In Warwick Neville and James O’Neill (1979) <
>The Population of New Zealand: Interdisciplinary Perspectives, pages 259-280.

 

Keywords: Environment & Resources;  Growth & Innovation;

 

Introduction

 

Population studies and economic studies are each vast subject areas, and there is not space to discuss all the issues. This chapter attempts to survey some of the more significant ones, and in particular focuses on the question: ‘What has been the impact of population growth on the postwar New Zealand economy, and what is likely to happen in the future?’ Many people will be quick to give a simple answer to such an apparently simple question. But a comprehensive answer is far from simple, and is dependent upon a host of value judgements. The aim will be to provide an appropriate framework for people to make their own conclusions, without attempting to suppress or disguise value judgements.

 

The appropriate population

 

Unfortunately most people discuss the population and economy questions using an analytical framework which assumes the population, or perhaps the population structure, is constant. There is no need to emphasize that over 39 per cent of New Zealanders in 1976 were not born in 1945, and perhaps another 7 per cent were not living in New Zealand in 1945 (Department of Statistics, 1976a, Tables 1. 6). But how exactly do you make judgements when a population is changing?

 

Consider a case where we are trying to assess the effect on the economy of an immigrant. What notice should we take of the benefit to the immigrant himself? For instance before the immigrant arrives we might conclude that his arrival would be a bad thing for New Zealand, but after he arrives we might conclude that it is a good thing, even though the facts have not changed at all. Now the immigrant is a New Zealander and we have to take into account that he benefited, even if on the whole the remaining New Zealanders did not. This explains the paradox of immigrants who advocate the ending of immigration. They may have benefited from it, but they are explicitly judging that those who were here before they arrived have not benefited from their presence, which is a harsh self-judgement in many cases. While we have illustrated the issue by immigration, the problem exists for emigration, birth, and death. There is no unique, acceptable population appropriate for every case.

 

In practice many policy decisions appear to be made with a notion of provisional membership of the population. Thus a conceived fetus is given provisional membership, subject to section 182 of the Crimes Act, which permits abortion under certain circumstances. An immigrant is given provisional membership in that not all his civil rights are immediately available (for instance, registration on the electoral roll and some social security benefits require a period of residence), and the non-naturalized can be deported. On the other hand New Zealand emigrants retain some of their legal entitlements suggesting they are only provisionally rejected from the population. Note that for some purposes such as bequests and inheritance the wishes of the dead are given almost equivalent status to those of the living.

 

A smaller problem, particular to migration issues, is the welfare of those outside New Zealand. That immigration was beneficial to the immigrant and to those in New Zealand would not automatically ensure it was beneficial to those in the immigrant’s homeland. It may be necessary to consider other country effects, particularly where the country is poorer than New Zealand and the immigrant has an expensively acquired skill (for example, doctors from South Asia) or comes from a small economy (for example, from the Pacific Islands).

 

The material standard of living

 

The conventional measure of the material standard of living is per capita consumption. Assuming we have decided on the appropriate population, there is still the problem of whether each member should be given the same weighting. The obvious and for our purposes significant issue is the treatment of children. It can be estimated that a household comprising two young children and a couple need to spend about 49 per cent more than the couple to attain the same standard of living. Hence a child’s consumption needs might be treated as 49 per cent of an adult’s (Easton, 1973). The figure is approximate, but it suggests it would be appropriate to treat in terms of per capita consumption levels two children equal to one adult.

 

The appropriate consumption measure is not immediately obvious.[1] Since investment does not directly contribute to the material standard of living, output can be firmly rejected.’ Obviously private consumption is a part of the material standard of living, but what about public consumption, that is the current expenditure of central and local Government? This is a vast issue which it is not easy to answer briefly. In my view the majority of public consumption is either subsidies to production and consumption enterprises, Government administration, or maintenance and investment in human capital (see below). Consequently, these need not be included in the individual’s material standard of living providing private consumption is measured at market prices and not factor costs (so our measure tells us little about the efficiency at which it is provided). Only a small amount of Government expenditure may be treated as directly supplementing private consumption (for instance, national parks, public libraries, etc.), and only this item should be added to private consumption to get a representative measure of the material standard of living. On the other hand we should subtract from private consumption items currently there which are employment costs or are for the maintenance and investment in human capital. Although private consumption is a rough measure of the appropriate variables, it is better than total output or public plus private consumption.

 

There are many inadequacies in the private consumption measure associated with the conceptual area known as ‘externalities’ (Mishan, 1967). Only those that are concerned with population need detain us here, except to forewarn that the whole area is fraught with difficulties.

 

Changes in the population can increase or decrease the effectiveness of an individual’s expenditure (that is, measured by private consumption) to maintain his standard of living. For instance, population increases may convert one’s pleasant isolated lagoon into a holiday camp, and since there are a limited number of lagoons, this can occur in a way in which everyone is worse off. Conversely an increase in population may make possible amenities that are not available to smaller communities. For instance, there may be insufficient interest in small towns in a musical group which specializes in Bartok. There is no unambiguous way of incorporating such changes in any measure of private consumption. We need to note the existence of the issue, and interpret any data with care.

 

Whatever conclusion may be drawn about these particular problems, it must be remembered that any measure of the material standard of living may be a poor indicator of the quality of life. Indeed it seems to me that we should pay more attention to increasing the quality of life than the quantity of output. That is, I believe it is possible to improve quality for a given quantity of material standard of living, by more intelligent concern about the output mix. Fortunately for the following discussion, quality improvement activities are similar to quantity increase activities in the broad, so that either or both are implied in subsequent analysis.

 

The determinants of output

 

Having decided upon an appropriate measure of performance, we now need some explanation of what determines the level of private consumption. It is simplest to treat long run consumption as the residual from total output after we have provided domestic investment and public consumption.

 

What then determines national output? The novice should be warned that there is considerable controversy at present over this issue, but we shall attempt to evade such issues by answering the question at a fairly general level. Even so the explanation may not always seem what it appears in terms of the conventional wisdom. [2]

 

The familiar components of the determinants of the national output are physical capital such as machines, buildings, and roads; natural resources such as land, hydroelectric power sites, and minerals; and technology which is the way in which we arrange the other components (and in which we shall include the economies-of-scale). However, instead of using the familiar labour input as a determinant of production, we shall use the less familiar notion of human capital. This is because we are particularly interested in the population issue, and need a concept more precise than that usually used.

 

Human capital

 

Human capital can best be explained by analogy with physical capital. The value of a physical asset is some sort of sum of the future income the asset can be expected to generate (Easton, 1980, Chapter 2). Obviously income which is far in the future is valued less than income more immediate, so we ‘discount’ it more.

