John Tamihere's recent article in the NZ Herald "It's time to talk about inequality", made me a little uneasy.
He's right in that it is time to talk about equality, or at least have some reasoned dialogue. But I was uneasy in that an important topic devoted way too many column centimetres to blaming a few rich people.
That does not provide a way forward. I have been lucky enough to have seen another side; civically-minded wealthy individuals doing amazing things for their communities with their money.
Widening disparities concern us all, even if you are doing well in business. There is increasing evidence that we are all better off when we are all better off. Economies do better when people have opportunities to share in the fruits.
In 2009, after the global financial crisis, The World Bank stated in a paper, "What is Inclusive Growth" that: "Traditionally, poverty and growth analyses have been done separately", and that these two elements need to come together in order to have sustained and inclusive growth.
Yes, we absolutely need social security, especially for those who cannot work, or are involved in other non-paid but valuable activities that support the economy and society. However, the focus should be on productive employment.
Thoughtful, strategic, economic development and equality of opportunity are the two most important components in addressing inequality in the long run, not shifting the money around. Simply trying to transfer money via taxes and transfers from the rich to the poor does not work.
Inclusive growth is occupying the minds of economic development organisations and professionals around the world. Why? Because it makes economic sense. Social or political instability is good for no one, neither is killing the golden goose – our environment.
As Robert F Kennedy put it: "GDP counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage... Yet does not allow for the health of our children, the quality of their education, or the joy of their play... It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile."
Treasury is currently thinking of ways to measure well-being, trying to get a handle on our progress as a nation. This is a complicated task. What is often missing from the macro conversation though is; how do we get lagging regions to build on their own ideas, strengths and assets?
The structure and quality of an economy are extremely important in these respects. For example, parts of the labour force most likely to be the "working poor" are in low-productivity jobs.
Strengthening sectors by extending their value chains, diversifying an economy by moving from being price-takers to value-creators, looking at training that shifts people into sunrise sectors that have higher paying jobs, giving people the tools and support to start their own businesses are all valid strategies. But they require long, hard co-ordinated work on the ground.
Economic development is as much about taking advantage of market opportunity as it is about addressing market failure. It is also a team sport. In your standard economics textbooks, you will find plenty about supply and demand, competitive and comparative advantage.
More and more, however, collaborative advantage, how individuals and businesses work together to create value, is a defining factor for inclusive growth. New business models that account for their social licence to operate also provide the opportunity to create meaningful jobs where the money goes round in a far more equitable way.
Twenty years ago Michael Porter said, "the enduring competitive advantages in a global economy lie increasingly in local things – knowledge, relationships and motivation that distant rivals cannot match."
This still holds true, but the world has moved much more towards collaborative working, IP sharing and shared value creation. Reducing inequality lies in the creation of opportunity, not in a zero sum game.
■ Dr David Wilson is the Chief Executive Officer of Northland's Economic Development Agency, Northland Inc, and Chair of Economic Development NZ.