of radicalization. Building community cohesiveness and resilience was also seen as important. In this context the report noted the value of the “Believe in Bendigo” group, which arose in response to right-wing anti-Muslim demonstrations in 2015.
There was evidently some ideological conflict in the committee, over the way extremism is described, as “left” or “right”. Even though ASIO has found that “left-wing extremism is not currently prominent in Australia”, and identified left-wing movements as victims of extremism, two Liberal Party members of the committee insisted on writing a short dissenting report, essentially equating terrorist threats from the “left” and the “right”. Some on the left can be irritating, such as the kindergarten revolutionaries who blocked a speech by Malcolm Turnbull earlier this week, but that’s about as far as they go. Turnbull described them as “fascist bullies”, but that description pays them too much respect: fascists have a much more coherent political philosophy than that rabble.
Suggesting that there is some equivalence between left and right threats – “everybody does it” – provides a convenient way to play down the threat from right-wing movements such as those who took part in the insurgency in Washington on January 6 last year. It is reinforced by those who describe Islamic religious-motivated extremism as “left”, even though it differs only in degree, but not in kind, from the extremism espoused by those who claim to base their hatred and bigotry on “Christian” values.