Frank Greenall: De-growing the economy

Frank Greenall

WE USE the term deflation to describe the increasing value -- through increasing scarcity -- of any given monetary unit, as opposed to it decreasing value through inflation.

Perhaps we should introduce a new term -- let's call it de-growth -- to describe an economy supposedly in growth mode, but where the majority of citizens' living standards lessen.

Following on the tail of "zombie town" man Shamubeel Eaqub, we now have Massey University demographer Peter Spoonley similarly predicting that in the next 20 years 60 per cent of the nation's growth will occur in Auckland.

His corollary to this is that most of the provincial regions are in "decline" as younger generation numbers relatively decrease, and therefore the challenge facing smaller centres is to "manage" this decline.

Not to labour a point, but the term "growth" is meaningless without factoring in the externalities and consequences associated with it, which is what we do with conventional "growth" criteria such as gross domestic product. Most economists, academics and businesspeople are absolutely in thrall to this fundamental deceit.

As with Marilyn Waring's example in her seminal work Counting For Nothing, it's akin to burning the furniture to warm the house, then claiming your standard of living has improved because you're temporarily warmer while now sitting on the floor.

The dairy industry understandably cops a lot of flak in this regard, but whose non-costed externalities make a mockery of "growth" metrics.

Dr Mike Joy, the Massey University freshwater ecology expert, recently pointed out some horrendous figures based on the amount the Bay of Plenty Regional Council recently paid a farmer NOT to dairy farm. This was to eliminate his nitrogen leachate into heavily polluted Lake Rotorua, with other farmers similarly targeted.

If this subsidy were to be implemented nationally, it would cost a staggering $20 billion per year to reduce leachate to acceptable levels.

Similarly, the pressures imposed by rampantly inflationary property values in Auckland, with crippling rents being asked of those least able to afford them, is inevitably engendering both physical and mental health issues, not to mention rising crime rates, as people struggle to make ends meet. Scandalously, the social services and justice/corrections sectors already figure among our major growth industries, and bet your bippy they will further expand. Is that where a big chunk of Mr Spoonley's Auckland "growth" will come from?

Many big business models we have constructed are more based on the old extractive and exploitative models of colonial powers, rather than seeking to build fair, sustainable and enduring economic entities for employers and employees alike.

Too often we see short-term strategies instead of long-term sustainability, and employees chivvied into working long hours with minimal wages and conditions.

Meanwhile, chief executives convert the savings into shareholder capital as per the strict directives of their million-dollar employment contracts. It's just a form of asset stripping -- both material and human.

Concurrently, we also see the toxic growth of the financial services sector that has no real value in terms of fostering quality of life, but exists to parasitically mine what should be simply a basic mechanism for facilitating the exchange of good and services. The supposed value of the financial derivatives market is an obscene multiple of the actual markets that serve what may be called genuine business needs.

Meanwhile, with household indebtedness right up there on the Olympic podium, many Kiwis -- including dairy farmers -- are totin' the barge every day to keep a lot of Australians laughing all the way to the banks that used to be ours.

Despite the astounding technological progress and income streams of recent decades, we have seen the non-elite economic sectors stagnating in terms of both true income and quality of life indicators.

Growth? Yeah, right.