Dialogue: The only way out of this hole is to stop digging

New Zealand has the highest level of household debt among the developed countries in the OECD. Its people are losing touch with values that are crucial to setting society on a sustainable course, writes JOHN LAIRD.

Anxious about New Zealand being able to attract foreign investment capital and achieve a high-growth economy?

Worried that the whole society must run faster just to keep up with other developed countries in the gross domestic product stakes?

Instead, why not take a hard look about what we value in our lives and society, and fashion an economy and lifestyle consistent with our resources and real needs?

Consider these points.

* New Zealand has the highest level of household debt among the developed countries in the OECD

* The country is on a consumption binge fuelled by easy credit and overwhelming advertising

* Mass media, particularly television, exalt consumption and devalue knowledge through a deliberate dumbing down of their audience.

These observations indicate that New Zealanders are losing touch with values that are crucial to setting society on a sustainable course.

Last January, Reserve Bank Governor Don Brash warned about the sustainability of household debt, measured by family savings rates.

Bank statistics show Kiwis' household savings rate declined from plus 2.5 per cent in 1992 to minus 4 per cent in 2000.

"By that year, our households were, in aggregate, spending more than their income. The OECD average saving rate that year was 8.4 per cent," Dr Brash said.

He warned that the level of household debt made New Zealand vulnerable to damaging and unforeseen events in the global economy.

The Reserve Bank had analysed the composition of the debt and concluded that it arose mostly from personal consumption. Dr Brash discounted an assumption that mortgage debt was higher than in other countries, saying New Zealand no longer had a particularly high percentage of home ownership compared with other OECD countries.

Another issue of sustainability is the student loan programme, which Associate Education Minister Steve Maharey declared to be unsustainable in the long run.

Last year, the programme had amassed a debt of $3 billion, which the Auditor-General projected would reach $20 billion by 2020.

By contrast, look at the situation in China, which is emerging as an economic superpower.

Middle class and upper middle class families there commonly set aside as much as three-quarters or two-thirds of their disposable income for their children's higher education.

Can New Zealand compete with that? Putting the burden of finance on students is a symptom of a society that values self-indulgence ahead of higher education of its children.

The question of sustainability internationally is focusing on how over-consumption among the middle classes and elites is destabilising global ecology and climate.

Reckless consumption of natural resources, driven by free markets rather than responsibly managed markets, is rapidly depleting the planet's biodiversity.

Pollution from overconsumption is spurring global warming and causing other ills.

Aiming to achieve sustainable consumption, we need to focus on how television has become a captive tool in the promotion of consumption.

When we look at dangerous debt levels in New Zealand, should we be surprised to hear that television here apparently has the highest frequency of advertising in the developed world?

It gets worse. Figures published by the United Nations in 1998 show that New Zealand had the highest expenditure on advertising as a percentage of GDP among developed countries, exceeding that of the United States and Australia, and equalled only by Britain.

Television has vast influence. Our children on average spend 25 hours in front of the television each week, about the same hours they spend in the classroom.

The development of a knowledge economy based on the pursuit of excellence is now widely seen as essential to our economic future.

Yet we squander resources on promoting a consumption economy and devalue the potential of education through the media.

Worldwide, media analysts are becoming increasingly alarmed about the dumbing down of the media. With its high level of intrusive advertising, our television is one of the worst culprits.

Dumbing down refers to programming tailored to the needs of advertisers. They want programmes that exempt viewers from the burden of thinking, but provide titillation and sensationalism.

Viewers are supposedly lured by this into a non-critical state of mind receptive to advertising.

Advertisers' quest for high audience ratings pushes programming towards the lowest common denominator, typically focusing on low-intellect themes of crime, violence, aggression and sex-related humour and vanity.

Is it a surprise that levels of frustration and aggression in our society are rising when such an influential medium parades desirable consumer goods alongside such themes?

Commercialised television may be free to air but it has its social cost and we end up paying for its delivery anyhow through increased prices of consumer goods.

Television is too powerful a tool merely to be dedicated to commercial gain.

The alternative, public service media, has been choked off by the ideology of commercialisation. The Government's response, tinkering with a TVNZ charter, is weak.

Again, reflection about New Zealand's place in the global economy is needed.

Economic globalisation has not been particularly kind to us. We have opened our markets to all kinds of negative influences and surrendered a large amount of economic sovereignty to foreigners, yet the expected access to major markets that would take our economy to a higher level is not forthcoming.

One problem is that New Zealand is operating under economic rules that were invented by foreign economists to serve capital-rich, big-market economies. New Zealand can hardly compete for foreign investment with European Union countries similar in population because those countries have access for their products to the whole EU market of 300 million people.

New Zealand cannot compete with developing countries for foreign investment in mid-range manufactured products because such investment favours low wages, lower environmental standards and fewer social obligations - thresholds that New Zealanders are unwilling to lower.

All the while, hanging over us is the unattainable American dream of ever-increasing consumption.

Obviously, money spent on self-indulgence is money not invested in education or innovation for the economy. We need a more nationalistic, self-sufficient and low-consumption economy that will yield a healthy savings rate for investment.

We need to re-evaluate the economic concepts coming to us as the hand baggage of globalisation.

For example, many of our economists still trot out the concept of consumer confidence as a measure of health of the economy, and journalists mostly buy it uncritically.

Consumer confidence is a euphemism that carries considerable ideological baggage: that increased spending and consumer-led growth are vital to the economy.

Families are already deep in consumer-based debt.

Will they dig an even deeper hole to fulfil the mantra of consumer confidence?

Refocusing lifestyles towards self-development and fulfilment through social involvement will enhance sustainability and harmony in society.

* John Laird, formerly a United Nations official promoting sustainable development, lectures in journalism at AUT.