Sounds like you're saying that de-coupling economic growth from environmental and social degradation is unachievable?

Or, put another way - if the country is to get richer - some people in it must become poorer.

Or, put another way - if the country is to get richer - then enviornmental harm is a necessary trade-off?

I disagree. It all depends on how you measure progress or productivity. Your theory might be true if we measure productivity based on GDP - which is precisely why we need a more qualitative measuring instrument. GPI seems to me to offer a means to expose the present trade-offs (which I do not believe need to be inevitable) and re-focus our efforts under a more holistic approach.

I certainly agree however that from both Labour since Helen and now National with John it's all been rhetoric - Labour's was the rhetoric of sustainability, National's is that of productivity. The more things change, the more they stay the same.

Kate:

1) yes its un-achievable, economic growth is tied to cheap energy and cheap inputs, we damage the environment by extracting them.
2) I dont see why it cant be dis-connected as increasing exports makes the country richer, otherwise yes internally if one person is richer, then for the same one other is poorer...in a gloabl setting v a National one though i dont think it can.
3) As 1) Yes.

What you are looking at is a double change, or actually use a different measure to GDP that takes into account non-tangibles.....I would suggest doing this is a better way, then we have 2 somethings to compare GDP v GDO (gross domestic outcome) then we could see what damaging the planet, or not is costing us in $.

"Labour's was the rhetoric of sustainability, National's is that of productivity"

I certainly dont see anything to support Labour as a party sustainablity, its zero on their agenda, except that it might gain them votes so they mumble about it, but if push came to shove, well jobs and social engineering would win every time.

National on the other hand I think really do want an improvement in productivity as it benefits their core support, employers. However it is going to be achieved at minimal or not cost to their core supporters...at the expense of the environment or the poor...

regards

thing

This Infometrics article is worth a read too:

http://www.interest.co.nz/ratesblog/index.php/2009/04/15/opinion-how-tou...

Also, along with the listed few references, you might find this NZMEA piece of interest:

"NZ's Productivity lags behind" 13 Mar 2009

Which can be downloaded from:

http://www.mea.org.nz/media/pressreleases.aspx

Why can't we do some of these suggestions and improve our productivity?

Why not?

Great links Kate and Les.

I like the idea of a variable GST rate but I'm not sure it is politically viable.

Imagine the following scenario, Bollard lowers GST by 1%, he gets a call from XXX, you b****rd the books don't balance now, I'm going to have to cut the education budget. The result being the great unwashed marching on the RBNZ pitch forks at the ready.

I prefer the approach of changing the reserve capital ratio (tied to housing only), although I'm not sure how practical this would be. I can imagine the brains trusts in the big 4 dreaming up all sorts of clever work arounds.

In my opinion a capital gains tax AND ring fencing is necessary, but I can only see this being politically viable if both parties agree on a consensus approach to this, otherwise the boomers will toss the govt. out next election.

The time for action is now, when the good times roll again the urgency to not rock the boat reasserts itself.

SimonD

Hi Steven,

"yes I agree"¦..there is more to quality of life than just dollars"

Ultimately nothing is about dollars - dollars are a representation of value nothing more.

The comparison is between our efficiency at producing resources, and other social values that may be in conflict.

Hi Les

"Why can't we do some of these suggestions and improve our productivity?

Why not?"

There is nothing against any policy - but we can't solely say "this increases productivity so it is good", we have to ask what the cost is.

Furthermore, I am doubtful about the governments ability to influence productivity outside of the framework it provides for the public sector. Lower taxes and different laws would increase productivity and efficiency - but we have to ask if the extra production is worth what we sacrifice by doing this. It could easily be, or it could not be.

Hi Les,

The cost comes from what society values, and what society wants. Fundamentally, outside of things like externality taxes and the provision of public goods the government sole purpose is to redistribution according to the will of the people. Now, whenever they do this - it reduces "efficiency", so society will produce less in order to gain this extra happiness from redistribution.

The best way to think about it is that by voting we get the government to "consume" a certain level of stuff for us through redistribution, so there is a smaller pie left over.

Productivity in this sense is just a residual - it isn't productivity we value but the extra production. When we are "targeting productivity" we are really targeting extra output (given the idea that we don't want employment to fall).

"What kind of sacrifices do you perceive need to be made for said "extra production"?"

That is a very important question - but one I am not trained to answer. As an economist I just try to keep the framework of costs and benefits alive, but I have not been trained to identify preferences or social values.

