Dialogue: It's time to decide how upbeat we want to be

By COLIN JAMES

It is a perfectly valid choice for the people of this country to settle for gentle economic decline relative to other countries. It is the one the people have made for 35 years and it has loads of international precedent, since Greece pioneered it two millenniums ago.

But it is not one that appeals to the political, research and business elites. So start paddling for the Knowledge Wave.

The elites don't like the jokes that are not entirely jokes, such as Australian Reserve Bank Governor Ian Macfarlane told recently when asked about a New Zealander joining his bank's board to administer a common currency. That would, Macfarlane said, be akin to United States Federal Reserve Board chairman Alan Greenspan being asked to have an Argentinian on his board.

He did later say he was sorry - but to whom was he apologising? There is now a case for comparing ourselves with South America, rather than the northern Europe of over-45s' nostalgic aspiration.

In gross domestic product a head - wealth - we are one-third below the Australians.

Yet in 1996 and again in 1999 voters opted for another of David Lange's cups of tea, a rest from deregulatory economic reform. It was, of course, a democratically valid choice. Helen Clark's high approval ratings attest to that.

In any case even some Rogergnomes now say deregulation of the economy under Rogernomics was "necessary but not sufficient". The Clark Government's cautious reinsertion of the Government into economic development is rapidly becoming a new orthodoxy.

But will that alone put us back alongside the Australians?

First, note that we are close to top on the World Economic Forum's index of environmental health. And we do not do too badly on indexes measuring technology achievement, education and human development.

So what's the fuss? Average living standards here go on rising in local terms. We notice the relative decline only when we try to buy a coffee or beer in London or Sydney. And isn't this still a good place to bring up children?

The fuss is that the health system is underfunded and so is tertiary education and many other social services. Bashings and murders are commonplace and there are Third World diseases in some suburbs.

That's what comes with relative economic decline.

It does not seem to be a simple tradeoff of less wealth for a caring society and nice place to live. The environment index shows rich countries score far higher than poor countries. With relative economic decline will likely come, eventually, relative environmental decline.

So what's to be done?

The usual response over the past three or four decades has been that "they" should do something so that "we" can have cream cake with our cup of tea. "They" are people other than oneself or one's own group. Most often it is the Government. Business is very practised at this line.

Or we habitually wait for a big bird to bring us riches. That happened with refrigeration in the 1880s and aerial topdressing in the 1940s. Why shouldn't the cargo cult work its magic one more time?

It won't, or at least it can't be relied on.

So if the Government wants us to accelerate economic growth, as it says it does, to 4 per cent a year, it will need to take a lead.

Right now, to take the "triple bottom line" (economy, social equity, environment) approach adopted by Clark, when there are policy choices to be made between the economy and the other two, the other two have priority more often than not. That is hallowed social democratic practice, endorsed in 1999.

But if it is the economy that is stuttering and if performance in the other two areas is at least partly dependent on economic performance, the implication for policy is that the economy must take priority more often than not when there is a clash.

The fragility of the Bolger-Shipley Governments illuminated just how politically risky that prioritisation is.

Clark is highly risk-averse and she is keenly wary of Rogernomics-style politics. But she can also surprise.

That's what makes this week's Knowledge Wave conference interesting. It comes at a fulcrum point in Clark's prime ministership, when she can build on her "rebalancing" of 1990s policy with a wealth-enhancing 2000s policy.

She has the popular authority. Does she have the personal daring?

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ColinJames@synapsis.co.nz

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