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Money buys social progress

It’s tough for parties in the opposition benches. They have been stripped of a major rod with which to beat National in an election year. 

Criticising the management of the economy is an age-old strategy but is problematic when things are in the bloom of health and set to improve further as the Christchurch rebuild continues and demand for exports remains high.

In addition, business confidence is near record levels, employment indicators are increasingly positive and the pace of economic growth is set to remain above 3% until at least 2015. 

The opposition parties are not ignorant to this reality, which is presumably why we’ve seen them trot out various stalking horses to see what issues will get some traction. 

Social equality is one of these, as we have seen with Labour’s Best Start policy. Another is an attack on GDP itself, with claims by the Greens that wealth is not being shared fairly.

The release of the first Social Progress Index last week has taken some shine off this line of attack.

New Zealand was ranked as the leading country for social progress, followed by Switzerland and Iceland. Close behind were the usual contenders in global rankings, including the Netherlands, Norway, Sweden, Canada, Finland and Denmark. 

Social progress is defined as “the capacity of a society to meet the basic needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”

Delving below the headline figures, New Zealand was rated “relatively weak” on three factors: maternal mortality rate, access to improved sanitation facilities and inequality in the attainment of tertiary education. 

But the country was rated “relatively strong” on gender pay in secondary enrolment, internet users, freedom of the press, water withdrawals, freedom of speech, property rights, freedom of life choices, corruption, respect for women, community safety net, years of tertiary schooling, and tolerance for immigrants, homosexuals and religion.

What this suggests is that while there is an income gap (the 80th percentile earns over 2.5 times more than the 20th percentile) in New Zealand, there are no major barriers to social mobility. This undermines the basis for policies like Best Start, which seeks to spend hundreds of millions to close a gap that only Labour perceives.

As for the suitability of GDP as a measure of social progress, the authors of the Social Progress Index correctly note economic growth is not a good ruler, with weak predictive correlations between the two. 

However, countries with a high GDP per capita dominate Social Progress Index rankings (25 of the top 30 most socially progressive countries are rich Western countries). There are outliers, of course, such as Saudi Arabia and Kuwait but what this indicates is that wealth is a necessary pre-condition for social progress gains. 

This makes sense when you consider a framework like Maslow’s Hierarchy, in which equality and the environment can only be addressed once the basics of food, shelter and economic security have been satisfied. 

This is clear in the data, which show not one of the 40 poorest nations rank in the top 50 countries for social progress.

This isn’t a licence for policymakers to rest on their laurels but it suggests economic growth and social progress need not be seen as competing outcomes.

The government would be well advised to make this link clear to the public if it wants avoid being beaten with this stock as the September election looms.

Jason Krupp is a research fellow at The New Zealand Initiative

Comments and questions

Jason .. you say.."The government would be well advised to make this link clear to the public if it wants avoid being beaten with this stock as the September election looms"..
They would also do well to look at where they stand in the transparency and accountability indexes..
You can only push 'perception and propaganda politicking' so far when people cant pay their bills, find work where they live, most of the Auckland open homes and auctions are close to 7 to 1 Asian/Indian attended.. ( not anecdotal have been to them!). Rentals are beyond reach in our cities for familes of four with two working, let alone one not !and finally our current Ministers seem to have continuing trouble with what are 'their ministerial responsibilities', what cabinet manuals' actually state are facts, and what the public at large's growing perceptions are on issues which often look like they constitute GLARING conflicts of interest, cronyism at work and that other dreadful C word I am far too much of a genteel soul to mention here..
It rhymes with eruption though!
I agree with you 'economic growth and social progress need not be seen as competing outcomes', however, the playing field needs to be fair. It isnt at the moment unless you are still benefiting from those tax cuts in Key's first term.. WE arent!

You are making the assumption that tax rates were fair before Key cut them. They weren't. The top tax rate at 39% was nothing more than an envy tax imposed by the Clark/Cullen Labour government on the flimsy excuse "we won, you lost". The 33% top tax rate before that had been set by the Lange/Douglas Labour government in the mid 1980s. All Key did was take the 39% back to the original 33%.

Sorry Lindsay you are either making the assumption that I am a Labour supporter or that I am naive enough to not understand how the tax system inequality has continues to worsen exponentially for many more of us since 2008.
I am neither.
My comment stands, and actually to reinforce it I also believe their is far more sanctioned tax avoidance/evasion at the top 8% level under National/United Futures watch adding to the problem..

A central topic at this year's World Economic Forum at Davos, Switzerland was wealth inequality and how it may be addressed. The Government's own figures show that 8% of the NZ population own 52% of wealth, and the trend is worsening. Going into the election, some economic fundamentals may look fine, but this one doesn't. In this is an area, the present Government looks particularly vulnerable, particularly given their commitment to no major changes of policy direction.