Presbyterian Support Northern is hosting a series of lectures on different aspects relevant to the wellbeing of children. The first lectures were given by Australian Labor MP, and former economics professor, Andrew Leigh. I wrote about his lectures here.
I was asked to speak on something around productivity and the wellbeing of children (thus there are huge areas highly relevant to child wellbeing that I simply don’t touch on). This was how my talk opened.
Imagine a country in which the average age at death was only about 45, 6 per cent of children died before their first birthday, and another 1.5 per cent before they turned five. Not many children are vaccinated.
Most kids get to primary school – in fact it is compulsory – but only a minority attend secondary school. By age 15 not much more than 15 per cent of young people are still at school. Only a handful do any post-secondary education (total university numbers are about 1 per cent of those in primary school). Houses are typically small – not much dedicated space for doing homework – even though families are bigger than we are used to. Perhaps one in ten households has a telephone and despite the street lights in the central cities most people don’t have electricity at home.
Tuberculosis is a significant risk (accounting for seven per cent of all deaths). Coal fires – the main means of heating and of fuel for cooking – mean that air quality in the cities is pretty dreadful, perhaps especially on still winter days. Deaths from bronchitis far exceed what we now see in advanced countries. There isn’t much traffic-related pollution though – few cars, so people mostly walk or take the tram. The biggest city is finally about to get a proper sewerage system, but most people outside the cities have nothing of the sort. And washing clothes is done largely by hand – imagine coping with those larger families.
Maternal mortality rates have fallen a lot but are still ten times those in 2018 in advanced countries. One in every 50 female deaths is from childbirth-related conditions – which leaves some kids without mothers almost from the start.
Welfare assistance against the vagaries of life is patchy. Most people don’t live long enough to be eligible for a mean-tested age pension. Orphans aren’t in a great position either, and there is nothing systematic for those who are seriously disabled. There is a semi-public hospital system, but most medical costs fall on individuals and families, and there just isn’t much that can be done about many conditions.
There are public holidays, and school holidays, but no annual leave entitlements. No doubt the comfortably-off take the occasional holiday away from home, but most don’t, because most can’t (afford it). Only recently has a rail route between the two largest cities been opened – but it takes 20 hours for cities only 400 miles apart.
I wouldn’t choose to live in that country. Would you?
And yet my grandparents did live there – they were all kids then. This was New Zealand 100 years or so ago, just prior to World War One. I took most of that data from the 1913 New Zealand Official Yearbook.
And if it all sounds pretty bleak, New Zealand was probably the wealthiest place, with best material living standards, of any country on earth. In the decade leading up to World War One, New Zealand’s per capita income was (on average) the highest in the world (jostling with Australia and the US, with the UK a bit further behind). The historical GDP estimates are inevitably a bit imprecise, but on statistic after statistic in that 1913 Yearbook, New Zealand showed up better than the other rich countries the compilers had data for.
The difference in material living standards between then and now is productivity – the new ideas, new products, new ways of doing old stuff, making more from what we have. Of other influences on material wellbeing, the terms of trade haven’t changed much taken over 100 years as a whole, and people work a shorter proportion of their lives now (whether in the market or in the home) than they did in 1913. Then, most (who survived infancy) were in work by 14, and dead by 65. Productivity is that enormous difference between what we enjoy today, and what my grandparent had as kids in middle-class New Zealand families on the eve of World War One.
And yet, by international standards we’ve done badly. We’ve gone from top of class to perhaps 30th today. It would take a two-thirds lift in average productivity for us to match today’s top-tier (a bunch of – small and large – northern European countries, and the United States).
That’s bad. On the other hand, think of the possibilities it leaves open. We don’t need to blaze trails at the productivity frontiers: making significant inroads on the gap between us and the top-tier would make a big difference to us, and to our kids. And economic failure tends to fall most heavily on those at the bottom, so getting a significant lift in productivity opens up possibilities for everyone, including the disadvantaged.
In this address I’m not focused on the how – the specific policies that might make a real difference. My focus is on highlighting the difference that could be made, and calling for our leaders – political and bureaucratic – to start acting as if they believe things can be better, getting in train processes that might identify what is really important for productivity here in New Zealand, and then getting on with it. Despite occasional references in speeches, our political leaders seem to have more or less given up, focusing on other stuff.
There is a (valuable) place for redistribution and policies that address immediate needs now – it isn’t an either/or – but just as no possible redistributive policies in 1913 could possibly have given people today’s material living standards, so any new redistributive policies now will inevitably make much less difference than markedly lifting our productivity performace would. I’ve banged on here about how dismal productivity growth in New Zealand has been in the last five years in particular (a total of 1.5 per cent). The best-performing OECD countries over the most recent five years were averaging more than 2 per cent productivity growth per annum – and all of them were countries catching up with the most productive economies, just as we once aspired to do. If we’d managed 2 per cent productivity growth per annum in the last five years, per capita GDP would be around $5000 per head higher (per man, woman, and child) today.
Catching up to the top tier will, in a phrase from Nietzche, take a “long obedience in the same direction” – setting a course and sticking to it. But here is a scenario in which the top tier countries achieve 1 per cent average annual productivity growth, and we manage 2.5 per cent average annual productivity growth. Here’s what that scenario looks like:
I’ve marked the point, 15 years or so hence, where the gap would have closed by half.
Could it be done? Well, on OECD numbers the G7 countries as a group have managed average productivity growth in the last 15 years of about 1.1 per cent per annum, and plenty of OECD countries – each in catch-up mode (Korea, Turkey, and various eastern and central European countries) – have matched or exceeded 2.5 per cent annual productivity growth over that period as a whole. Mine is just a scenario, but it doesn’t look like one that should be beyond New Zealand – and unlike any of those other countries, we were the richest and most productive country in the world barely more than a century ago.
The full text of my address is here. It includes a plug for fixing the manifest evil – by outcome if not by intent – that is our housing and urban land market, which systematically skews away from those at the margins, where (inter alia) our particularly disadvantaged children are typically found.
I end this way:
Judging by the inaction of our leaders in tackling the persistent productivity failure, it suggests that when it comes to crunch ours (regardless of party) care much less about the kids – of this generation and the next – than the cheap rhetoric of election campaigns might suggest. Giving up on productivity – in practice, and whatever the rhetoric – is a betrayal of our kids (and their kids). And most especially it betrays the children towards the bottom of the socioeconomic scales, those who typically end up paying the most severe price of economic and social failure.
Productivity isn’t just some abstract plaything of economists. It makes a real and tangible difference, opening up whole new possibilities and options. We need, and should able to achieve, a whole lot more of it. Our kids deserve no less.
croaking cassandra 