Money buys social progress

Jason Krupp

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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

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