 

Similarly we can think of a human being as an asset generating income in the future and calculate his value by discounting these future incomes in a similar way. You may think this is a cost accounting approach to people. But providing we remember that people are the ultimate consumers, then we can treat the human capital approach as one, but only one, facet of the whole person.

 

Table 1: Average human capital by age, 1971 [3]

Age Group	Human Capital Total	Per Person as annuity	Net market output
	$	$ p.a.	$ p.a.
0-4	12,100	901	-1,030
5-9	22,100	1650	-760
10-14	33,000	2470	-470
15-19	47,000	3530	720
20-24	55.300	4150	2650
25-29	51,800	3890	3130
30-34	46.200	3460	2940
35-39	40.000	3000	2820
40-44	33,200	2490	2630
45-49	26,300	1970	2310
50-54	19.400	1460	2060
55-59	12,600	950	1760
60–64	6,300	480	1290
65-69	1,700	120	660
70-74	– 800	-60	120
75-79	-1,300	-100	-180

Discount rate of 7.5 per cent per annum.

 

Table 1 presents some estimates of the average value of the human capital of individuals at various ages. These figures are not particularly acct rate.[3] There are two important assumptions mentioned here briefly, but which are discussed in further detailed later. Firstly, we have made an imputation for childcare by parents because this is a very important activity in the creation of human capital, even if there is no market payment for it. Secondly, there is no deduction for the consumption of the individual. This is because we are treating such consumption as a benefit to the individual.

 

A third important assumption is that of the discount factor. Unfortunately the value of capital is very sensitive to the discount factor so sometimes it is more helpful to look at the annuity or stream of income the capital would generate. This is equal to the capital value times the discount rate. This is shown in column 2. The particular discount rate used is 7.5 per cent per annum. which seems to be roughly the after-tax corporation discount rate.

 

The first thing which may strike you is how valuable an average New Zealander may be. The 1971 peak average of an excess of $50 000 for a person in their early 20s may be compared with the average for the standard house at that time of $8 300. However, without slavery you cannot convert the human capital into a lump sum except in the goodness of time through working. Indeed, if you and your spouse march in on a banker stating your human capital value is $100 000 and you want to borrow a tenth of it for your house, even your cost accountant is likely to think you a little strange.

 

But for the community as a whole we can calculate the total value of the human capital in New Zealand. In 1971 this was $85,000 million which compares with a total personal wealth of $14,000 million and perhaps another $2500 million held by Government and foreigners. So our human capital exceeds our total physical capital (Easton, 1980, Chapter 7).[4] The importance of human capital as a contributor of total output is clear. The annuity from this wealth is $6 400 million, almost double the actual labour output of $3 287 million. The reason for this difference is that, as a result of a very rapid population growth that we have experienced in the postwar period, half of our human wealth is still in the gestation stage, like an unfinished power station or stored wine. We shall see this has important implications for long term prospects in New Zealand.

 

Note also that children who are absorbers of net output in terms of health care, education, and parent care have a positive net wealth and, as measured by their annuity, are directly contributing to society. However, the contribution is not appearing as extra output for consumption, but as appreciation of the human capital embodied in the child. This is such an economically and socially important phenomenon that it requires a section of its own. But before discussing this topic further it is useful to look at the converse: human capital depreciation.

 

The average individual’s human capital peaks in the 20s and thereafter decreases to less than zero in his early 70s. This reduction in the individual’s future stream of output is diminishing through age, retirement, and death. Such a process of capital appreciation followed by depreciation is inevitable if man is born with nothing and dies with nothing.

 

Before completing this section the reader is reminded that these figures are not very accurate, but they illustrate the point we need to make. Human capital is important. Such an exercise in cost accounting must be seen as a part of the total human picture.

 

Investing in human capital

 

Children, or more precisely expenditure on children, is an economic activity which generates a joint product. This piece of jargon is not a reference to the biological truism that it takes two to conceive, but that expenditure on children produces three separate types of outputs (or benefits) in roughly fixed proportions. You are warned that joint products are by no means easy for economics to handle.

 

Firstly, the child, who is a member of the community benefits from the expenditure. Secondly, the child’s parents benefit from the expenditure in that they derive pleasure from their children. They indicate their pleasure by sacrificing their own consumption in order that their children may consume. We shall see that these sacrifices are substantial. (Incidentally the widespread phenomenon of one person directly benefiting from another’s consumption complicates economics, to the point that it tends to be ignored. But in the case of parents and children we cannot ignore it.)

 

Thirdly, the expenditure is also an investment in the child, building up the human capital of the society which will later be realized when he produces as an adult. So three groups jointly and separately benefit from the expenditure on children in different ways; the child, its parents, and society.

 

Consideration of expenditure as investment in children does not automatically assume that the expenditure is necessarily productive. For instance wine maturing in a cellar may be annually blessed by the priest. In the light of present scientific knowledge it appears unlikely that the blessing has much effect upon the wine, but nonetheless the vintner will record that as an activity associated with its production. Our education system may have a similar effect upon our children, and I am not only referring to activities under the Nelsonscheme of religious instruction. But again we record this as an investment in our children.

 

There are major types of expenditure on children. Firstly, there is the private consumption expenditure on food, clothing, housing, and recreation. Using the `two children equals one adult’ ratio, and assuming expenditure is shared equally within the family, about 20 per cent of private consumption, or $670 million in 1970-71 was consumed by children. Secondly, there is public expenditure, mainly on health and education. In 1970-71 this came to about $300 million.

 

Thirdly, mothers (and to a lesser extent fathers) decide not to go out to work in order to stay at home and care for their children. This is particularly significant among parents with pre-school children (Easton, 1977). In that the parents’ production of other commodities is reduced, and they or other members of the community forgo the resulting consumption, the parents’ time can be treated as expenditure. In the previous calculations on human capital this came to $460 million in 1971. Thus total expenditure upon children came to $1 430 million, a sum similar in magnitude to gross domestic investment on physical assets in 1970-71 which was $1 522 million but included $193 million provided by overseas borrowing (Department of Statistics, 1976b).

 

It is clear that there is no simple way of allocating the total expenditure on children between the various outputs or benefits. For instance we might argue that education is primarily investment, but obviously children may enjoy the educational experience, and their parents may be pleased that the children are receiving the education. However, it is possible to calculate who provides the $1430 million. The parents provide the child’s consumption less family benefit and tax concessions plus the parents’ forgone earnings less taxation on the earnings. In 1971 this totalled about $860 million. The remaining $570 million was society’s share provided through the tax system. Probably about half of these taxes were paid by parents. Thus the direct parental contribution to investment in children was three fifths, and they contributed another fifth through the taxation system. Conversely non-parents contributed only one fifth of the total cost.

