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Family Matters No. 30 - December 1991

Director's report

Economic humanism: New national direction for the 1990s
Don Edgar

Abstract

The author proposes a new doctrine for the 1990s: that of 'economic humanism'. He argues that to expand some of the necessary changes and benefits of so called economic rationalism and to help our theorists, planners and politicians recapture the elemental point of the public/private mix, the best balance is one that improves the quality of people's lives. The main policy issues for a decade of economic humanism are: increased investment in early childhood; support for parents and families; jobs, income and secure housing; a restructured work system; a reincorporation of youth into mainstream civilian society; a new vision which sees our elders as a resource, not a burden; the eradication of poverty; and a better tax mix.

An Australia suffering more than 10 per cent unemployment makes family policy discussions a matter of serious urgency. Tinkering at the edges with a bit of a family allowance increase here, a bit of income- or assets-testing there, a few more or a few less dollars for marriage counselling or family support services, a slightly better enforcement of child maintenance collection none of it makes much difference to the million people unemployed and their families.

Youth homelessness and the rights of the child are important issues in themselves, but they now must be seen in the broader context of the thousands of families driven into poverty and homelessness.

The decade of the 1990s requires a new sense of national direction and purpose. And since the economy and its impact on family life is so central, I'd like to propose a new doctrine: that of 'economic humanism', to expand some of the necessary changes and benefits of so-called economic rationalism and help our theorists, planners and politicians recapture the elemental point of the public/private mix, that the best balance is one that improves the quality of people's lives.

It is time for some new thinking. Knee-jerk reactions and revamps of tired old policy approaches have to be exposed for what they are. Australia's position in the world economy is threatened; we have been living in lotus land, and bananas do seem to be overtaking the old life-savers of wool, wheat and minerals. In that climate, neither Adam Smith-style faith in the forces of supply and demand nor more of the same old welfare safety net will do.

Put very simply (see Pusey 1991), modern developed societies are coordinated by the actions of both the state and the market economy. Their relative autonomy affects the benefits and costs that accrue to individuals and families within civil society as well as our identity as a nation.

As we have seen in eastern Europe and elsewhere, excessive coordination of society by the state can degrade civil society, violating the adaptive capacities of ordinary social life and threatening the social reproduction of both culture and individual identity. Coordination becomes an end in itself, unmediated by publicly affirmed and renewed norms of morality.

On the other hand, excessive laissez-faire also degrades civil society because it is then 'colonised by market forces'. 'Culture and identity dissolve into arbitrary and individual choices and individual calculations of utility', with the result that public and private elites overwhelm the independence and autonomy of the masses (Pusey 1991). Michael Pusey's book, Economic Rationalism in Canberra, may paint too black and white a picture of the power of public servants and theoretical economists. But it rightly reminds us that, in trying to restructure unwieldy and unproductive economic systems, economic rationalists have made the fatal slip of treating society itself as the enemy. They have put a system above the people it is meant to serve.

We must reassert the primacy of civil society, the centrality of family, neighbourhood, culture and individual choice-making within an active social structure, over the arbitrarily reified 'economic system' so beloved of those who live in the rarefied atmosphere of Canberra.

Just as state control and an overblown welfare state degrade the integrity of the individual and the capacity of civic groups to negotiate and cooperate within a reasonably democratic and equitable balance, so would free market nihilism endanger the reproduction of society and the very identity of Australia as a nation. It is only by ensuring the integrity of civil society that we can keep a reasonable rein on the relative evils of state or market coordination. (See also Edgar 1990)

What would be some of the elements of 'economic humanism'?

First, both the goal and the starting point would be the integrity and quality of civil society not the economic system or some model of economic theory, but the reality of everyday life in the home, the workplace, the community.

Second, investment in human capital, human capacities to cope individually and collectively with our varied environments would become the core language of discourse, not investment in new enterprises or property or exports as such. They are means, not ends.

Third, the impact of policies and programs on human beings, not their efficiency or cost-benefits alone, would become the key 'performance measures' of society.

Fourth, every individual would be valued and valuable, responsible for and contributing to the wellbeing of others.

Following these four principles, I would see the main policy issues for a decade of 'economic humanism' to be as follows.

Investment in early childhood development

We know that the first eight years of life are the years of greatest cognitive growth and the development of multiple intelligences (Gardner 1983). We know that poverty and deprivation in those early years have long- term consequences for later learning, earning and coping capacity (Edgar 1986), and that quality child care can alleviate those problems and prevent costly flow-on effects. Yet we invest little in early childhood education compared with schools and tertiary institutions and we treat child care as mere baby- sitting with little recognition of either the developmental benefits of quality child care or the damage from its obverse.

Support for parents and families

Crucial to the full development of any child's potential is the quality and resources of family life. We talk of child care centres and fee relief but offer few resources for parenting at home. Worse, we have just set up a two-tier system of fee relief which penalises carers outside the labour force. Where are the relief care places, the book and toy libraries, the parent centres, the TV programs and support materials that might assist parents to do their socially central job of raising competent children? (Edgar 1990)

The debate must broaden. We are so hell-bent on means-testing and restricting access that we've lost sight of the fact that all parents need community support and that every society throughout history has had need of non-parental carers. We need more of the Western Australian style 'Family Centres' in non- stigmatising accessible locations, and less of the problem-focused, high cost patch-up services some professionals love to provide. We need more on-the- ground service support and less bureaucratic 'coordination' and control. Funds spent at the local level will be accounted for more carefully than when controlled and evaluated by central bureaucrats.

Jobs, income and secure housing

This is the bedrock of family policy, for 'affording' equals choice, and no family can function well without adequate income and housing stability. Labour market and employment policies are crucial to the future of children and families and we have to change our perceptions of work if that future is to be assured.

