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Love You: Public Policy For Intergenerational Wellbeing By Girol Karacaoglu

Tuwhiri Project (2020 $27)
Review by George Ritchie

We are in the middle of a systemic environmental, social and economic crisis.

So says Girol Karacaoglu, a former Chief Economist at the NZ Treasury who these days heads up the School of Government at Victoria University.

Although he’s not alone – Girol stresses to me over Zoom that this is a view shared by “the most orthodox institutions you can think of” referring to the Treasury in its evidence for the 2019 Budget and Secretary-General of the OECD, Angel Gurria, in a 2019 speech.

His new book is intended primarily as a challenge to young people: change the way that New Zealand debates and creates public policy. Help us get out of this crisis.

Thirty years ago, NZ was something of a fashion-setter in terms of giving its central bank statutory operational independence & responsibility to maintain consumer price stability. It was also ahead of the game in terms of the degree of its statutory fiscal management transparency.

The urgent predicament these days is how best to institutionalise greater transparency, inclusivity, and clearer accountabilities for advancing the wellbeing of current and future generations.

You might be excused for thinking, well, why get so animated as to release a book about this? Didn’t the Government release a Wellbeing Budget in 2019 & 2020? Doesn’t the Public Finances Act now require the Treasury to produce a long-term report on wellbeing every four years?

Yes. And the latter in particular is “an important step in the right direction.” As Chief Economist at the Treasury from 2012-16, Girol was the main driver behind the Treasury’s Living Standards Framework, an analytical tool which helps officials preparing the Budget to establish the impact of policy on the varied dimensions of wellbeing. He is hardly going to knock his own work. But “whatever one’s political persuasions – [this Government] has reduced the accountability. The volume [on wellbeing] has been augmented but if you lift the hood… targets, visible, real have been diminished”.

The book, written mostly pre-Covid-19, includes six further justifications for a ‘radically different approach’ to policy which prioritises not just economic growth, but environmental quality, equity, social cohesion, personal freedoms and political voice across generations.

A couple of these reasons are likely well understood by most: wellbeing is multifaceted (as you can see from the sentence above) and these facets are interdependent (for example, if we are suffocated by pollution, it’ll be tough to work and study).

The most striking justifications included are that:

  1. We exist within a world of radical uncertainty in that we do not fully understand the present, we certainly cannot predict the future and – in the tradition of Hayek – no one person or organization can ever come close to holding the information required to arrive at the best explanation.
  2. We are social animals, and social sources of wellbeing (eg, having someone to rely on in times of trouble or experiencing generosity) arise in communities with norms of trust, belonging and mutual support.
  3. We – individuals and our communities – are the primary source of creative ideas, which in turn are the main drivers of innovation, technological progress and prosperity.

Taken together, Girol rejects the idea of policy-maker-as-architect who can run models to determine the optimal solution to well-defined problems: “You can’t drive public policy by landing a ship on the moon”. Instead, he thinks government should be a facilitator of bottom-up contributions that utilises the decentralized preferences, aspirations and ideas of individuals and communities. It should also invest in people’s capabilities, giving them the ability to provide those contributions with the confidence that their more basic needs of food, safety and belonging are met.

So, while Girol posits some intriguing policy ideas in this book, including ‘universal basic services’, a means-tested NZ Children’s Fund (equivalent to the NZ Super Fund), and a ‘leave no one behind’ strategy, it is really not up to him (or any single person).

The core proposal in the book is all about how to develop policy. Key themes include:

  1. Accountability: Parliament should set long-term environmental, social and economic objectives with associated targets. Government will set short-term targets toward achieving the longer-term objectives and must report on these each year as part of its annual budget. An appropriately resourced Independent Office of Wellbeing (think Parliamentary Commissioner for the Environment) should provide advice and monitor progress toward these objectives.
  2. Inclusivity: A network of NGOs, local and regional government representatives, academics, etc should be involved in deciding the objectives and then generating policy projects, all based on engagements with communities. Localism and experimentation at the local level should be embraced, and central government should aim to ‘connect and support’.
  3. Sufficient resourcing and implementation: A strategic portfolio allocation within the NZ Superannuation Fund should be earmarked for these long-term wellbeing-focused investments, and the private sector should often be brought in as partner and co-investor. A dedicated Ministry of Works/Infrastructure Commission type entity should lead delivery of critical outputs.

Girol doesn’t claim originality for the concepts above. His contribution is to bring various pieces of the wellbeing/economic literature and international practice together in a coherent structure so that the critics cannot dismiss it as “waffle”. He borrows heavily from writing by Johnathon Boston on governing for the future, Amartya Sen on building capabilities and individual agency, Chelsey Reid on participatory development, and John Kay and Mervyn King on radical uncertainty. International best practice for Girol includes the What Works Network of NGOs in the UK, a Future Generations Commissioner in Wales undertaking independent reviews of policy actions, and Bhutan’s recognition of wellbeing as the primary objective for public policy.

His biggest fear is that without a coherent structure, we won’t deliver anything tangible. And “then the whole thing will be gone”. There are many in the business community, in economics departments and likely some still at the Treasury hostile to wellbeing frameworks, and who would happily stick to a narrower economic and fiscal approach.

Is it politically achievable? “We are living in a country where when we decide that something is hurting us then we can take unanimous decisions”, and Girol gives examples of the Reserve Bank Act 1989 to tackle rampant inflation and the Public Finance Act 1989 to ensure intergenerational fiscal responsibility, as well as more recent bipartisan attention on addressing deteriorating mental health. “I don’t think any party would go against these measures now”. So, Parliament is the obvious leader that needs to stand up and produce a coherent narrative that we are in trouble.

But invoking the spirit of the book, success here can ultimately only come about through the actions of individuals and communities, and Girol pins most of his hope on the “1000s of young people who are extremely thinking and thoughtful” in the public sector, private enterprise, and non-profit organisations to put intergenerational wellbeing at the heart of their work.

George Ritchie is a student of economics and policy analyst who splits his time between Wellington and London.

© Scoop Media

 
 
 
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