 

If we treat all of this expenditure as human capital investment, which is plausible providing we do not assume that all of it is equally productive (see below), we can say that four fifths of human capital formation is provided by parents. Remembering that parents are also likely to be purchasing their houses, at least partly because of their children, parenting is probably the biggest source of community savings for total human and physical capital formation. Clearly it is an activity that deserves much more investigation, and acknowledgement in its role in the economy.

 

We may ask whether it is fair that parents should carry such a large share of the burden of capital formation. This question becomes more pointed in a society with effective contraception, where couples can choose not to have children, others have small families, and at any point in time a significant proportion of households have no children.

 

One response is that parents now choose to have children. Presumably the choice implies that they think they will benefit from the children. There is no need to subsidize the parents’ benefits further. On the other hand parents might respond that they do not see why they should subsidize the childless who are benefitting from the human capital formation. Another response is that increased financial assistance to families would increase the birth rate (assuming for the moment this is considered a ‘bad thing’). There is not a great deal of evidence that family size is so sensitive to the level of family incomes although no doubt the timing and spacing of families could be affected.

 

On the other hand it might be argued that investment in children appears very profitable, so we should do more of it. Obviously we could well spend more upon the productive parts of the investment but, as we shall see, it is not clear what is the productive expenditure. As in so many of these issues, the pure demographic and economic analyses provide a framework in which decisions can be taken. But we need some ethical judgement in order to use the framework.

It seems to me that a judgement not unlike that of the Royal Commission on Social Security is more appropriate in New Zealand circumstances (Royal Commission of Inquiry, 1976, 65). The Commission took the view that an aim of New Zealand society is, ‘That everyone is able to enjoy a standard of living much like that of the rest of the community, and thus is able to feel a sense of participation and belonging to the community’.

 

There are a number of groups who may have a much lower standard of living but we may not think them entitled to public financial help. For instance ascetics who prefer a lower material life style, or persons capable of work, for whom there is work, and who choose not to take it. For this to occur requires full employment (Rosenberg, 1977). Families are another issue. They have a low standard of living because they are providing a high proportion of the savings of the community (Easton, 1977). Many feel they are not able to participate or belong to the community as a result; this is likely to occur particularly among mothers.

 

Research suggests that in 1974 about one quarter of our children and one fifth of their parents were below the material standard of living set by the Royal Commission as a minimum for pensioners (Easton, 1976a). That was 640 000 people, and the number since then has probably risen as a result of the downswing of the present economic depression. The National Superannuation Scheme has raised the standard of living of all pensioners markedly above the Royal Commission minimum level. The largest group of the poor in New Zealand today are families with growing children. The ethical judgement points towards the State contributing a higher proportion of the expenditure on children.

 

The productivity of the investment

 

There is not much evidence to indicate which types of expenditure upon children are the most productive investment. Obviously one can go on at length about good nutrition, house environment and similar needs, but it is preferable to be a little more precise. However, some forms of expenditure may be anti-productive investment. For instance it is thought that childhood obesity may increase adult health care costs, and reduce longevity.

 

Perhaps the only relevant systematic study involved the return on education. Ogilvy concluded an overall social return on secondary and tertiary education of 17 per cent per annum (Ogilvy, 1970). One might question his figures, but they suggest that, across the board, post-primary education investment is very productive. There do not appear to be any similar studies on primary and preprimary education, health, parent care, and consumption goods. Even more useful would be an indication of which parts of education are most productive. For instance I am inclined to the prejudice that good elementary mathematics teaching is very productive, as would be courses at secondary school and adult education which improve individuals’ ability to manage their own health, and their children’s. One can speculate on these issues at length. There can be little doubt that we could markedly improve the effectiveness of our investment in our children. The problem is how. All our evidence shows is that it is a question well worth pursuing. Having established the importance of human capital it is useful to examine some of the other output determinants with particular respect to the population issue.

 

Renewable natural resources

 

Any country has limited renewable natural resources such as land and hydroelectric power sites. An increase in population reduces the quantity of natural resources per head, and ceteris paribus should decrease the output potential of the country. However, it is not immediately obvious that natural resources are a major factor in output determination, and that physical capital substitutes do not exist. For instance farmland may appear limited, and urban growth reducing it. But there is farmland of past years which is now underutilized. It is possible that if we needed more farmland very little capital expenditure in access roading and the like could make this wasteland productive again. Obviously if the population were to increase tenfold, natural resources could be a major limitation on material output, but it seems unlikely that they will be a major limitation in New Zealand with the likely population ranges possible here.

 

Depletable natural resources

 

It is undeniable that the world has been drawing heavily upon its stock of depletable resources, the most important of which is minerals, particularly fossilized energy. At some point such resources will be exhausted, although there is some dispute as to how soon. Obviously a higher population, and all other things equal, will deplete the resources faster (Chapter 12).

 

However, there is a prior issue. Present measures of material output overestimate true income, because they are not reduced by the reduction of the wealth stored in depletable resource form. When this has been adjusted for it is not at all clear that the industrialized nations of the world have experienced much growth in the last few decades. Contrariwise we can treat the investment programmes and the introduction of new technologies as substitutes for resource depletion. It is obvious that the world cannot deplete its resources faster than the substitution of investment and technology without a long run decline in its material standard of living. Whether this has been occurring we do not know. In such circumstances it might be wise to limit the pressure on depletable resources until we are surer of the actual situation.

 

These are worldwide considerations. New Zealand appears to be a substantial importer of depletables, particularly oil which provides 62 per cent of our primary energy, and phosphate. On the other hand we export ironsand and processed energy and fertilizer materials. Perhaps it should be added that at least part of the current energy demand controversy centres around population assumptions. It looks as though nuclear energy and the utilization of prime environmental sites for power stations could be avoided if low birth rates continue.

 

Export market limitations

 

A variation on the natural resource limitation thesis is that the New Zealand export markets are limited, particularly for the traditional product of processed grass. Thus our ability to export is fixed, and consequently so is our ability to import; although the rate at which we have been borrowing since 1975 may appear to contradict this argument. If imports are fixed, a larger population means imports per head are smaller.

 

Thus far the argument is probably a plausible approximation of reality; the next step is more questionable. The argument goes on that there is a direct relationship between imports per head and output per head. Thus, a higher population means lower imports per head, and a lower material standard of living. The assumption of a simple relationship between imports and output is probably incorrect and, even worse, misleading. It is based upon some peculiar belief that import substitution is impossible or, at least, very expensive. Not far away is the belief that all our exporting is efficient which is patently untrue as indicated by the vast subsidies we have been pumping into export industries.

 

Physical capital

 

Under the ceteris paribus assumption, the less physical capital per head, the lower will be output. How much lower is not easy to measure, and we must also consider to what extent a higher population increases the supply of savings.

