Global report turns ideas on economic growth upside down

Taxing billionaires, solving the energy crisis, working fewer hours and being happy with what we've got - it's the recipe for future success, according to a new report on global justice .

It sounds terrific - energy transitions that lift up the poor, claw back planetary damage, and raise living standards for most of the world.

But this plan relies on taxing the extremely rich, and developed countries forgoing their quest for economic growth in line with the idea that we all have enough.

It's the Global Justice Report from the World Inequality Lab, a radical plan that proposes transforming how we live on a finite planet so that nearly everyone gains.

The focus is on reforming the world's financial architecture.

It suggests a wealth tax on the world's billionaires to pay for an organisation that would redistribute that money, and lift up the less well off - including by funding energy transitions, changing focus from sectors such as industry and mining to education and health; and tackling climate change along the way, in a world where we would eat less red meat and work fewer hours.

And we'd stop using GDP to measure our success.

It may stand out as a message of hope ... but what's the point, if no one is listening?

Even one of the report's authors describes it as "visionary and maybe utopian".

Tuesday's episode of The Detail talks to two academics, both from the School of Government at Victoria University of Wellington, about the feasibility of the ideas here.

Arthur Grimes is a professor of wellbeing and public policy; 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.

He doesn't think many people would disagree with the utopian aims of the report, but says: "I see nothing in the report to suggest how it could happen, that's the problem with it.

"It's just dreamland really. I thought it was a spoof when I first read it and was wondering who'd put it out, but it turns out maybe they're serious."

One of the features of the report is a world where developed nations would recognise when they had enough stuff, and stop growing - stop producing goods we don't really need. The trouble with that, says Grimes, is that if New Zealand doesn't get richer, people will leave to go to Australia where they can earn more money.

"You can have all the utopian dreams in the world, but if one country tries to implement them, people will just leave it - as they do with New Zealand.

"We could absolutely prioritise redistribution and all these sorts of things, but if the productive people all decided to go to Australia we'll all be worse off. This report just completely ignores how people will react."

In the podcast Grimes explains why we should stop using GDP as the sole measure of a nation's prosperity.

"GDP is an old fashioned concept, even to economists," he says. "I always cringe when I hear New Zealand politicians talk about 'we must increase GDP' ... do they not understand what GDP means? It's just a bland phrase to be honest.

"I don't think they've thought about it ... I mean most politicians don't think very deeply ... I think it's just a catch phrase 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 happy, healthy lives and yeah, greater prosperity definitely helps that."

But he says there are better measures than GDP.

"Life expectancy's a really important one, healthy life years is really important. It's all very well being prosperous but if it's a short life it doesn't really count for much."

Grimes says there are three major determinants of how happy people are with their lives - prosperity, family, and health.

Max Rashbrooke, an adjunct research fellow in the School of Government at Victoria, is one of the contributors to 'The Piketty Phenomenon: New Zealand Perspectives', and also wrote the book 'Inequality: A New Zealand Crisis'.

He calls the Global Justice report "an extraordinarily ambitious project".

He says while the work gone into the report is really significant about spelling out a particular vision of the world, it also has the air of "something dreamed up on a spreadsheet".

"It feels a bit ... perfect and ideal," he says. "It's not quite clear what the touch points of this report are into people's actual day-to-day lives, and governments as we know them, and the very great difficulties in accepting for instance that developed nations are not going to grow, in aggregate, for 70 years.

"It's not clear just how much impact a report like this is going to have."

One of the big sticking points would be the plan to tax the world's wealthiest people an amount rising eventually to 20 percent of their income.

"That's absolutely crucial to [Piketty's] vision," says Rashbrooke. "Every year they'd be paying a fifth of their wealth in tax, and obviously what that means is that their wealth would decrease very significantly in quite short order, and that is nigh-on impossible to imagine.

"The Greens here struggle to convince more than 10 percent of the population that a wealth tax of about two percent ... is a goer. Piketty's proposal is 10 times more ambitious than that. So that's a pretty tough sell.

"It would be interesting to know if in his heart of hearts even Piketty thinks that this [report] is going to be implemented," he says.

"Some people put things out there in order to show what's possible, and to enlarge our sense of what could be achieved, and to broaden the debate.

"I suspect that is the role that this report is going to play."

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