A few weeks ago, the founder of well-being economic, Richard Easterlin died, at the age of 98. In 2019, I invited him out to NZ, as a Visiting Professor to Auckland University. He was interviewed by Liam Dann at the NZ Herald and had a degree of influence over this nation's approach to the pandemic, as recognized by the Beehive in June 2020, which includes a link to a Zoom interview that I did with him back then. Easterlin was the intellectual architect of former PM Ardern and Finance Minister Robertson's "well-being approach" and "well-being budgets". That approach has always been scorned by National and ACT, who regard it as a joke. It is no joke to me.
Easterlin argued, with much evidence, that the main drivers of human happiness are high quality health & health-care, a satisfying job, and close support from a family group. Economic growth and an obsession with consumerism & materialism were not particularly important in his view. Why? Because he believed strongly, with lots to back him up, that human well-being depended not so much on how wealthy we are in absolute terms, but more on how wealthy we are compared to others.
Whatever your own views, here's the thing. One can view NZ as a country divided into two halves - one pushing for faster economic growth - which has become the Coalition's sole focus now - versus another group who are not so obsessed with it and give greater weight to quality of life, work-life balance, and overall lifestyle. I'm certainly not laughing, like the Coalition, at Easterlin's legacy. Aside from being a friend, he was a deep thinker. Don't most people live in NZ because, although they maybe could become richer by going to live somewhere else, still prefer the overall quality of life in this country? The Coalition will not be re-elected on the basis that it fires up economic growth - it will be swept from office to the extent its attempt to fix the health-care system is not effective. In such a case, Kiwis will likely react at the ballot box with ferocious anger. It is why the Conservative government in the UK lost to a landslide that saw over a decade of Labour governments under Tony Blair. Should Kiwis see their overall quality of life & happiness as being undermined these past years, that issue may reduce their support for the Coalition more than headline figures on how fast the economy is growing. To the extent the increases in income are not shared around, that concern also lessens the extent to which rising GDP matters to many people.
So don't laugh out too loud just yet, should you be a National or ACT party supporter, about Easterlin's well-being economics. NZ remains in the top 10 of happiest countries in the world. Isn't that position more important than its GDP per capita ranking? We certainly do need to be more economically prosperous, but not to the extent everyone in the country loses their lifestyle. Then it is certainly time to leave. Why, by the way, did PM Luxon say he is "wealthy" and "sorted"? And buy his bach on Waiheke? Why does he symbolize the view that after acquiring a boat, a bach, and BMW (in his case a Tesla) one is fine? In Silicon Valley in the US, a guy with Luxon's wealth is a total nobody. Luxon just feels relatively wealthy in NZ. He wants to be King of his Little Ant Hill, rather than a complete unknown in a big place. That's Easterlin's point. Luxon is thinking of his position compared to other Kiwis. He feels his overall life-style in NZ is great, even though on the world scale of things, he's no big fish, not even a medium sized one. Instead Luxon feels since his health & health-care are good (having private health insurance), has a satisfying job and supportive wife and children, he is "sorted". So let's not pretend the pursuit of wealth is everything. Easterlin was a huge fan of NZ and what we represent for this reason. So go good with the Big Guy Upstairs, Richard, who probably shares your values.
Whatever your own views, here's the thing. One can view NZ as a country divided into two halves - one pushing for faster economic growth - which has become the Coalition's sole focus now - versus another group who are not so obsessed with it and give greater weight to quality of life, work-life balance, and overall lifestyle. I'm certainly not laughing, like the Coalition, at Easterlin's legacy. Aside from being a friend, he was a deep thinker. Don't most people live in NZ because, although they maybe could become richer by going to live somewhere else, still prefer the overall quality of life in this country? The Coalition will not be re-elected on the basis that it fires up economic growth - it will be swept from office to the extent its attempt to fix the health-care system is not effective. In such a case, Kiwis will likely react at the ballot box with ferocious anger. It is why the Conservative government in the UK lost to a landslide that saw over a decade of Labour governments under Tony Blair. Should Kiwis see their overall quality of life & happiness as being undermined these past years, that issue may reduce their support for the Coalition more than headline figures on how fast the economy is growing. To the extent the increases in income are not shared around, that concern also lessens the extent to which rising GDP matters to many people.
So don't laugh out too loud just yet, should you be a National or ACT party supporter, about Easterlin's well-being economics. NZ remains in the top 10 of happiest countries in the world. Isn't that position more important than its GDP per capita ranking? We certainly do need to be more economically prosperous, but not to the extent everyone in the country loses their lifestyle. Then it is certainly time to leave. Why, by the way, did PM Luxon say he is "wealthy" and "sorted"? And buy his bach on Waiheke? Why does he symbolize the view that after acquiring a boat, a bach, and BMW (in his case a Tesla) one is fine? In Silicon Valley in the US, a guy with Luxon's wealth is a total nobody. Luxon just feels relatively wealthy in NZ. He wants to be King of his Little Ant Hill, rather than a complete unknown in a big place. That's Easterlin's point. Luxon is thinking of his position compared to other Kiwis. He feels his overall life-style in NZ is great, even though on the world scale of things, he's no big fish, not even a medium sized one. Instead Luxon feels since his health & health-care are good (having private health insurance), has a satisfying job and supportive wife and children, he is "sorted". So let's not pretend the pursuit of wealth is everything. Easterlin was a huge fan of NZ and what we represent for this reason. So go good with the Big Guy Upstairs, Richard, who probably shares your values.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
5 comments:
Nobody is saying that lifestyle is not important, but lifestyles can only exist if someone pays for the food, housing, energy, education, hospitals and other resources that the lifestyle depends on. It's not a question of being obsessed with GDP, but the reality of needing to earn money in order to spend it. If you don't earn you don't eat, if you don't eat you don't s*** and if you don't s*** you die. I have never read any books by this Easterlin chap, but if his views are as describedin this article, he sounds like just another academic in an ivory tower with no common sense.
I'm a bit surprised Robert is supporting the so called Health response to covid with no consideration for the economic devastation left behind.
How many people are dying unnecessarily (as predicted by the productivity commissions lockdown assessment report written during the first lockdown) now because the economic cupboards were left bare?
Following the wellbeing at all costs approach, should the government now be chalking up billions more debt to pay for more drugs and hospitals?
We'll be broke.... but happy?
How are the swedish people feeling after their sensible and clever government implemented the response layed out in nzs own prepared pandemic plan (a plan which was incredibly ignored by adern et al)
Sweden had the lowest covid death rate in Scandinavia, whilst preserving their economic ability to look after the Swedish people post covid.
On PM Luxon saying he is "wealthy" and "sorted" - will he feel like that when TPM come for his property and wealth? As the saying goes ... Pride goeth before a fall!
Might a fourth 'main driver of human happiness' be added, for want of a better name 'economic sufficiency' whereby one has ongoing food and shelter without worry.
Robert says: “We certainly do need to be more economically prosperous, but not to the extent everyone in the country loses their lifestyle.” This is true, and it’s why National needs its coalition partners, and why Luxon should avoid dissing them and support the aspects of their policy that are compatible with his growth strategy and with one law for all!
But, alas, we have continued adherence to net zero, and ongoing wrangles over the NZ coastline – for starters. Luxon will be aware that his party has lost approx. 5-6% of its support since the election & Labour has gained the same amount, whereas all the smaller parties have basically held their support. To win the next election, he will need to BOTH show an improving economic performance AND shore up the support of his coalition partners.
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