 

Economies of scale

 

A larger population is frequently advocated on the basis of ‘economies of scale’ which is the notion that costs of unit output reduce as total output increases. This argument tends to be overemphasized, is technically deficient, and ignores a counter argument.

 

The economies-of-scale argument is exaggerated because the likely range of possible populations in New Zealand is small. For instance the difference in population size between a zero and 15 000 per annum net immigration rate is about 11 per cent after 30 years which is hardly large enough to reap major economies of scale.

 

The argument is technically deficient because it does not distinguish between economies of scale for a given technology and economies of scale with a variety of technologies. Nobody denies that for a given technology to produce a product there is an optimum scale of production and that, for some of these technologies developed in much larger economies, the optimum scale is large compared with potential New Zealand production.

 

However, economic theory is more equivocal on whether economies of scale exist at all, when we have a variety of technologies. It is possible that there exists another technology, perhaps as yet unknown, which has a smaller optimum scale but is just as materially efficient as that of the technology of larger economies. Large scale technologies are used because of the market, rather than any inherent technical advantages of the scale itself.

 

This argument has a substantive policy implication. If New Zealand uncritically imports foreign technologies, it is likely to be faced with operating below the optimal scale. On the other hand if it searches for its own technologies it may be able to produce at much lower costs, and indeed export the technologies to similar small scale economies.

 

Finally, if there are economies of scale, there are diseconomies of scale. That is, the population may be too large and create congestion costs. This seems a plausible explanation of some of the problems which arise in large cities throughout the world.

 

If economies of scale are important they are likely to be found, not in manufacturing industry if we use the most appropriate technology, but in infrastructure such as regional transport (where better and cheaper services could be provided if the transport traffic volume warranted it), and housing (because family privacy requirements mean a small family uses more housing per head than a large family). The diseconomies similarly appear to be infrastructural and at their most significant in the provision of urban services such as private transport, communications and utilities, but not with respect to urban public transport and community facilities which may experience economies of scale.

 

The effects of rapid population increases

 

The preceding section shows there is no clear answer to the question as to the relationship between the level of population and output, in the sort of population range possible to New Zealand. However, it is important to distinguish between the level of population and the growth of population. While we cannot be sure of the long run effect of a population of 6 million instead of 3 million, whether the population doubles overnight or over a millenium will markedly affect the economic situation in the period between now and the long run.

 

Consider an economy which is experiencing a rapid population growth. Compare that with the same economy experiencing a negligible population growth. Assume that the cost of providing the extra population (by whatever means) is provided without significant cost to the community. This is plausible for population increases from birth, where most of the costs are willingly given by the parents and from immigration where the migration costs are small and in part provided by the immigrant or friends and other voluntary donors.

 

However, the provision of the extra physical capital remains a problem. In the long run the new addition to the population may, in effect, generate sufficient savings to provide the extra capital required to maintain the average material standard of living of the population. In the short run either the savings must be borrowed from foreign sources or the population must increase its own savings and lower its consumption.

 

The quantity and timing of the savings and investment required depends on the source of the population increase (see below). But there can be little doubt that under rapid population growth consumption must be depressed or foreign investment increased in the short run. Whether these changes are great is another matter.

 

The most severe problems occur where there is a change in the population growth rate. If it suddenly increases, the economy quickly has to find extra capital resources. Conversely, if it suddenly falls the economy can reduce its investment programme during the transition. These ‘accelerator’ effects appear to be quite substantial, and suggest that changes in population growth rates may be a major factor in economic performance. On the other hand, as we shall see, providing performance is properly measured there may be very little difference between this case and the performance of an economy experiencing a steadily increasing population growth.

 

Two other issues are relevant. Increased population in a tight labour market economy generates extra expenditure that is likely to be met by increased imports and borrowing, or inflation, or both (Monetary and Economic Council, 1966). That is why the Australian Government has increased its assisted immigration programmes when it is reflating.

 

Secondly, population lives in a society, and new population has to be absorbed in an existing social environment or, particularly when growth is rapid, create a new one. The record of suburban expansion in New Zealand suggests that however onerous has been the task of providing the physical infrastructure for suburbs, including roading, housing, and recreational facilities, we have been far less successful in providing the social infrastructure in which social relations take place. The phenomenon in newly established suburbs of severe social problems, such as delinquency, which fade away as the suburb matures, is an indication of the social problem generated by rapid population growth.

Some policy issues

 

A useful way of bringing together the analysis, in preparation for the final discussion on the postwar and future experience, is to consider some policy issues involving population, with particular emphasis on the economics of the issues. However, policy decisions must take place within the context of a community, only part of which is ‘economic’. We often find that fundamental social issues dominate the economics. In population issues these are frequently matters of civil liberties, but even these liberties reflect very fundamental social concerns such as the sanctity of life and individualism.

 

The birth rate

 

Some people propose that the community should consciously control its birth rate. Advocates may want a higher birth rate or, more frequently in recent years, a lower birth rate. It is important to appreciate that such social control of the birth rate in either direction is likely to be ineffective or involve major infringements of personal liberties as we currently envisage them. However, even if we could consciously modify our birth rate, would we want to?

 

It is clear from the preceding discussion that childbearing or rearing is, among other things, a productive activity, and that the supply of adequate human capital is vital for the continuing functioning of society. We can investigate the effects of birth rates on human capital by considering two population projections provided by the Government Statistician, one involving the ‘high’ fertility assumption and the other the ‘low’ fertility assumption, each with the zero net migration rate (Department of Statistics, 1973).[5] Table 2 shows the expected population under the two assumptions, and the average human capital for 1971, 1986, 2001, and 2031.

 

The construction of Table 2 necessitated several assumptions, but the results should be robust enough to make a number of points. Take the high fertility assumption projections first. These have a long run net reproduction rate of 1.54, or similar to the 1971 net reproduction rate (N.R.R.). The projections assume zero net migration, and no further human productivity increases.

 

Over the 60 year period these projections show a slight increase in human capital, and a 20 per cent increase in the conventional output per capita. These changes arise because the 1971 population is the result of a higher fertility rate than that projected, so that there is a stock of human capital stored in children in 1971 which gets released as they grow up, but not all of the stock is replaced, because of the lower birth rate. Two adjustments have been made to the conventional output per capita measure, although in the case of the high fertility  assumption they make only a slight change to the percentage increase. Adjusting the population, with children having only half the weighting of an adult, the increase is 19 per cent over the 60 year period. If we also impute the consumption of children and the loss of output due to parenting as a benefit to the parents, the increase in output over the period is 18 per cent. The small fall compared to the conventional measure is due to their being proportionally fewer children in 2031 than in 1971. The human capital measure and all three output measures show most of the increase in the first 15 years of the period, and after 30 years they are nearly stable, indicating that the economic effects of the slightly lower fertility would appear relatively quickly.

