Thursday, February 15, 2007

The cost of capitalism

The big story of the day has been the Unicef report on children's quality of life, which shows that New Zealand is failing its children. While we fail to collect enough data to allow a full judgement to be drawn, what statistics we do collect are pretty damning. High rates of child mortality, low vaccination rates and low rates of material wellbeing would place us at near the bottom of the league-table, only just above the US and UK. The only bright spot is in educational achievement - and even that is tainted by low rates of participation in education after age 15. Overall this is an appalling situation, and one which should shame the nation.

The Herald's Simon Collins has a summary of the report here. The full report is online here [PDF]. For those who are interested, the full "league table" is:

  1. Netherlands
  2. Sweden
  3. Denmark
  4. Finland
  5. Spain
  6. Switzerland
  7. Norway
  8. Italy
  9. Republic of Ireland
  10. Belgium
  11. Germany
  12. Canada
  13. Greece
  14. Poland
  15. Czech Republic
  16. France
  17. Portugal
  18. Austria
  19. Hungary
  20. United States
  21. United Kingdom

New Zealand would come in just above the US, with Australia slightly higher than us.

Russell has already commented on the close correlation between countries which ban smacking and countries at the other end of the scale from us, but there's another obvious difference here as well - and that is between those countries which pursue American-style unfettered capitalism on the one hand, and those which maintain decent labour standards, a strong welfare state, and strong public health and education systems on the other. It is no accident that these countries tend to be at opposite ends of the scale: the welfare state and strong public services insulate people from the excesses of the market, and provide better living standards, opportunities, and health and educational outcomes for those on the bottom of the heap.

Unfettered capitalism has a cost, and it is borne by the weakest in society - children. Our terrible ranking today can be directly attributed to our move away from the welfare state and public services in the 80's and 90's, in favour of a market red in tooth and claw. Perhaps something to think about next time National promises to cut public services to provide tax cuts for the rich...?


I think you'll find that socialist kleptocracies tend towards the bottom, while free, capitalist nations are at the top when all countries are included. But feel free to ignore fact and use ideology to spin it whichever way you want.

Posted by deleted : 2/15/2007 06:00:00 PM

MikeE: This study looks at rich nations, and what it tells us is that, among rich nations, welfare states do far better than "free, capitalist nations" at caring for their kids. but clearly that's because they're measuring something other than the wealth of their overclass.

Actually, I think it would be an interesting exercise to compare this to the comparable rankings from the market freedom (or whatever its called) index...

Posted by Idiot/Savant : 2/15/2007 07:50:00 PM

Interesting-I was just looking at suicide rates- obviously not exactly the same issue but I think it is related as a reflection of overall quality of life and I see that

"New Zealand had the third highest male youth suicide rate, after Finland and Ireland, and the highest female youth suicide rate. New Zealand is one of a small number of countries which have higher suicide rates at younger ages than at older ages."

I wonder why this is so? It can't be as simple as capitalism bad because Ireland and Finland both do relatively well on the children's quality of life scale.

Posted by Amanda : 2/15/2007 08:08:00 PM

"American-style unfettered capitalism"

Are you joking? America? Sure it's a freer economy than many - but it's far from unfettered.

Posted by Duncan Bayne : 2/15/2007 08:24:00 PM

Numbers on the right-hand side are the rankings from the Economic Freedom Index 2007.

1. Netherlands 14
2. Sweden 21
3. Denmark 13
4. Finland 16
5. Spain 27
6. Switzerland 9
7. Norway 30
8. Italy 60
9. Republic of Ireland 7
10. Belgium 17
11. Germany 19
12. Canada 10
13. Greece 94
14. Poland 87
15. Czech Republic 31
16. France 45
17. Portugal 43
18. Austria 25
19. Hungary 44
20. United States 4
21. United Kingdom 6

The "capitalists eat babies" theory doesn't seem to be borne out.

Do a scatter plot and you'll see that there is no correlation (positive, but very weak) between economic freedom and child welfare, according to these surveys.

The US and the UK are outliers on one side and Italy, Greece and Poland are outliers on the other side.

Posted by Bernard Darnton : 2/15/2007 10:24:00 PM

I'm picking that there is correlation - the factors you are talking about were the criteria.

This is the UN after all. They are hardly going to give a good score to countries that don't ban smacking.

Posted by Anonymous : 2/15/2007 11:07:00 PM

Yes France and Austria are close to the US and the UK - France has a welfare state socialists would envy, where your unemployment benefit is based on your previous job's income - where it is a convaluted process to fire anyone. What absolute bloody nonsense.

The correlation is between Nordic societies where parents and families value children almost without parallel, the two wealthier Catholic/Mediterranean ones (which I suspect have serious issues that are hidden statistically in some of the most paternalistic societies in W.Europe) vs the rest.

