Brian Easton's latest column is a response to the complaint that we have poor economic performance because we have summer holidays. It praises them

This is a re-post of an article originally published on pundit.co.nz. It is here with permission.

Summertime, and the living is easy. We used to take our kids to Coes Ford on the Selwyn River near Christchurch for mucking around in the water. Great memories. Apparently, you can’t nowadays. Often the water is too low because of the draw-off by the thriving dairy industry and, in any case, one is advised no swimming because of pollution. True for other Canterbury swimming holes.

The Canterbury economy is currently booming – more so than much of rest of the country – in part because of that dairy industry. The downside is that, like elsewhere, the province has lost some of its past recreational areas. Of course there are alternatives; building swimming pools may add GDP, but they would be less necessary had we Coes Ford and all.

GDP growth is not only associated with environmental loss. How much is our road building program about easing the congestion on previously adequate roads which have become congested by the increased use of cars and by the bigger population?

This list is already sufficient enough to remind us that economic growth is not always an unmitigated benefit. The technological innovation which drives growth is neither ethical nor unethical. A laboratory may produce a life-saving medicine, or it may produce a recreational drug which is addictive and destroys life. Businesses which implement the innovations are not particularly ethical either. Their managers may be, but the profit driver does not give many rewards for ethical achievement except when there are outside pressures on it.

For over two millennia philosophers have pondered on the connection between private ‘vice’ and public ‘virtue’. It was Adam Smith who explained how competition between self-seeking individuals could result in the public benefiting. (Because he had a theory rather than just piety is treated as the ‘father of economics’.) But he said ‘frequently’, not always. For a quarter of a millennium, economists have investigated when competition has a beneficial outcome to the public. There are numerous caveats to get favourable outcomes, far more than the conventional wisdom acknowledges. That is why the government is continually intervening to align market decisions with the public good.

Looking over that last quarter of a millennium, one can conclude that those living in affluent nations at first benefited from economic growth, albeit at a cost of environmental degradation and human disruption. My sense is that the proposition is less true today, although it may still be true in less affluent economies (and for the poor in affluent economies).

Even so, technological innovation continues and businesses seize the opportunities it creates. But we may be no better off if the unmeasured downsides offset the GDP gains. Yes, we have more things, but it is not evident we think we benefit as a result.

We may be better off with more opportunities which liberate our capabilities – the luxury of being able to reduce work and income to, say, write a novel if that is what you really care about. We may be better off with widening experiences. You may visit by web the Botticelli exhibition in Florence – once you would not have heard of it anyway and, in any case, the showing could not have been brought together in the past. (But there is a offset of losing experiences like Coes Ford.) A lot of people feel better off if they can demonstrate they have more things than their neighbours have. (The term ‘conspicuous consumption’ was coined an eighth of a millennium ago by Thorstein Veblen.) It enables individuals to express their diversity. One obvious wellbeing gain has been increased longevity with proportionally fewer life-years of disability.

Yet the conventional wisdom is that we should concentrate on increasing GDP. The Luxon Coalition Government seems to have nailed its justification that it will do so. (There may be an upturn this year – it will be well trumpeted. Even so the per capita level will be lower at this year’s election than it was when the coalition took over, three years earlier.) There may be wellbeing gain from a little less unemployment. What it is unclear is the extent to which the government is willing to sacrifice the nonmarket downsides in its pursuit of economic growth.

This leaves the election year economic rhetoric in a strange situation. It will centre on economic growth performance; people will say that the growth is important but the likelihood is that it will not be much of a factor in determining their political choices. Which is one reason why the political parties are likely to turn to cultural issues – explicitly or by dog whistling. There will, of course, be the usual struggle between who should be winners and the consequential losers – although that is in unmentionable in polite company. In the end, voting may reflect assessments of who will govern the least badly.

What I do not see is a paradigm evolving which focuses on a replacement to the emphasis on uncritical economic growth. That involves some notion of wellbeing rather than just the consuming more. But the notion is a bit woolly and requires a lot of careful thought.

Our grandchildren may have more things than we did, but since I don’t expect to see them swimming in Coes Ford; they may be worse off.

*Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on pundit.co.nz. It is here with permission.