An Economy That Serves The People


Christine Milne’s first major speech as Greens leader, delivered yesterday to the National Press Club, should have been a red rag to her critics. But whereas The Australian and the Coalition have consistently run a "class war" line against even mild proposals by Wayne Swan and Julia Gillard, Milne’s economic address seems to have been delivered to an empty room.

Milne’s thesis was essentially this: that the economy should serve people and nature rather than be "an end in itself". This boilerplate statement alone should have provided plenty of meat for the attack dogs.

In particular, she criticised the overweening focus of commentators and politicians on GDP as unrealistic:

"GDP measures what we make and consume, not who we are (our human and social capital) or where we live (our natural capital). It ignores work done in the home and volunteer work across society. It disregards the entrenched gap between rich and poor. It loves a catastrophe like a car accident or the Queensland floods because they generate economic activity, regardless of the human cost."

William Nordhaus, the Sterling Professor of Economics at Yale University, has argued that GDP is important as a measurement tool, because in previous decades we had comparatively little information about the health of the economy. "There were people then who said things were fine and others who said things weren’t fine. But we had no comprehensive measures," he told the New York Times’ Jon Gertner in 2010.

But as an indicator of real progress, GDP still doesn’t tell the whole story — the Obama administration is playing politics, not development, when it emphasises increasing GDP, rather than high unemployment figures, Gertner said. Milne ran a similar line yesterday, saying, "… if we’re helping unemployed people find worthwhile jobs and we’re addressing structural inequities such as illiteracy; surely that is real growth, regardless of what our GDP numbers show". Even the business world is coming around to this kind of thinking. Integrated business reporting that considers social and environmental impacts is beginning to make inroads.

Milne also addressed the "debate" around productivity. "Contrary to what [the Liberal Party and business lobby]say, there is no evidence that allowing workers to be treated more harshly and unfairly does anything to improve society". The Greens, she said, will focus on "education, R&D, better health and better resource efficiencies".

Studies by Ernst and Young and the Society for Knowledge Economics in 2011 found that "human capital" issues — how staff are managed and trained — were the biggest drains on productivity. NM’s Ian McAuley wrote on the issue earlier this year:

"Contrary to the notion that productivity stems from hard-driving management, [the studies]found that high-performance organisations were distinguished from low-performance organisations by high scores on procedural and distributive fairness, job satisfaction and well-being. In short, a set of workplace relationships characterised by mutual respect."

Her other positions — that we need to tax more (but not broaden the GST), price carbon, move the political focus off election cycle surpluses and find savings in the removal of subsidies for dirty industries — are accepted by large parts of the Australian and international establishment, including Nobel Prize winners Paul Krugman and Joseph Stiglitz, as Milne was quick to point out. Tax in particular is a no-brainer; the current Labor government taxes less than John Howard. And as we’ve argued consistently here at NM, the time to invest in public infrastructure is now. 

But despite this, Milne will have trouble convincing anyone that "the Greens are the most economically responsible party in the parliament" on an anti-surplus line. With the risk of a "double dip" recession still a very real one, keeping "dry powder" in the form of budget surpluses is attractive both economically and politically, as Rob Burgess argues today at Business Spectator.

Whether the leader of the Greens will have the chance to realise any of her economic vision is another question. Milne maintains that when it comes to economics, the Greens aren’t "anti-growth" — but she’ll have to work hard to convince the electorate that this is the case if the party is to survive. Both major parties are gunning for the Greens, and Milne knows it, insisting that the party’s electoral priority is to increase their primary vote — in the face of evaporating preference deals, defeats in recent by-elections and ongoing attacks from Sussex Street.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.