A FEW years ago, a couple of politicians made an extraordinary offer. Come to Hawke's Bay and invest, they said, for we have low wages and conditions.

This thinking imagines that economic success comes, not from the creative dynamism of our own local culture and enterprise, but when some outside "investor" comes into our place like some latter-day colonist.

And all the better to be cheap. Hail cheap human resources, cheap environmental resources (even free, if you can get it), cheap compliance costs. Hail their freedom to take the land and whatever lies beneath.

This is a seriously visionless view of our commercial world, whatever the propaganda of jobs and prosperity for all. We can think and act a whole lot better than this.


It was also more confirmation of what we have known for some time: There are many men in suits who see the wage rates of Bangladesh as our economic goal. Let us have poverty — poverty is good for business — and let's put the blame on the victims,

perpetuating the myth of the undeserving poor while lauding those who drive a Maserati.

This approach to life and the economy is very dumb because it degrades the basis of a strong local economy. It is morally and intellectually bankrupt because child and family poverty is our poverty, just as the degradation of our natural systems is our degradation.

It is also myopic because it kills opportunity, creates costs, and makes life worse for local business, and it is deluded because it promotes the takers and short-term wheeler-dealers and makes life harder for creative enterprises.

We lose community cohesion and quality, get less enterprise, get additional costs, and less money going around local business.

Here's how. A kaumatua once told me that people have lost hope. We were comparing the feeling of optimism and opportunity we once had with the feeling today that life is now different. When people lose hope and optimism, then society is worse, and the realisation of talent stalls. We are poorer.

This loss of cohesion and belonging is the first and major cost of poverty. When you make policies that reduce hope we degrade our social capital; the very thing that creates economic prosperity — trust, participation, belonging, social and individual responsibility, justice and caring.

When you feel good about life, you meet, you trust in justice and each other, you exchange ideas, discussion flows — and things happen. Start-ups, clusters, art, expression, value-chains, new connections. And enterprise leads to more enterprise, hope to hope ... a virtuous circle.

You also see opportunities and have the confidence to feel you are not, once again, going to be treated as a casual unit, a wage slave.

This is a sociological phenomenon understood by the best economists, those who focus on people-led development. Build a community, a team, not a mechanical factory staffed by unthinking and obedient Orcs.

To compound the idiocy of crushing potential, we get costs instead. The personal cost of misery when children are sick with preventable diseases; the public cost of having an ambulance at the bottom of the cliff instead of cheaper prevention; more mental health problems; wasted education investment; violence, theft, police and prisons all increase.
The last negative effect of poverty is in reducing economic demand.

The Great Depression is a classic example of what happens when you reduce demand to a trickle. But we had our own mini-example when New Zealand's local economies tanked after National Party Finance Minister Ruth Richardson stripped $1 billion off welfare support in her 1991 "Mother of all Budgets".

It tanked because poor people — who tend to spend locally — could no longer buy, and so those enterprises laid off staff, compounding the reduced spend and the layoffs. And Big box retail came in to compound the problems of local business.

So let us start a conversation. Poverty is a choice we make; a very bad one. It is both a symptom of an economic creed and a key driver of our own material and spiritual poverty.

Poverty suits the takers, not the creators — it is not the consequence of some moral or meritorious karma; it is a clear sign of an economy in trouble, and a need to think and discuss new ideas.

Chris Perley is an affiliated researcher at Otago University's Centre for Sustainability with a governance, research, management and policy background in provincial economies, rural communities and land use strategy.