THE AUTHOR

Martin Knox was born in England in 1946. The speculative fiction novel The Grass Is Always Browner was published in 2011 and general fiction novel Love Straddle in 2014.  Presumed Dead was published March 2018. Running Out of Time, a general fiction novel about marathon running, is planned for publication about 2020.

Author Martin Knox Author Martin Knox

Early in his working life he was a chemical engineer and later, a management scientist researching alternative models of government planning. He worked in the UK, Canada, the USA and Australian nuclear, tar sands, petroleum, coal and coal-to-oil industries. He was awarded 1st Class Honours in Chemical Engineering from Birmingham University and worked in the petroleum industry in Canada.

Martin Knox researched alternative systems of government at Imperial College, London. He emigrated to Australia to be employed in mining development. At age 40 he became a high school science teacher and wrote a textbook that was published, during that time. After which he wrote full-time for several years publishing a course in Senior Multi-strand Science and went on to teach it on-line to distance education students.

Since 2013, his main occupation has been writing fiction novels. His two marriages resulted in wonderful children and grandchildren, but also divorce. Always a thinker and doer, he writes letters, sings in a choir, draws figure art, discusses books, movies, philosophical ideas, government planning and current events.

Since August 2016, after completing Presumed Dead, he has been re-writing an abridged version of Love Straddle, A Girl Short, planned for 2019. There’s always a new writing project in the pipeline.

Martin Knox Author Martin Know relaxing at home where he writes full time.

Other Author Credentials

Martin Knox is active in city development forums as an individual resident, with views such as the following from 2017. He is not politically aligned and his opinions sometimes change.


DOES GROWTH BENEFIT SOME GROUPS AT AN EQUIVALENT COST TO OTHERS?

When the ‘developers’ ship’ moves through the economic medium of technology and humanity, it displaces existing activities and lifts up a wave of increased value in anticipation. In the wake are reduced values opposing the motion, such as devalued properties. Movement can possibly be in any direction, loosely referred to as ‘growth’. This is said to occur when developments act in the same direction on the GNP or another growth indicator, such as a Gross National Happiness Index. (1). The developers’ progress is

Martin Knox author Residential apartment building, West End, Brisbane, March 2016

propelled by taking a lead in investing, trading, profiting and voting that will power them along their right of way. Losers suffer reduced lifestyles but lack representation and are without power to prevent the disadvantages they suffer from development.

Growth tends to be welcomed because it is assumed to be a panacea for economic and social ills. Development is often welcomed the way a docking freighter is mobbed by a cargo cult. Is all growth wonderful? Before a development is approved, a comprehensive evaluation of its benefits and costs is desirable. This article will attempt to summarise various viewpoints and conditions a development should satisfy before it is approved. The focus is especially on economic winners and losers.
Developers justify their projects with reference to mainly five moral philosophies.
The idea of free markets rests on the laissez-faire philosophy propounded by Adam Smith in his book Wealth of Nations (2). Economic markets are undermined by the misbehaviour of greedy developers who seek higher returns on investment than free market competition would afford them. Buyers and sellers are supposed to act from independent self-interest. Governments have tried to achieve this by regulating developers but they have been powerless to prevent all but the worst excesses. Developers exploit their customers by controlling market conditions, such as gaining public land to develop without tendering by donation to a political party. Without competition, their gain is the public’s loss.
Unemployment in Brisbane at mid-March 2015 was reported by the ABC to be 5.1% which was commented to be ‘full employment’, presumably because this percentage is unlikely to be able to be lowered for ‘structural’ reasons rather than job insufficiency. Assuming such ‘virtual full employment’ really exists, another market inefficiency results. Development jobs, instead of reducing unemployment, attract employees from other projects and sectors. Development has job skills found in other areas. Thus development benefits may be offset by skill shortages elsewhere and the collapse of uncompetitive industries such as manufacturing.
In industries that are commonly constrained by scarce resources, paying Peter may rob Paul. When one industry makes high demands on labour, capital, land, water, energy or government favour, another industry could starve. The Gregory Thesis in the 1970s was that the growth of the mineral sector decreased the international competitiveness of manufacturing and agriculture (3). This was because mineral sales increased the value of the Australian dollar. This competition was apparent in currency exchange rate change but other inter-sectoral competition within Australia also occurred but was less noticeable. Thus sector growth is not in ‘terra nullius’ but displaces earlier indigenous occupation.
Residents’ are often losers from construction in their neighbourhoods of new accommodation and resulting increase in population that could cause a decline in lifestyles. The winners are probably investors in the development company, banks, suppliers and other local businesses and property owners. Whereas winners are likely to gain more from development than losers lose, there is no requirement for losers to be compensated. Losers may also have to contribute infrastructure costs, because developers in Queensland are reported to pay only 65-70% of the infrastructure delivered (4), with the rest presumably being taken from residents rates payments.
The philosophy of free markets focusses on economic benefits and economic losses. There are other dimensions to consider. The philosopher Jeremy Bentham in the 18th Century advocated consideration of happiness and pain in his principle The Greatest Good of the Greatest Number. Under this philosophy, when a public park is to be extinguished by a development, the economic benefit that would accrue to the developer may hold less sway than the losses in amenity that would be suffered by the community. In making such a calculation, Bentham applied another important principle: ‘Everybody to count for one, and nobody for more than one.’ This became known as the ‘utilitarian’ philosophy.
Another philosophy is that production from resources of finance, skills, land, space, transport access, water, energy and finance should be sustainable. Resource usage efficiency may be achieved because the developer reaps the benefits. For other other aspects of sustainability to be respected, Government intervention may be necessary.
We have all seen examples of the developer collecting an ante on hyped up provision of sustainable features such as renewable energy. It can result in developer benefits being obtained from users.
Another philosophy of development is to require humanitarian benefits, such as provision for disabled and disadvantaged people. Costs of such provision could be passed on to buyers of developed properties. These benefits would be user-paid.
If developers adopt a philosophy of conserving natural environments, it could prevent destruction and rundown, ameliorating them for user and community benefit. Again, it would be user or government paid.
Obeisance to some or all of the above five philosophies and others may be required by planning authorities. As we have seen, actioning of these concerns is either with the developer or the government and often user-paid.
Issues of who benefits and who loses from development can be related to criteria propounded by welfare economists. The Pareto principle is that:

