The Fallacy of Voting for ‘the Economy’

‘The economy’ is a popular term, especially in election year.  Unfortunately, most New Zealanders have very little understanding of what it is. When economists and politicians talk about ‘the economy’ they are usually just talking about Gross Domestic Product (GDP) which is the sum of all the transactions: every time money changes hands in an officially recorded way it increases GDP. There is an assumption here that the greater the country’s GDP, the better off it is.  The problem with this is that a greater GDP doesn’t necessarily mean greater social well-being. It certainly doesn’t mean less crime, better education or health care and it doesn’t necessarily even mean more jobs. It just means greater transactions – more money is being moved around.  New Zealander, Marilyn Waring: a pioneering radical economist[/caption]



It’s time we started questioning ‘the economy’. The Christchurch earthquakes have been great for the economy. Oil spills like the Rena also generate a lot of economic activity, selling off New Zealand’s assets looks great for the economy too, because there are lots of transactions adding up to greater GDP.  Child abuse generates much more economic activity than good parenting, with all the associated legal fees, media frenzies and so on.  Countries with high GDP can have major problems with crime, unemployment, massive debt, poor education and insufficient health-care, like the United States for example. There is a lot of money being moved around, but it isn’t going to where it is most needed.

The current government is basing it’s campaign on a strong economy, hoping that the magic of the word will be enough to win votes.  They are laying claim to the creation of 83,000, most of which were actually created by circumstances outside of their control, especially the Christchurch earthquakes. It is shameful and embarrassing for a political party to be profiting from disasters in such a way, especially when people are still suffering from them and not enough is being done. 83,000 kids are going hungry in New Zealand and many of them have working parents. Creating more underpaid jobs isn’t the answer.

Experts have been questioning ‘the economy’ for a long time. GDP is such a poor measure of social well-being that many other systems have been developed that more accurately and specifically look at positive indicators, not just transactions.   The countries with the greatest social well-being have more equality: less of a gap between the rich and poor. These countries, like Denmark or Japan, have lower levels of crime and much better health and education statistics, while maintaining a strong economy. 

‘The economy’ is a system created by people, not a law unto itself.  When we think about ‘the economy’ we should be thinking of it, not as a force of nature, but as a socially created system that measures what we value.  Rather than a generic economy based on GDP and nothing else, we should be asking the question: what kind of economy do we actually want? What kind of jobs do we want to be creating? Do we want our numbers to be bigger without actually having a better-functioning society or do we want an economy that values children and old people, health and well-being, education and sustainability, innovation and new technologies, peace and safety?  Instead of blindly voting for ‘the economy’, it’s time to think about what kind of economy we really want to have.