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Chapter 1: What is the main topic of the Global Justice Report?
There's a brilliant report out from the World Inequality Lab. 45 authors, the name you'll probably most recognise is Thomas Piketty, but many other prominent thinkers in there, working from a database drawing on the information collected by more than 200 researchers.
And what they say, and it's a message of hope, and boy don't we need those, that we can raise living standards, dramatically reduce inequality, and live within the planet's boundaries.
The World Inequality Lab has produced what it's called a radical plan, where it proposes transforming how we live on a finite planet so that nearly everyone gains.
What they say is we need to change our principles to focus on sufficiency, ensuring that everyone has a decent life.
A wealth tax on the world's billionaires would pay for an organisation that would fund energy solutions for to bring down the planet's temperatures. There'd be a change in focus from sectors such as industry and mining to education and health. It would be a world where we would eat less red meat and work fewer hours and where most people would have more money.
It would also mean developed nations essentially being happy with what they've got instead of constantly consuming more. The concept of sufficiency. And we'd stop using GDP to measure our success. Could it work?
It does slightly have the air of something that works better on a spreadsheet than in the real world.
I mean, there's nothing particularly new here except it's sort of running some sort of Panglossian utopian scenarios.
Hi, I'm Alexia Russell, and today on The Detail, the Global Justice Report, which came out this month. It may stand out as a message of hope, but what's the point if no one's listening? Even one of the report's authors describes it as visionary and maybe utopian.
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Chapter 2: How can we raise living standards while addressing climate change?
But if we don't toss these ideas around and take notice of some of the best economic brains in the world, nothing would ever change. So let's get into it. Later, I'm talking to Max Rashbrook, an adjunct research fellow in the School of Government at Victoria University of Wellington, about what he calls an extraordinarily ambitious project.
First, though, Arthur Grimes is a professor of wellbeing and public policy at the same place. He's also a senior fellow at Motu Research, New Zealand's leading economic think tank, and he's a former Reserve Bank chairman and chief economist. I started by asking him why we do still use GDP as our measure of success.
So GDP is a measure of everything that's produced within the borders of the country. So it's gross domestic product. None of the letters GDP make sense to an economist.
Chapter 3: What radical changes are proposed by the World Inequality Lab?
Gross means that we're not deducting depreciation of capital and things, which obviously we should. So We should think in net terms rather than gross terms. Domestic means what's produced within the borders of New Zealand, but rather we should be interested in what goes to New Zealanders. So that would be with the letter there would be N for national.
And we shouldn't be worried about what's produced. We should be worried about the income that comes from it. In the past, we produced lots of wool, but no one wanted to buy it. That was production, but it wasn't income because not anybody paid any decent price for it. So, we'd want to use income.
Not many people around the world now use gross domestic product as a measure of certainly of welfare or wellbeing. If you're gonna use national accounts, you use net national income, which is takes off depreciation accounts just for the people in the country and it's income rather than production. So GDP is a very old fashioned sort of concept even to economists.
If you look at World Bank or any of these, they're always, they normally talk about gross national income or net national income.
NNI, we should be saying NNI, not GDP.
Yeah, exactly, exactly. I always cringe when I hear New Zealand politicians talk about we must increase GDP. I think, do they not understand what GDP means?
Do they mean productivity?
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Chapter 4: How would a wealth tax impact billionaires and global inequality?
Well, I don't know what they mean with this. I think it's just a bland phrase, to be honest. Right. I don't think I know what they mean.
So why are we so obsessed with it? They do keep saying GDP.
Yeah, it's weird. I don't think they've thought about it, to be honest. Most politicians don't think very deeply, so I think it's just a catchphrase that they use without understanding what they're talking about. But so do some economists, so it's not just politicians.
I mean, what we're interested in in the end is that people lead sort of happy, healthy lives, and, yeah, greater prosperity definitely helps that, but greater prosperity is better measured than... with other measures rather than GDP. You know, life expectancy is a really important one. Healthy life years is very important.
It's all very well-being prosperous, but if it's a short life, it doesn't count for much. So we would want to certainly be looking at other things other than just material prosperity. The literature in this area, in the well-being sort of economics literature,
and for that matter, psychology and sociology, it's more or less come to saying there's three major determinants of how happy people are with their lives. One is prosperity, so that's important. One is their family circumstances, being happy with their family and friends. And the third one is their health. And once you've got those three, you're pretty happy.
But all three of them are important, not just one of them.
Let's have a look at this report that came out last week. The headline, a good life for the 99% isn't a pipe dream. It can be done. Here's how. Now, these are, I guess we'd have to say, you know, left-leaning economists. And it has sort of cynically been described as impossible to achieve utopia, what they've said out here.
But are there aspects of this report that we should be sitting up and taking notice of?
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Chapter 5: What is the concept of sufficiency in economic terms?
Yeah, look, I don't think many people would disagree with the aims or, you know, the utopian aims of it. Obviously, we have to live within the planetary boundaries and especially in terms of climate change. That's absolutely crucial because that's like a hard constraint eventually.
We see terrible living standards in certain countries, although almost every country has vastly increased their living standards over the last 20, 30, 40 years. And inequality across the world has reduced a lot over that time as well. largely because the poorest countries like China have become much wealthier. So the poorest people in the world are now middle-income people.
They were the poorest and now they're middle-income.
Chapter 6: Can we measure success without relying on GDP?
So there's been a big move towards greater equality in the world, but I think most people would share the view that reduced inequality would be a good thing.
And do you think it's possible for us to, as they suggest, 90% of the world's population doubles their income but works half the hours that we work today?
What it reminds me of, not that I was around at the time, but Keynes in the pre-World War II period predicted that his grandchildren would only work 15 hours a week. And what was that, 750 hours a year, which is less than what they're suggesting here. And he was completely wrong, of course.
What else is in this report from your scanning of it that is something that we should perhaps take notice of, that we should talk about as a society and think about, could we work towards this?
uh i mean i see nothing in the report to suggest how it could happen that's that's the problem with it it's just sort of just dreamland really i thought it was a spoof when i first read it um yeah and i was wondering who put it out but it turns out maybe they're serious but um There's just nothing there about how to achieve it, you know, and how would you go about doing it?
I'll give you an example. We've often heard in New Zealand that, you know, we don't need to get any richer because, you know, we're pretty well off and we're happy, you know, pretty happy most of the time.
The problem is that we have this place called Australia next to us where anybody can go and work and people leave to go to Australia, not because it's a fantastic place to live, you know, if they've got... spiders and snakes and it's too hot and all that sort of stuff. They go there because they can earn more money.
The simple fact is that you can have all the utopian dreams in the world, but if one country tries to implement them, people would just leave it, as they do from New Zealand when they go to Australia. We could absolutely prioritise greater redistribution and all these sorts of things. But if the productive people decided to leave to go to Australia, we'd all be worse off.
And that's what this report just completely ignores, how people would react.
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