The doughnut economy

: Oxford Univresity economist, Kate Raworth
 

Yesterday saw the unveiling of more details of the Government’s “well being” economic measures.

Momentum is beginning to build on the well-being project with the next big step being an international conference in Wellington in November and then the rollout of the measures in next year’s budget, presumably in May.

And today one of the international thinkers working in the area, Kate Raworth from Oxford University, will present a keynote speech at a conference in Auckland about her model of the economy which she calls “the doughnut economy”.

Simply both the well-being measures and Raworth’s theory are designed to define the quality of the economy rather than just the quantity of the numbers that measure its day to day activities.

The “living standards framework” is being built by the Treasury  around four different types of capital --- the conventional financial/ physical capital and also natural, human and social capital.

Treasury yesterday published a paper looking at how culture intersected with the capital definitions.

The paper said: “The ability to live as who you are, without feeling compelled to adopt another identity to fit in with wider society, is an important aspect of wellbeing, as is having a sense of belonging and connection to a culture and place.”

As an example of how this might impact into the living standards' framework, the Treasury paper says that “the independent proposal for the Living Standards Dashboard includes “the number of Māori language speakers” as one of its indicators."

Other things to be considered include cultural participation and national identity.

The problem facing the bureaucrats is how will they measure these apparently intangible values.

Statistics Minister James Shaw yesterday said that as part of the Green Party’s Confidence and Supply Agreement with Labour, we are beginning the process of compiling a list of around 100 indicators which will make up a set of measures known as Indicators Aotearoa New Zealand or Ngā Tūtohu Aotearoa.

 

“What gets measured gets managed, and this work is part of the Government’s wider programme to make policy and measure success in ways that ensure meaningful improvements in our lives and our country,” he said.

“In next year’s Budget, Finance Minister Grant Robertson will ensure New Zealand’s success is not just measured by how much the economy has grown but by whether our people and our environment are better off too.

“While Stats NZ is developing the indicators that will be used to track progress, Treasury is working on a “Living Standards Framework” for policy.

“These two pieces of work will come together in the Budget.

“The indicators of well-being will form a set of measures which the Government of the day can choose to use to track the country’s success.”

Shaw has previously referenced the work of Oxford University academic Kate Raworth on the “doughnut economy.”

Raworth is a keynote speaker today at the Environmental;l Defence Society annual conference in Auckland which includes three Government Ministers along with National's Environment spokesperson, Scott Simpson.

Raworth argues that Economics is broken.

She says it has failed to predict, let alone prevent, financial crises that have shaken the foundations of our societies.

What she calls its outdated theories have permitted a world in which extreme poverty persists while the wealth of the super-rich grows year on year.

And she argues its blind spots have led to policies that are degrading the living world on a scale that threatens all of our futures.

Raworth’s theory conceives of the world as a doughnut consisting of two rings.

The inner ring represents a sufficiency of the resources we need to lead a good life: food, clean water, housing, sanitation, energy, education, healthcare, democracy.

Anyone living within that ring, in the hole in the middle of the doughnut, is in a state of deprivation.

The outer ring of the doughnut consists of the Earth’s environmental limits, beyond which we inflict dangerous levels of climate change, ozone depletion, water pollution, loss of species and other assaults on the living world.

The area between the two rings – the doughnut itself – is the “ecologically safe and socially just space” in which humanity should strive to live.

The purpose of economics should be to help us enter that space and stay there.

This may all sound like an esoteric theory, but Treasury, Statistics and politicians like Robertson and Shaw are fast making it a reality in New Zealand which will become much more evident with the next Budget.

 

 

 

 

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