Social issues vital in policy-making

The Tribune (Palmerston North) 7 February 1999

AFTER a recent four-month lecturing assignment in Japan, Professor Srikanta Chatterjee has a personal understanding as to why many of his students wanted to visit New Zealand.

'What I did was provide a broad course which looked at the New Zealand economy and society in relation to the rest of the world," he says of his Asia 2000 Foundation of New Zealand exchange.

"Almost everybody in Japan is interested in the New Zealand reform programme (as) the Japanese economy is in need of similar reform."

Professor Chatterjee says many of the students knew little about New Zealand, but were keen to visit by the end of the course. He himself was lured here by a similar desire to explore New Zealand.

Having attained his masters degree from the University of Calcutta and PhD from the London School of Economics, he was not short of lucrative offers from universities around the world.

Massey University wasn't one of those lucrative offers and his decision to take up tenure was only made after he decided money wasn't his primary concern.

"(Having) grown up in Calcutta and then spending 15 years in London I had had enough of big city living. I think I made a very good decision to stay."

Professor Chatterjee believes his interest in economics was sparked from growing up as a child in India and seeing poverty all around him: "I didn't face dire poverty, but I saw it around me and wanted to understand why".

Now, he says, he has answered that question which he pondered over as a child.

"I (have) found that the social issues (are) at least just as important, if not more important, in economic policy-making than just market-driven economic issues."

Having lived through New Zealand's reform period, Professor Chatterjee is even more convinced this is the case.

"In many respects we are a more efficient economy now, but in many other respects we have gone backward in a major way. For instance, we should not have got to the stage where large portions of society have come to depend on foodbanks - these are issues I try to draw attention to both here and abroad."

He has yet to see this view embraced by policy makers, but feels confident attitudes are changing.

"The tide is beginning to turn. Now governments around the world, including the World Bank and International Monetary Fund, are emphasising the importance of social considerations and the importance of government."

He says one of his early teachers, Amartya Sen, was awarded the Nobel Prize for economic sciences last year for his work on poverty and deprivation.

For Professor Chatterjee then, the need to balance economic and social policies in tandem is of utmost importance. He says it is a delicate balancing act which "requires some sections of society to give up a bit more" in order to achieve a reasonable standard of living for the wider population.

However, the alternative - a growing section of society living as an underprivileged class - is not something many would be happy to tolerate.

Professor Chatterjee describes last year's inequality research as outside input for policy makers. That research indicated less than 10 percent of all income earners have benefited from the reforms. A similar proportion remained as they were before the reforms, while the remaining 80 percent were worse off.

He says it provided concrete evidence the reforms haven't benefited the population as a whole.

This year he hopes to complete that study by examining inequality levels within various ethnic groups in New Zealand and looking at how the reforms have impacted on each of these groups over time. He also aims to complete some joint research in his other area of interest, international trade and finance. That research will examine the impact a floating exchange rate has had on New Zealand's competitiveness with other key trading nations.

Looking to the year ahead, Professor Chatterjee wants to see an economy which he describes as "losing steam" to pick up. "We had a major recession last year, yet the Australian economy grew by five percent."

This indicates that New Zealand's economic woes cannot be entirely attributed to a poor Asian economy.

He believes policy makers need to take a serious look at what's gone wrong and refocus on what's really important - and he is only too happy to suggest this involves ensuring that social issues are kept well and truly in the frame.

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