The options include a future of high technology producing further joblessness but a redistribution of financial and leisure benefits; or a future of work for the elite few, a part-time substratum and an alienated underclass of the unemployed; or a future of jobs for all in which an expanded vision of labour-absorbing employment draws everyone into a cooperative and productive society.

The latter option is 'economic humanism' as I mean it, a system which does not merely distribute income while some work and others idle, but where everyone has a positive stake in the culture of productive work. Of course, to achieve such a state would require rethinking the narrow view of work outside the home as 'productive' and that within the household as insignificant and invisible.

A restructured work system

To achieve full employment as above, many things would have to change. The workplace is not at present 'family friendly'; rather it constrains the sensible allocation of skills, services and time, and damages the coping capacity of many families. Job sharing, flexible hours and locations of work, permanent part-time options, leave and other benefits assigned to changing life course needs, lower hours to permit higher employment rates, removing tax impediments to productive investment, rethinking penalty rates and welfare poverty traps, all require a new perception of (un)employment. Work done in the home needs some sensible form of recognition in the national accounts.

A new approach to youth

Part of this new definition of work must involve a reincorporation of youth into mainstream civil society. An historical irony is that in the 1890s if the poor survived childhood they faced a positive future as young people and adults; in the 1990s children in general are better off, yet face a bleak future. Young people are the most severely affected by Australia's current recession, and unemployment of 1519-year- olds sits at 28 per cent. Staying on at school is only a second best option, jobs lost by young people are unlikely to reappear and both youth and family income supplements are woefully inadequate.

The debate bogs down in a silly dichotomy between youth versus adult wages rather than payment for skills and productivity, and an equally silly knee-jerk reaction against 'working for the dole'. The fact is that unemployment results not just in poor income; it also creates despair and low self-esteem. Without some responsibility, without some stake in society, young people (not surprisingly) feel rejected, angry and confused.

Business-sponsored education and work schemes, programs such as Westrek that give meaningful work to the long-term unemployed, voluntary work while receiving Jobsearch Allowance, work that puts youth in social touch with elders or others in need, must surely be preferable to idleness and despair. Recognition of school as work, of voluntary work as job experience, of skills wider than formal qualifications would also help reincorporate youth in society. Participation, not exclusion, must be the aim and imaginative solutions must be found.

A new vision for our 'elders'

As I outline in more detail in a later article in this issue, our elders should be seen as a resource, not a burden. Work time reduction should replace sudden retirement so their expertise and experience continue to contribute to nation-building. Community schemes that relink the generations, and housing patterns facilitating that inter-generational exchange can be devised (see Family Matters, No.25, 1989). Instead of merely economic debates about the costs of aged care, we need to recognise the need for active health maintenance and provide wider options for continued contributions to replace the growing age ghettoes we see in the United States.

The eradication of poverty

As we have argued in detail elsewhere (Edgar, Keane and McDonald 1989), no group in society can afford poverty. Its social costs are unacceptable, not just for the poor who suffer directly, but for the better off and wealthy too through the additional burden of taxes. The language of political discussion has to shift from the cost of 'handouts' to talk of investment in people, of the market benefits of higher family income for all, of the cost-benefits of preventive and emergency support to prevent families going right off the cliff to be picked up by the costly ambulance service at the bottom.

A better tax mix

Knee-jerk reactions are also rife in relation to the tax transfer system. By the time this issue of Family Matters goes to press, the Coalition's consumption tax and related proposals will have been made public. We have no prima facie position on this. Rather, we will ask: Which families will benefit and how? Are low income families adequately compensated? Does the new tax mix reduce disincentives to productive investment? How will it all affect those things that matter to families jobs, housing, standards of living?

And questions must be asked about related matters such as whether money in people's hands may help more than compulsory superannuation. Or how might it be possible to restructure housing repayments (Wulff 1991) so that families are able to pay at the times they can best afford it rather than when the costs of children are at their peak?

The human side of economics demands more creative thinking than we have yet had, from either side of politics.

Priority to children and family policy

The notion of 'economic humanism' rests upon investment in people, and that means families. Most Australians still put family life above all else. They work to live, they do not live to work. It will always be so, and economists and politicians should remember it.

If we had in place a coherent approach to supporting families in their core tasks of income generation/consumption and of caring, we might manage to build a nation that is worth having rather than one for which (temporarily) the economic settings are right.

References

  • Edgar, D. (1986), 'Poverty: its impact on educational opportunities', Links, Department of Education, Queensland, No.6, 1985 and No.1, 1986.
  • Edgar, D. (1989), 'Children, youth, elders: re-linking the generations', Family Matters, No.25, December, pp.27.
  • Edgar, D. (1990), 'Families, children and moral obligations', Family Matters No.27, November, pp.4951.
  • Edgar, D. (1990), 'Lift Off for Children's Television', Family Matters No. 27, November, pp.3839.
  • Edgar, D. (1991), The development of competence, Unpublished paper, Australian Institute of Family Studies, Melbourne.
  • Edgar, D., Keane, D. and McDonald P. (eds) (1989), Child Poverty, Allen & Unwin, Sydney.
  • Gardner, H. (1983), Frames of Mind, The Theory of Multiple Intelligences, Basic Books, New York
  • Gittens, R. (1991), 'The taxing language of the great debate', The Age, Melbourne, 27 October, p.2.
  • Pusey, M. (1991), Economic Rationalism in Canberra, Cambridge University Press, Cambridge.
  • Warren, N. (1991), 'Recent trends in Australian taxation and their impact on tax incidence', University of New South Wales, referred to in Gittens 1991.
  • Wulff, M. (1991), 'Restructuring home loan finance for low-income families: third and final evaluation report on the Capital Indexed Loan Scheme', Australian Institute of Family Studies for the Department of Planning and Housing Victoria.