 

Table 2: Human capital projections, 1971 prices (a)

Factor		1971	1986	2001	2031	Increase 1971-2031
Population	H	2.86m	3.63m	4.61m	7.65m	167%
	L		3.39m	3.85m	4.47m	56%
	Diff		7%	20%	71%
Average Human Capital	H	$29,300	$29.800	30,300	30,100	3%
	L		$30,600	30,300	27,600	-6%
	Diff		-3%	0%	9%
Output per capita	H	$950	$1130	$1140	$1140	20%
	L		$1270	$1380	$1340	41%
	Diff		-11%	-18%	-15%
Output per adjusted capita (b)	H	$1080	$1280	$1290	$1290	19
	L		$1420	$1520	$1470	36
	Diff		-10%	-15%	-12%
Adjusted output per adjusted capita (c)	H	$1370	$1610	$1620	$1620	18%
	L		$1710	$1800	$1700	26%
	Diff		-6%	-10%	-6%

(a) High: High fertility assumption; Low: Low fertility assumption.

(b) Adjusted capita: children equal half of one person.

(c) Adjusted output: adjusted for non-monetary benefits of children.

 

However, the low fertility projection with a long run N.R.R. of 1^.03 may conform somewhat more closely to realistic expectations, given present trends in fertility levels. As it involves a markedly different long run population structure  from 1971, that there are markedly different long run effects is not surprising. Over the 60 year period, by which time, without migration the population is approaching stability, there is a fall in average human capital of 6 per cent but a rise of conventional output per capita by 41 per cent. This population has proportionally fewer children and young adults which represents lower human capital, but larger proportions among working adults resulting in a higher market output. It is investing less in its children, and is able to produce more for consumption. The transition from the high pre-1971 fertility to the low long run fertility is all the more dramatic considering that the average human capital peaks in 1986 and falls thereafter, and the output variables peak in 2001 and fall thereafter (though by 2031 they are stable).

 

Since the high fertility gives a 20 per cent increase in average material output while the low fertility gives 41 per cent, or about an extra 0.3 per cent per annum over the period, a strong economics case for a low birth rate might appear to be made. But look at the other output measures. When adjustment is made for the consumption needs of children, the low fertility output is only 14 per cent higher. Wheri adjustment for the benefits of children to their parents is included, the low fertility output is only 6 per cent higher. This latter figure is so small and the calculations so approximate that it suggests the output in 2031 of the two fertility projections can be treated as roughly the same.

 

However, before an overall conclusion can be drawn it is necessary to consider whether there are any other relevant issues, particularly with regard to the non-human factors of production and the quality of life. These were surveyed earlier. The reader is invited to review them and consider whether they point overwhelmingly in one direction or another. It is perhaps relevant to remark

some of those arguments against larger populations are in fact arguments against higher total output. Thus it may be as economically realistic to advocate the prevention of production of motorcars as of children. Indeed as soon as my family has bought its second car, we will join the Z.M.G. lobby.

 

The physical capital issue requires a little more analysis since obviously the high fertility projection assumes a much greater requirement. But by how much? To answer this you have to make many more dubious assumptions, but if you accept these arguments you might conclude that the high fertility requires an extra savings per year of $66 per person (in 1971 prices), which is

not going to make a great difference given our accuracy, and the significance of the intangibles which the calculations exclude. Some of it will be saved willingly in order to provide for one’s children, some of it can be borrowed internationally, at no real cost if you believe the neoclassical economics from which the $66 figures was derived.

 

It is true that the extra capital requirements may be sharper in the early part of the 60 year period, or to put it another way, the low fertility projection involves the realizing of pre-1971 investment in the first half of the period. Obviously if you cannibalize your investment you will benefit. But the figures suggest that in the long run there is no significant real cost to the community, unless it wanted to increase its birth rate. Surprisingly there is no evidence in the low fertility assumption of serious problems arising from the aging population. This appears to be because the transition is relatively slow and stabilizes close to zero population growth (Z.P.G.). A rapid fertility fall going well below an N.R.R. of unit could involve complications.

 

It might appear from this discussion that the economic analysis is fairly agnostic to the fertility rate, and that other considerations are more important. The latter statement may be true, but the analysis is far from agnostic. The conclusion is, that if the population chooses an N.R.R. of 1.54 then economically it will be in much the same situation as if it chose an N.R.R. of 1.03, and vice versa. If, however, it chooses an N.R.R. of 1.03 and is forced to expand at an N.R.R. of 1.54, it will be much worse off because it will insufficiently value the sacrifices it makes for its children. The converse holds for the high fertility preference population restricted to low fertility. Their extra material output will not compensate them for the loss of benefit from not having children. Far from being agnostic, the economic analysis is strongly sympathetic towards individuals choosing their preferred reproduction rate. There is always the likelihood that some people in the population have a higher fertility preference and others a low one. That is the same problem as when some households want three cars, and some one car and a good public system. Clearly this is a more general issue which requires another treatise.

 

This conclusion differs from a crude economic assessment for two reasons. Firstly, it includes the critical role of human capital and human capital formation. Secondly, it recognizes that some investment in children also has consumption characteristics because individuals perceive themselves as benefiting from the investment in their own children.

 

Access to contraception

 

Once again this is an issue which involves civil liberties, and in which economics can provide only a frame. Economically attention must be drawn to the high costs of ‘unwanted’ children, perhaps in terms of their involving low human capital or investment in their having a low return on their investment. Even so, once they are members of the community such children are entitled to be treated as humanely and fairly as any others. Economic analysis draws attention to the need to prevent ‘unwanted’ children, but sidesteps the issue of how to identify them. However, while we might not be confident that potential parents would always make ‘right’ decisions it would seem that a policy, consistent with civil liberty objectives, of allowing the potential parents to make the decision as to whether or not the child would be wanted is not inappropriate and likely to be more effective than authoritarian directives. This would point to no abnormal restrictions being placed on contraception.

 

Should contraception be paid for by the couple using it? The price mechanism is a normal restriction, and exists for other consumption that we might deem ‘worthwhile’, such as food. It is argued that contraception is a medical expenditure, and medicine should be provided free. For my part I do not see any a priori reason that health services should be free. Rather that each service should be judged on the basis of separate criteria. In any case it is not obvious that contraception should be treated as medicine, any more than routine maternity involves a medical service (Easton, 1974).

 

I know of no plausible general reason for the provision of free contraception. However, there are a number of groups in the community who have specific reasons justifying free contraception; for example, because of medical circumstances, individuals with low incomes and low borrowing power who may desire expensive sterilization, and so on. It is unlikely that it would be possible to provide free contraception for all these groups without extreme administrative complexity or inequity. In these circumstances the simplest administrative procedure might be to provide free contraception. This is a particularly strong argument for contraception through abortion once medical and legal permission is given and, to a lesser extent, for sterilization.

