Category Archives: Growth and development

ECONOMY IN TRIAGE

Could policy leaders decide the priority order of treatment for parts of the economy injured or disabled by pandemic restrictions? My proposal draws informally on Keynesian, Classical Monetary and Modern Monetary theories. I reject Laissez Faire theory because governments have already begun large expenditure commitments. I have attempted to derive priorities by screening out activities that could be helped by governments to bring happiness of various kinds: hedonistic, eudaimonic, psychological and spiritual to the various stakeholders employees, customers, suppliers and investors. 

I will not identify my analysis with particular local, state or federal government jurisdictions in any country. I live in Australia, but I describe below phenomena that have been prepared from thought rather than by social research and they could be enumerated in many locations.

Because of their multiplier effect, outputs that are inputs to employment-intensive follow-up activities should have priority e.g. trucks not cars.

Infrastructure projects that cause most sustainable employment should be preferred e.g. construction of public park amenities, not National Broadband Network fibre optics installation.

Public funding should support the greatest good of the greatest number, like public transport, not narrow interests, such as subsidisation of airlines. Haemorrhaging of public funds to support unsustainable industries should cease.

Developments requiring sustainable skilled employment are more desirable than casual unskilled labouring. 

Funding of arts, entertainment and education should recognise their potential for multiplier effects in stimulating development in other sectors.

Diversity of outputs is desirable to reduce currency inflation effects on industries struggling with falling prices for their exports and increasing costs of imports e.g. farms, due to buoyant foreign exchange rates from high growth sectors e.g. minerals (Gregory Effect). 

Priority should go to primary industry supplying secondary and tertiary industry, when it conserves and sustains scarce natural resources.

Value-adding by secondary processing of products e.g. minerals, could have priority where efficient use is made of natural resources e.g. water, land.

Development of the tertiary sector should prefer industries with a high multiplier effect e.g. tourism, education, health. Activities that generate little sustainable employment, for example coal quarrying for export and retirement apartment construction, could be less attractive.

The priorities above are controversial. The task of calling help for some parts of the economy and denigrating others will be contested from personal experience and interest. I have made these calls to draw attention to the parlous state of government treatment of the economic pandemic. I want to register my disapproval for profligate government spending by highlighting some likely consequences.

 For further ideas see my writing on growth, development, government, Covid-19 at https://martinknox.com

TURNING DOWN GROWTH

As economies strive to regain momentum after Covid 19, should growth of Gross National Product, as a national goal, be limited by stopping certain types of development?

Below are five initiatives against uncontrolled growth. 

Costs of growth to a community can exceed the benefits to the developer. Governments should prevent a few people benefiting from development at the expense of others who have no legal redress. Winner-take-all is a development game won by wealth. Legislation is required to fully compensate losers. See: Does Growth Benefit Some Groups At An Equivalent Cost To Others? M P Knox 2020.

A steady state economy is the sustainable alternative to perpetual economic growth. Responding to an increasingly constrained world, the Centre for the Advancement of the Steady State Economy has policy goals of stabilized population and consumption.

Growth could be opposed. Disillusionment with societal development by technological and industrial systems has created interest in overthrowing it by popular revolution. See: Industrial Society and Its Future, Theodore Kaczynski, 1995.

Instead of setting happiness goals that would inspire their citizens, governments fix on GDP growth and increase in wealth. It is proposed that Maslow’s hierarchy of needs is a suitable template for government actions to achieve real happiness. See: A Plea For New National Goals That Inspire. M P Knox 2020.

Happiness Alliance’s mission is to improve the happiness, well-being, and sustainability of all beings on our earth. It has sought the replacement of GNP by Gross National Happiness as in the nation of Bhutan. 

Control of growth could consider four other concerns.

Jobs and Happiness

Whenever a development is touted, the number of jobs to be created is stated first. Public perception of developments has favoured the creation of still more jobs when there has been near full employment. A surplus of jobs has choice: occupation, income, social status, sociality location that people value. People’s ultimate happiness’s vary: hedonism, eudemonia, flow and spiritualism are the main types. A person’s job defines the types of happiness achievable and what he or she will strive for. Thus the value of growth is partly the summation of employees’ happiness’s. Jobs that reward merely with income for superficial hedonism would be inferior to those bringing higher quality happiness. 

Growth should be sustainable

When demand increases there can be growth in supply, or a chain of supply. The chains go back to primary production from natural resources, which may be abundant or possibly scarce and unsustainable. The supply chains often employ people in permanent jobs. Attractiveness of growth in a chain of supply depends on the overall multiplier effect, measured as the increase in GNP (including remuneration paid) or counted in jobs created.

Increased supply of cotton grown for export from Australia would employ few extra workers, require few supplies, take scarce land and water and devalue incomes in other sectors (Gregory Thesis).