So how about that? Why are France and Austria, two generous welfare state countries just above the evil US and UK (the latter of which is hardly without generous welfare and public healthcare). Surely France should be near the top of the league table, or does it show what goes wrong when socialism goes too far and strangles the economy?

Posted by Libertyscott : 2/16/2007 12:09:00 AM

bdarnton: I know - I did some quick tests against the Heritage Foundation's index and the Fraser Institute's one, and found that while it looks pretty compelling when you compare the numbers at the bottom (particularly if you include Australia and NZ in their approximate place), the correlation isn't even good enough for social science.

Posted by Idiot/Savant : 2/16/2007 12:42:00 AM

It's interesting that one of the few criteria where New Zealand performed well was educational achievement, e.g. literacy, as the major criticism I can remember National making of our primary and secondary schools at the last election is that our schools were failing in those very areas. Is it too much to ask that the right wing talking points and reality have some vague connection, or at least aren't in diametric opposition to each other?

- Ranald

Posted by Anonymous : 2/16/2007 01:29:00 AM

Ranald - unfortunately, it is too much to ask. National and their media allies will jump on any chance to suggest the education system is failing (just the public education system, mind you). Even if they don't know their NCEAs from their NZQAs:

Posted by dc_red : 2/16/2007 08:07:00 AM

I get Spearman's rho as ~0.17 with P~0.43, being not significantly different to 0 (no correlation).
Ranking the countries on their EFI (reducing the leverage of Greece and Poland), assuming EFI is the cause, and doing a 2 order polynomial correlation (it better matches the middle dip) gives R~0.58, still not significant.

Posted by Anonymous : 2/16/2007 08:19:00 AM

I have posted extensively over on Public Address on this issue...

What the report clearly shows is that the high achieving countries are those which are catagorised by Esping-Anderson as Social democratic welfare states - not the liberal welfare states of the Anglophonic world.

Further, the discussion about taxation addresses only part of the issue (and is a very Liberal welfare state concern). You can obviously tax highly and not achieve much (ie the former Eastern bloc). Why these states succeed is that they are both redistributors and they score highly in terms of democraticisation.

Proportional representation, oversize coalitions and cabinets, consensus-orientated discourse norms, genuine inclusion of stakeholders, non-authoritarian public services are the generally common features that set them apart from the Anglophere.

If nothing else we should be sending our senior public servants to Amsterdam or Gothenburg rather than Boston or the LSE for finishing school.

Posted by Anonymous : 2/16/2007 12:16:00 PM

The "capitalists eat babies" theory doesn't seem to be borne out.

Clearly though, there is a balance to be found. Someone above mentioned France which may have a welfare system to write home about but has been living with 12 to 15% unemployment for a couple of generations (40% in many inner city areas). Trying to set up and run a business there, get a lease on equipment or whatever is by many accounts a nightmare. As for taxation - it's their job to fleece you and your job to hire a lawyer to put together your retrospective return...

Equally, smashing the poor to create a spiffy Ayn Randian/BRT paradise also has profoundly bad affects on the broad health and well being of society.

I am proud of what can be achieved easily by businesses in NZ but am also cogniscent of the fact that strong social investment is required to sustain us all in the long term.

Posted by Anonymous : 2/16/2007 03:34:00 PM

Which country has the lowest infant and under-5 mortality rates in the world?

You can double-check this on the UNICEF "State of the World's children" site.

Certainly not a result of welfare or massive health spending.

It is even more impressive when compared with neighbouring countries.

Posted by Anonymous : 2/17/2007 01:36:00 AM

"If nothing else we should be sending our senior public servants to Amsterdam or Gothenburg rather than Boston or the LSE for finishing school."

Though not Paris or Vienna. You are deluded if you think LSE is a bastion of free market capitalism

Posted by Libertyscott : 2/17/2007 01:42:00 AM

This report is being widely reported here in Britain and widely discussed. My girlfriend and I are of the opinion that due to the unchecked pervasion of business interests over the last 3 decades the sense of community has been crippled. She suggested that when women were given the opportunity to have careers, value change took place. The economy has caught up and become more cynical about families, until nowadays being a mother or a father isn't something to "be", it's something you have to fit in around having a career. Being a parent means going to a shopping mall and buying your kids loads of worthless junk.

And of course business has been allowed to influence our moral perspective to the point where most people (here, at least) believe that this is the moral thing to do. And it's true to an extent in New Zealand also - it's rare, difficult and frankly a bit strange if a parent just wants to be a parent.

In this sense I would suggest that capitalism does play a part in these figures, though there is not enough data and the wrong questions were asked.

Posted by Andrew Myhre : 2/18/2007 05:35:00 AM