 

Euthanasia

 

When the annuity value of an individual’s wealth falls below his consumption, it may appear that there is an economic case for euthanasia of that individual, since average incomes would increase as a result. However, this would be an invalid use of economic analysis. Critical to the issue is the appropriate population. It is certainly true that the economic welfare of the population increases after euthanasia, but the pre-euthanasia population is worse off, since one of it is dead. Of course the narrow economic judgement may not be the most important issue. As has happened with previous policy questions on civil liberty issues, so in this case, the sanctity of life would be considered more significant.

 

Where the economic calculus has some relevance is in making judgements about allocating life sustaining programmes when there are limited resources available. In particular, the peak human capital age group of 15-30 years has been experiencing rising mortality rates in some countries, mainly due to accidental death and suicide. The calculus suggests it could well be profitable to allocate more funds to minimize such mortality.

 

Economics, per se, says very little about two issues often confused with euthanasia. The appropriate legal (and social) definition of death, and the individual’s right to die in dignity. These are likely to be significant issues in the near future, but economists qua economists have only a marginal contribution to make to these debates.

 

Immigration

 

Few would dispute the right of the modern nation to regulate the entry of non-nationals. Consequently a policy on immigration is inevitable and, except for the special issues of refugees and family reunions, economic considerations are likely to play a major role in its formation.

 

A popular view in the 1960s, and still held by some groups, is to use immigration to solve labour shortages when the labour market is tight. This view arises from the fallacy of composition; the belief that what is true for the part is true for the whole. The immigration of carpenters might

solve the labour shortages in the building industry but the new carpenters’ expenditure would generate shortages elsewhere. It can be shown that the newly created shortage exceeds the solved shortage (or substantial imports are generated) so the general use of immigration to solve short run problems arising from a tight labour market is self-defeating (Monetary and Economic Council, 1966).

 

A variation of this argument, which was popular during the 1975 election campaign, was that the immigrants caused the housing shortages or high housing prices at the time. The actual reasons for the housing market situation were vastly more complex than the crude immigration argument suggests (Easton, 1976b) although there can be no doubt that immigration was a factor (Monetary and Economic Council, 1966). However, it needs to be remembered that, compared with the established New Zealander, the immigrant is likely to have an intense housing usage on arrival so that, for instance, an immigrant replacing an emigrant is likely to increase the amount of housing stock available to the remainder. Moreover, new arrivals tend to concentrate in particular housing areas, so that the element of truth in the analysis can easily be converted into a prejudice.

 

The compounding of this prejudice with racial prejudice, as appears to have happened with Pacific Islanders, is especially ironic for they are particularly likely to have a low housing usage. After Labour Weekend, 1976, the police reported eight Pacific Islanders sleeping in a garage. The motorcar population might be entitled to object to the effect of immigration on their housing, but clearly in this case the human population should be ashamed rather than prejudiced.

 

In fact the Pacific Islander on a temporary work permit may be the one exception to the conclusion of the uselessness of immigration for solving short term tight labour market problems. His aim is to save rather than spend, and he is likely to be a low utilizer of physical capital. His net effect may be to reduce the labour shortage. However, this analysis has the implication that when the labour market slackens the temporary migration is terminated. In effect we export our unemployment to the Pacific Islands, and the termination of the remittances from New Zealand can have a disastrous effect upon the Island economies. It is hypocritical to talk of the temporary immigration of Islanders as a form of foreign aid when we both promote it and terminate it for our own benefit.

 

If, with the possible exception of Pacific Islanders, immigration for short term reasons is rejected, is there a case for it as a part of long term strategy? For those who support a larger population the answer is clearly ‘yes’, and those who are against any population growth the answer is equally clearly ‘no’. But how should it be viewed by those who do not place the population level as the highest priority?

 

From the preceding discussion it is clear that immigration which involves the acquisition of a high quantity of human capital may well benefit New Zealand. Practically, this means the immigration of skilled or professional labour of which there is likely to be a long term deficit from New Zealand sources, usually because we cannot train such personnel ourselves.

 

Even so, the skill must be an appropriate one. For instance, imported engineers whose experiences are based upon production scales far in excess of anything realizable in New Zealand may insist upon entirely inappropriate technologies. Another instance is the foreign social scientist who believes hisown culture is universal and uncritically interprets New Zealand society in its light; an individual only too familiar, even in the 1970s.

It is also important that the migration policy does not inhibit the provision of the internal supply of the skill. Our technical education programmes have been set back at least a decade because we thought we could import suitable technical and skilled workers. Moreover, another problem was created since the imported worker has often been better qualified and hence entitled to higher status, pay, and more opportunity, than his equally able New Zealand coworker. This has been an understandable if unfortunate source of antagonism towards British immigrants.

 

We need also to note the adjustment problems of the new arrival, which may be unmeasurable but are all too obvious. They appear sufficiently large to make some apparently viable immigration proposals socially expensive. On the other hand, equally unmeasurable are the benefits, particularly for a small society, of the extra diversity of experience which the foreigner brings with him. Finally, we need to note that if New Zealand gets free human capital from the immigrant it has to supply the associated physical capital, a point well appreciated by Vogel in the 1870s whose schemes involved both immigration and overseas borrowing.

 

Overall, then, immigration as a long term supply of human capital is not as attractive as some of its advocates argue. Paradoxically though, since there may be more human capital in the immigrant’s wife and children than in the individual himself, the immigration of families is more attractive.

 

Emigration

 

Emigration is largely the converse of immigration. Typically it involves the loss to New Zealand of human capital, and the release of the associated physical capital to the rest of the community. Generally emigrants are high in human capital, and probably involve a net loss to the community. In many cases this loss will be more than recovered later if and when the New Zealander returns with the benefit of the alternative overseas experience.

 

However, the right to emigrate to a country which will accept him is considered one of the civil liberties of the New Zealander. Moreover, a small country must accept that it will be unable to cater for all the abilities of its population. We must be delighted that a Rutherford is able to pursue his studies overseas, even if we are sad to lose him.

 

There may be a case for some sort of discouragement on those whose human capital is partly the consequence of large social expenditures. An obvious example is that of medical graduates. A possible procedure might be to treat university costs as an interest free suspensory loan which need not be repaid if a doctor carried out 10 years service in New Zealand. There would need to be provision for postgraduate training overseas. Thus there would be no restriction upon the graduate leaving New Zealand but an economic charge if he did not repay the community contribution to his earning power. For reasons of equity the scheme would need to be applied to all university graduates, although for many the public costs of their tertiary education is quite low. Perhaps the first 3 years at university might be treated as a gift.