‘(a) legitimate welfare improvement occurs when a particular change makes at least one person better off, without making any other person worse off.’ (5)

Under this criterion, a developer would be required to fairly compensate all those who would be disadvantaged. I have not come across any examples of developments where this criterion has been applied. Its critics point out that it treats developers severely according to traditions of compensation, or rather absence of compensation.
Council development assessment officers would probably have some examples of where objectors have been compensated by a developer. For the most part, developments are approved without compensation of objectors.
Modern law and economics are almost entirely based on the Kaldor-Hicks criterion: winners should be able to compensate all losers (6). A loser is supposed to be consoled as he wallows in disadvantage that the winners are getting more than he’s losing. He will get no compensation at all. I believe this is the situation with most development in Australia. Certainly, the winners are profiting at the expense of the losers.
A third criterion is Little’s: the potential losers could not profitably bribe the potential gainers to oppose the change (7). Again, losers do not actually get compensated. It would be a poor consolation that the gainers would make too much to stop them.
In summary, developers in Australia are required to have prospects of making more than losers lose, don’t have to pay them compensation and get community donations. It is a bias that is the accustomed propulsion of development even though the effects on the economy may be disruptive and even harmful.
Other growth propellants are birthing, immigration and government spending on infrastructure, defence and other non-market projects. They may be short-term stimulants or long-term investments. The dimensions of their benefits include humanitarian and Keynesian effects. The costs are borne by wider groups such as taxpayers and it is more difficult to compare benefits with costs.
All these influences on individual developments together may result in ‘growth’. As we have seen, very often the benefits to developers are at a cost that may even be larger to another group, such as the community. It behoves developers to be considerate of others, taking more responsibility than simply supplying users.
Governments should check that a development observes the five philosophies mentioned, especially free market competition. Shrinkage of an adjacent economic sector due to the development should be predicted by the government and deducted from benefits causing approval. Development approval tends to be granted without real compensation of losers. Governments should prevent a few people benefiting from development at the expense of others in the community.


References
1 Zhong, Raymond, ‘In Bhutan, Gross National Happiness Trumps Gross National Product,’ The Wall Street Journal, December 15, 2015.
2 Smith, Adam. ‘An Inquiry into the Nature and Causes of the Wealth of Nations, 1776.
3 Gregory, R, G,, “Some implications of the growth of the mineral sector.”, Australian Journal of Agricultural Economics, 20(2), 1976, pp.71-91.
4 Coutts, J Executive Director, Planning Services, Planning Group, Department of Infrastructure, Local Government and Planning. Public Briefing – Planning Bills 2015, Transcript of Proceedings, 30 November 2015, Brisbane.
5 Pareto, Vifredo ‘Cours d’économie politique,’ University of Lausanne, 1896.
6 Stringham, Edward ‘Kaldor-Hicks Efficiency and the Problem Of Central Planning,’ 2001, https://mises.org/files/qjae423pdf/download?token=7T2JY0RK
7 Little, Ian M.D. ‘A Critique of Welfare Economics’, 1949, Oxford, 1950, p273-275.

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