Launching the idea of wellbeing into the public economic consciousness is really about knocking the old metric of Gross Domestic Product off its lofty pedestal, but will the launch of the first Wellbeing Budget succeed in making it stick?
In the seminal early 2000’s teen film Mean Girls, Gretchen Wieners is on a mission to make “fetch” happen. Wieners is desperate for the term to enter the tween argot, much like the word “skux” did in Wellington and Auckland in the same period. Boomers might render “fetch” as “groovy” in their own vernacular.
Throughout the film Wieners repeatedly drops the word into conversation — “that’s so fetch” — in a fruitless attempt to make it “happen”, until finally, her sometime friend (and the film’s eponymous Mean Girl), Regina George brusquely snaps that fetch will never “happen”.
“Stop trying to make fetch happen. It’s not going to happen!” was the immortal line.
In the small world of political economy, “wellbeing” is a bit like fetch. Everyone is trying to make it happen, but no-one has quite succeeded. On Thursday, with the delivery of the first Wellbeing Budget by Grant Robertson, we’ll get to see the most concerted attempt yet.
Launching the idea of wellbeing into the public economic consciousness is really about knocking the old chief metric Gross Domestic Product off its lofty pedestal as the ultimate arbiter of an economy’s health.
GDP is a flow measure. It takes in spending on all goods and services within a given timeframe and tells us if the amount spent on those things is going up or down.
Its supporters say that lets us know how well an economy is doing by showing us whether more or less is happening. It’s detractors say it misses out on key things like who is doing the spending (is it everyone, or mainly just the wealthy?), and what is being done to bring that spending about. Plundering the oceans for fish may be great for GDP in 2019, but it doesn’t exactly describe a “healthy” economy if those stocks of fish are all gone by 2025.
GDP has had detractors from the start. Simon Kuznets, the inventor of national accounts (one of which is GDP) had his doubts about its use as a measurement, and when he delivered his Nobel Prize lecture in 1971 even said that “a number of analytical and measurement problems remain” with theories used to measure growth.
GDP isn’t even a complete measurement of what it purports to measure. In New Zealand, it doesn’t capture spending on illegal drugs, which are actually a significant part of the economy, which is why they’re measured in Australia. Also, as Marilyn Waring argues, it doesn’t factor in the unpaid economy. When someone leaves work to raise their children or look after family, GDP shrinks by the income that person has lost, even though that person is doing productive work. A mother raising her children for free is not captured by GDP, but a nanny, doing the same work but for a fee, is captured.
But the main argument for knocking GDP off its pedestal is that it often masks when things aren’t looking all that great in the economy. GDP can be soaring — the economy growing at three, four, or five percent, but that could mask the fact that children are falling into poverty, house prices are being detached from incomes, and people are living less happy, healthy lives. This is what the Wellbeing Budget is likely to focus on. Putting measures about the health of society alongside GDP, to place it in context, rather than get rid of it completely.
“We should totally just stab Ceasar”
The real move towards wellbeing began in the aftermath of the Great Financial Crisis, which undermined public confidence in the economy. Partly as a response to this, French President Nicolas Sarkozy commissioned rockstar economists Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi to report on “economic performance and social progress”.
The Stiglitz-Sen-Fitoussi Commission reported back that GDP was an inadequate measurement of economic progress. In response, Sarkozy instructed the national statistics agency of France to take greater account of things like quality of life and the environment when measuring the nation’s economy.
… since Cameron’s happiness initiative the country’s become so upset even the Prime Minister has taken to crying. In France, people are so unhappy that thousands of gilets jaunes take to the streets every Sunday to, well, smash things.
This crossed the economic Rubicon — a rash of European countries and international organisations like the OECD implemented measures to try and make “fetch” happen.
David Cameron in the UK established a happiness index, and talked at length about Wellbeing, in language not dissimilar to Grant Robertson.
“Wellbeing can’t be measured by money or traded in markets. It’s about the beauty of our surroundings, the quality of our culture and, above all, the strength of our relationships. Improving our society’s sense of wellbeing is, I believe, the central political challenge of our times,” were his words.
The OECD began its “How’s Life” work, asking its member nations about how their citizens were feeling and how their lives were.
But fetch still didn’t happen — in fact, things got worse.
The UK is no happier. In fact, since Cameron’s happiness initiative the country’s become so upset even the Prime Minister has taken to crying. In France, people are so unhappy that thousands of gilets jaunes take to the streets every Sunday to, well, smash things.
Things across the OECD aren’t much better, several of its member countries are now led by governments that could be broadly described as fascist.
I just have a lot of [moon] feelings
Part of the problem might be the fact that while governments are very good at talking about wellbeing and happiness, very few really try to do much about it.
Cameron brutally cut public services in the name of cutting his country’s massive Budget deficit. Across Europe the story was much the same as countries engaged in brutal austerity programmes to narrow their deficits. In that context wellbeing looks more like an attempt to cover up public service cuts than a serious attempt to make things happen.
In New Zealand, the story could be the same. Treasury’s unusual “moon feelings” wellbeing card game which it insists is separate from the Budget, suggests there’s plenty of window dressing going on here too.
But the Wellbeing Budget does go further than many of its international counterparts. Measurements of the country’s wellbeing will be published and made easily accessible on Treasury’s website for everyone to see just how well (or unwell) the economy is working. It’s not a cheap tack-on, it’s baked into the actual Budget itself.
You go Glen Coco
So what are we likely to see? Well, not a whole lot of new spending. The Government is restrained by its debt target, meaning there’s not likely to be much new capital spending on schools, and hospitals.
Another Budget rule, which prohibits Crown spending from exceeding more than 30 percent of GDP means that Robertson has also tied himself to not expanding the size of the state far beyond what it is at the moment. Ardern has also ruled out a capital gains tax, and the Tax Working Group was not allowed to even look at income tax increases and other revenue raising measures, meaning the Government doesn’t have much opportunity to spend more money even if it wanted to.
But perhaps we’re making the mistake that this was about economics and wellbeing to begin with. Part of the political story of the Wellbeing Budget may be to signal how bad things really are in the hope that it whets public appetite for change.
The Welfare Expert Advisory Group, for example, detailed a shocking picture of New Zealand’s welfare system, but just a fraction of its $5 billion worth of recommendations were adopted. Yet put this fact to people in the Government and they’ll respond with a wink and a “wait and see”. There’s more to come — people just have to want it.
Part of Helen Clark’s success with raising taxes after her election in 1999 was her ability to illustrate just how bad things were. In opposition, she was able to paint a vivid picture of a crisis in areas like health which created a mood for change. A comparable mood just didn’t exist following nine years of fairly popular government under National.
Transformation is uncomfortable and it requires a population ready to suck it up. If the Wellbeing Budget shows just how sick New Zealand is, the Government might create such a mood, paving the way for a 2020 election manifesto that would promise real change.
That would mean even if “fetch” happens, it’s unlikely to be tomorrow.