 

Although in the past, economists have concentrated upon the economics of immigration, the rising levels of emigration suggest that more attention will have to be paid to that aspect.

 

The regional balance

 

There is almost a national consensus that New Zealand is facing severe problems in the regional balance of its population, particularly with the drift to Auckland, and to a lesser extent with urbanization. The problem arises because internal migration is determined by private decisions, concerned only with private costs and benefits. The consequent social expenditure follows these private decisions. It appears that the social costs of population moving to Auckland have been outweighing the extra private benefits of the move, and similarly rural areas and the South Island have been suffering social costs of out-migration in excess of the private benefits. These extra social costs were mentioned in the discussions on the infrastructure and economies of scale, and the social problems of rapid population growth.

 

So far New Zealand has tried to meet the problem of regional unbalance by neglect (in the 1960s) and vague indicative planning with a few regional subsidies (in the 1970s). Neither policy has been particularly effective. The only policy likely to be effective is to curb directly the growth of Auckland by price or administrative means while building up alternative growth nodes. It appears that either Auckland industry should be charged for the extra social costs of growth in Auckland (which may partially occur through local authority rates if a policy of neglect is continued) or by restricting employment growth in the Auckland area by requiring approval for a firm to increase its size.

 

Unfortunately the degree of parochialism in New Zealand makes the choice of alternative growth nodes invidious. It seems likely that in the north there should be greater concentrations in Hamilton, Rotorua, and Tauranga as alternatives to Auckland. With the Kaimai tunnel now completed, Tauranga could well become much more important as a port. In the south, Christchurch will have to grow in order to generate opportunities in the remainder of the South Island, but this growth must not be at the expense of the remainder. At present Wellington would seem to be an inappropriate growth node, unless it divested itself of some of its governmental activities through a devolution of central Government powers to local decision makers.

 

Population and economic perfromance

 

The preceding discussion has indicated that there will be no simple, brief, comprehensive summary of the effect of population growth on economic performance; and the opposite issue is not even being touched upon. However, the following broad brush conclusion might be fair.

 

The postwar increase in the reproduction rate which led to a near doubling of the New Zealand population in the 30 years after the Second World War places a very great strain upon the economy, through its human capital and physical capital investment requirements, and on society through the pressure on urban social structures. On the other hand we might consider the period as one where although the material growth rate performance was not great, the country increased its investment in its human capital stock and this investment will be realized in the future in terms of greater material growth with the falling population growth rate of the future.

 

We might also conclude that at least part of the strain arose not so much from the growth itself, as from failure to face the issue. It is not difficult to write down a check list of viable policies which could have substantially improved the integration between the population growth and economic performance. That we permissively permitted the excessive growth of Auckland, ran an immigration programme based upon short term expedients, neglected the parental, pre-school, and health role in human capital formation, and ignored the problem of unwanted children is undeniable. Whether these failures were the result of a lack of knowledge, foresight, or political will must be debated elsewhere.

 

The next 30 years are likely to be very different. The birth rate is falling close to, and perhaps below, replacement levels. Economic conditions over the next decade are likely to result in a net immigration close to zero, or even negative. Investment in human capital and associated physical capital for the population increase is likely to be a lower proportion of economic activity.

 

The result could well be higher growth levels in our material standard of living, higher labour productivity, and higher female participation in the workforce. On the other hand if our balance of payments remain in the desperate situation of the 1973 to 1978 period, we may instead experience continuing unemployment and net emigration.

 

Future policy prospects

 

I cannot conceive of a future world which at some stage does not have a long run constant population. This being so, we might as well start thinking of zero population growth now, even if we are a few generations off stability. One hopes that we can reach that state without a desperate economic collapse. I must confess that recent population trends throughout the world make me more optimistic than I was a decade ago, but it still could be a near thing.

 

If the whole world is to have a net reproduction rate of unity, then New Zealand must have a similar one. We are already close to it, and the one area where I see a need for action is in the reduction of unwanted children. I should be sorry if we were to go markedly below unity because it would show a lack of faith in ourselves as a nation.

 

However, even if the world experiences zero population growth, there seems to me to be a strong case for some growth of the New Zealand population through net immigration, so that the population of the world is more evenly spread. Such migration should take place without excessive short term economic pressures upon New Zealand, and within a context of our growing cultural and social autonomy (which, I hasten to add, is certainly not the same thing as racial autonomy). Fortunately ours is a migrant’s culture, so it would be easier for us to respect the contribution of the immigrant than for some nations with a different history (Easton, 1976c). However, we shall have to think carefully about how we are to cope with the extra population although I do not think the problem is insurmountable.

 

I have suggested that while the economy is depressed there is likely to be zero or negative immigration. Nonetheless the substantial emigration, amounting to over 1^.5 per cent of population each year will have to be replaced at least in part. Thus there is a need for a policy stance towards immigration, even if we decide that New Zealand already has its share of the world population.

 

Firstly we need to know more about the reasons for emigration and particularly whether there are New Zealanders overseas who would like to return, but cannot for reasons with which we can deal. Secondly, while the Pacific Islands’ intentions remain unclear, it is likely that we will have to take a larger share of the South Pacific Polynesian population in New Zealand. This could easily be improved the integration between the population growth and economic performance. That we permissively permitted the excessive growth of Auckland, ran an immigration programme based upon short term expedients, neglected the parental, pre-school, and health role in human capital formation, and ignored the problem of unwanted children is undeniable. Whether these failures were the result of a lack of knowledge, foresight, or political will must be debated elsewhere.

 

The next 30 years are likely to be very different. The birth rate is falling close to, and perhaps below, replacement levels. Economic conditions over the next decade are likely to result in a net immigration close to zero, or even negative. Investment in human capital and associated physical capital for the population increase is likely to be a lower proportion of economic activity.

 

The result could well be higher growth levels in our material standard of living, higher labour productivity, and higher female participation in the workforce. On the other hand if our balance of payments remain in the desperate situation of the 1973 to 1978 period, we may instead experience continuing unemployment and net emigration.

 

Future policy prospects

 

I cannot conceive of a future world which at some stage does not have a long run constant population. This being so, we might as well start thinking of zero population growth now, even if we are a few generations off stability. One hopes that we can reach that state without a desperate economic collapse. I must confess that recent population trends throughout the world make me more optimistic than I was a decade ago, but it still could be a near thing.

 

If the whole world is to have a net reproduction rate of unity, then New Zealand must have a similar one. We are already close to it, and the one area where I see a need for action is in the reduction of unwanted children. I should be sorry if we were to go markedly below unity because it would show a lack of faith in ourselves as a nation.