My hope is that the democratic process reveals what society values - and as long as parties are transparent about the trade-off between production and other things they are willing to take on then people can really tell us how they feel.

Ultimately, Treasury does a lot of good work illustrating what the benefit of lower taxes and the such is - given that benefit we have to ask society how much it values the extra spending.

This is a tough issue - but one where I would like honest, transparent discussion from our government, rather than the closed one sided view we have had for the last decade.

I would note that I am not saying that we shouldn't be interested in moving to a point with higher productivity - we just have to be honest that there are costs, and given this we should ask society whether it is willing to face that movement.

Matt Nolan "“ there are plenty of ways of improving productivity without any negative social trade-offs; it depends on the technology used. The problem we face as a nation is that have we let our technology baseline slide to such a degree that we are not exposing our economy to opportunities for productive improvements to the extent that we should be. We are great at educating scientists and technologically literate people but we have an awful record of giving them the resources to do something useful with their knowledge.

Les Rudd "“ if the overwhelming majority of people think that the country is heading in the "right direction" http://www.roymorgan.com/news/polls/2009/4373/ it's no surprise that there is no appetite to discuss changing the status quo. Reducing staff levels is the most likely way that productivity will be improved in the current environment; maybe when unemployment reaches double figures there will be a rethink about the direction we're heading in"¦

Matt there are plenty of opportunities to increase productivity that would cost no more than the investment required to adopt the technology in a typical business-case scenario. That would be neutral to your social values. The problem is that, due to the diversion of capital resources into non-productive assets (the logical result of current monetary policy), there are now insufficient technology-focussed businesses out there that could recognise and exploit such opportunities. Greater resourcing of R&D through central government or tax breaks could result in social benefit trade-offs, but then we have got a huge amount of catching up to do if we want a modern productive economy.

Hi Neil,

If there are things we can do which give us something for nothing we should do them - but if the private sector isn't taking these roles on I seriously doubt the government can identify them

From a speech given by Vaclav Klaus, President of the Czech Republic, in the USA in March:

"...........The last issue, I would like to mention here today, is the current financial and economic crisis. A month ago, I spent three days discussing this topic with many leading politicians at the World Economic Forum in Davos and my depressing feeling from these discussions is that both the elementary rationality and the economic science have been excluded, suppressed or forgotten. The very unpleasant, day by day deeper economic crisis should be treated as a standard, cyclically repeated economic phenomenon, as an unavoidable consequence and hence a "just" price we have to pay for the long-term playing with the market by the politicians and their regulators. Their attempts to blame the market, instead of themselves, should be resolutely rejected. Their activities, aiming at "reforming", which means re-regulating the economic system world-wide, are all very doubtful and I as said in Davos: "I am getting more afraid of reforms bringing in more rules and increased international regulation than of the crisis itself." A large increase in the scope of financial regulation and protectionism, as is being proposed these days, will only prolong the recession.

My country has not, luckily, experienced any financial crisis so far. We had one ten years ago, in the moment of the Asian financial disturbances, and it motivated our banks to become very cautious. We did, however, import an economic crisis. This happened partly because of the fall of demand for our exports, and partly because of the behaviour of foreign banks which own our local banks. Due to the problems in their mother countries, and in the attempts to rebalance their portfolios, they dangerously restricted credits even in countries without apparent financial vulnerabilities. This is the effect of globalization and of our rapid selling of our state-owned banks after the fall of communism when there was no domestic capital at our disposal.

Aggregate demand needs strengthening. One traditional way to do this is to increase government spending, mostly on public infrastructure projects, on condition these are available and the country is ready to massively increase its indebtedness. The Czech government has not yet decided to do so because we do not believe in this procedure. Not all of us are Keynesians, even now. It would be much more helpful to initiate a radical reduction of all kinds of restrictions on private initiatives introduced in the last half a century during the era of the brave new world of the "social and ecological market economy". The best thing to do right now would be to temporarily weaken, if not permanently repeal, politically correct labour, environmental, social, health and other "standards", because they block human activity more than anything else........."

http://www.klaus.cz/klaus2/asp/clanek.asp?id=NK29ATgKc2ah

Watch that space: that is the world's best-governed country today.

Heh. Guys, products can be made with next-to-zero environmental impact: software, movies, art, literature. Inputs: food and neuronal activity.

The straw man of Trade-offs of getting richer/gunging up more land is so 1830's Manchester.

But if y'all want to wallow in Doomsterism, Kunstler's yer man...