The best growth is at the end of a long and variegated supply chain, with its output value added to by further local processing. It doesn’t matter whether the goods are machinery or fashion accessories, because the happiness generated depends on employment quantity and quality created. Growth from mining of non-renewable resources using scarce water, with low employment and loading them unprocessed into ships, could be turned down as of low benefit to the community.

Individuals and the Public Good

Adam Smith proposed that supply of goods to market buyers was all the public welfare society needed. Jeremy Bentham wanted the greatest good of the greatest number. In welfare economics, the public good is decided with money amounts. A development was good if the benefits exceeded the costs and whether the winners could compensate the losers, or perhaps the losers could pay-off the winners. 

But in practice there are wider considerations in deciding whether to approve a development. Monetary gain, utility, resources use efficiency, humanitarian concerns and environmental impact all affect computation of growth. Keynesian priming of economic project ‘pumps’ with low value public works could be turned down if they do not overcome these concerns. Growth by digging holes and filling them in again should be turned down.

Personal goals and achievement

John Stuart Mill put responsibility for growth on individuals, who pursued liberty within the confines of societal laws required to protect other individuals.  Simone De Beauvoir in her book The Ethics of Ambiguity has explained that true freedom cannot be obtained by walking over others’ freedoms. Growth that takes away individuals’ freedoms should be turned down. 

In conclusion, growth should be regarded with rational scepticism as a sectoral interest. Cargo cults and cranes on the horizon are ideologies of past times and have no place in the present or future.

https://martinknox.com 

Pruning controls growth

A PLEA FOR NEW NATIONAL GOALS THAT INSPIRE

A 3-min read.

People are of different types, from high achievers to vague drifters. They all benefit from purposeful government, because without purpose and goals, often little of real value results. Goals motivate achievement. Motivated humans can achieve greatness. 

The Egyptian pyramids are evidence of unequalled human accomplishment. The pyramid builders probably valued the pyramid as a cultural icon. NASA’s Apollo programme had a man-on-the-Moon goal. The work meant more than collecting one’s pay. Humans can strive in cooperation if goals are well-defined, their challenge is accepted and achievement is by overcoming difficulties, not by winning.

Happiness is the main purpose we have. We need it for our health and well-being. Suppose a government could make a new beginning and wanted happiness for its people. What types of happiness should that government seek? There are four kinds of happiness according to The Happiness Alliance they are: eudaimonic help to others (making a difference; community; altruism; levelling); psychological flow (existentialism; freedom); hedonistic consumption (sociality; acquisition; travel; sport; arts); or spiritual escape and religion.

Although these types of happiness can be produced by government actions, they are too embedded and indeterminate to be planned and budgeted. This is a problem, because precise a priori happiness goals are needed to inspire achievement. Neither wealth nor GDP growth promote the happiness of enough individuals for surrogacy.

Psychologist Abraham Maslow in his 1943 paper ‘A Theory of Human Motivation,’ identified many types of satisfaction: physical; emotional; social; psychological and spiritual in a hierarchy cumulating satisfaction from provision. For example, a person won’t be able to satisfy self-esteem needs while they are starving. It is proposed that a government should plan and budget for its people to achieve satisfaction of the needs categorized by Maslow, beginning with basic physical needs, then progressively higher needs, which would be satisfied with cumulating happiness.

What if each of safety, belonging, esteem and cognition was adopted as a programme goal? Could elaboration of Maslow’s goals inspire and prioritise government spending? Please tell someone who could use this approach.

If the donkey knows what is required and the carrot inspires it, no stick is necessary. Sticks don’t drive us these days. Goals are carrots when they achieve happiness.

https://martinknox.com

KNOW IF GROWTH IS GOOD OR BAD?

Australia's GDP growth was 0.2 percentage points for the quarter ending September 3rd, 2019, bringing the annual pace of GDP growth to 1.2 per cent. It has been higher in the past and is almost at the zero growth rate favoured for a steady state economy. It is a half of the US rate of 2.3 percent for the 4th quarter in 2019. Australia's production is growing slowly. Are we to suppose there has been improvement in something else? Unlike Bhutan, Australia does not record happiness. If there has been an increase in happiness, or a decrease, we wouldn't know. Media reports of growth and its effects provide only a partial picture.. 
To appreciate what growth is occurring and how beneficial it is, I will switch my viewpoint to individual developments, the criteria for identifying winners and losers, and what they can expect.
This is investigated in my paper DOES GROWTH BENEFIT SOME GROUPS AT AN EQUIVALENT COST TO OTHERS? For developments where this occurs, there are several possible philosophies of compensation. A conclusion is that development proposals should be audited for their attention to: markets; the public good; resource use efficiency; disadvantaged people; and conserving environments. Careful development will ensure that growth, although it may be slow, will be fair.
My novel Presumed Dead is a crime fiction story that illustrates a government decision process for a casino development involving a sassy woman city councillor.
growth-benefits-and-costs-160819.docx

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