 

However, even if the world experiences zero population growth, there seems to me to be a strong case for some growth of the New Zealand population through net immigration, so that the population of the world is more evenly spread. Such migration should take place without excessive short term economic pressures upon New Zealand, and within a context of our growing cultural and social autonomy (which, I hasten to add, is certainly not the same thing as racial autonomy). Fortunately ours is a migrant’s culture, so it would be easier for us to respect the contribution of the immigrant than for some nations with a different history (Easton, 1976c). However, we shall have to think carefully about how we are to cope with the extra population although I do not think the problem is insurmountable.

 

I have suggested that while the economy is depressed there is likely to be zero or negative immigration. Nonetheless the substantial emigration, amounting to over 1^.5 per cent of population each year will have to be replaced at least in part. Thus there is a need for a policy stance towards immigration, even if we decide that New Zealand already has its share of the world population.

 

Firstly we need to know more about the reasons for emigration and particularly whether there are New Zealanders overseas who would like to return, but cannot for reasons with which we can deal. Secondly, while the Pacific Islands’ intentions remain unclear, it is likely that we will have to take a larger share of the South Pacific Polynesian population in New Zealand. This could easily be seen as a great problem, but it is better regarded as a challenge which needs to be tackled positively in consultation and concern with the Pacific Island communities. Given that the proportion of their populations involved may be substantial, and their migrants may be low in human capital (but not in human worth) it is likely to be both in their interests and ours that the migration be orderly and slow. It may well be that temporary migration with the Islander returning to his community may be very important, and certainly if the Islands ask we should give them every reasonable assistance to maintain their population and cultural autonomy.

 

Migrants who do not originate in the South Pacific require a different approach. Undoubtedly we shall continue to select immigrants high in human capital. From earlier discussions it follows that we should not see this as a long term major supply of certain skills, but as supplements or initiating programmes to build up internal supply.

 

This is not the only change of approach to migration that is needed. The earlier recognition of the human capital in the remainder of the approved migrant’s family suggests that selection should consciously adopt a family capital point of view. A family with a skilled (though not necessarily working) mother, and adolescent children already demonstrating ability or with some occupational training, may be an attractive immigration proposition. Providing such immigration is a long term strategy there seems to be no reason why the number of immigrant children per family should be restricted.

 

As a long term immigration programme will involve further physical capital formation and this is the main reason migration programmes are likely to be restricted during the current economic depression, the extra savings need to be found either domestically or by borrowing. Immigrants’ own funds and gratis gifts from countries who support emigration of their nationals could also be helpful.

 

Given the expected emigration rate of New Zealanders, it is unlikely that the proportion of foreign born living in New Zealand will decrease much below the current 10 per cent (excluding those born in the Pacific Islands and Australia). Strategy towards the origin of these immigrants will need reviewing, particularly if one of the advantages of such immigration is the cultural diversity it makes possible. The preponderance of British foreigners is partly the result of lethargy arising from historical practice and partly the mistaken belief that culturally New Zealand is like Britain. The contribution of non-British minorities such as the Chinese, the nineteenth century Scandinavians, the middle European refugees from Nazism, and North Americans in the last decade or so has far exceeded their numerical size, and suggests that such a policy could remain productive. One step would be to encourage immigration of groups already well established and integrated in New Zealand such as the Chinese and Dutch. If the international regional balance is a major reason for any immigration programme migrants from South and South East Asia should also be considered. Providing it is controlled to prevent exploitation, the adoption of young Asian children into New Zealand families may be a viable policy.

 

Finally if overseas experience is seen as advantageous to New Zealanders, involving them in short term migration, returning after, say, 3 years perhaps a complementary programme should be considered for short term migrants here, with the understanding that if they like us enough we will consider allowing them to stay. We already practise the first part of such a programme for Asian students.

 

Conclusions

 

The relationship between the economy and the population is by no means a simple one. Yet there is no reason for neglect. The neglect in the past with regard to economic and social policy has been illustrated throughout this chapter. But there has also been an academic neglect. In the past, studies in New Zealand have been between the wishful and fragmentary, and for a variety of reasons conclusions from foreign studies are not particularly appropriate.

 

In advocating more attention to this study area, and the related one of manpower (or is it personpower?) planning, we are not yet advocating further official committees stacked with the benevolent, the inexpert, the part time, and the token representative.[6] Our real need is for systematic research; that is the payment of full time social scientists supported by adequate facilities to explore further the issues raised in this chapter.

 

Notes

1 For some peculiar reason the National Development Council used an output rather than a consumption measure of welfare (National Development Council, 1972, 1).

2 A good summary of the collapse of the conventional wisdom’s aggregate production function is to be found in Harcourt and Laing (1971).

3 Details of the calculation are available from the author. The human capital is the expected net market output, that is, factor income less health, education, and parent-care expenditure discounted at 7.5 per cent.

4 The discount rate for human capital is higher than the return on personal wealth, which has the effect of undervaluing human wealth. On the other hand the estimate for wealth held by government includes only items for which a return or imputation is made in the national accounts.

5 The post-2001 projections are the author’s.

6 Such as is proposed in Task Force on Economic and Social Planning (1976, 73).

 

References

Department of Statistics (1973) New Zealand Population Projections 1971-2001. Government Printer, Wellington.

(1976a) 1976 Census of Population and Dwellings: Provisional National Statistics, Bulletin 2, Wellington.

(1976b) National Income and Expenditure 1974-75, Government Printer, Wellington. Easton, B.H. (1973) A Needs Index, mimeographed.

(1974) ‘Financing of medicine,’ in D.W. Beaven and B.H. Easton (eds), The Future of New Zealand Medicine: A Progressive View, Peryer, Christchurch, 91 –97.

(1976a) ‘Poverty in New Zealand: estimates and reflections,’ Political Science, 28, 127-40.

(1976b) ‘The New Zealand housing market,’ New Zealand Economic Papers, 10, 1-29.

(1976c) ‘These islands now,’ New Zealand Monthly Review, 17, November, 1-2.     (1977) ‘The economic life cycle of the family,’ Australian and New Zealand Journal of Sociology, 13, 1, 85-89.

(1980) The New Zealand Income Distribution, New Zealand Institute of Economic Research, Wellington.

Harcourt, G.C. and Laing, N. (1971) Capital Growth, Penguin, London.

Hicks, J.R. (1948) The Trade Cycle, Oxford University Press, Oxford.

Mishan, E. (1967) The Costs of Economic Growth, Staples Press, London.

Monetary and Economic Council (1966) Increased Immigration and the New Zealand Economy, Government Printer, Wellington.

National Development Council, Targets Advisory Group (1972) Growth for Better Living, Government Printer, Wellington.

Ogilvy, B.J. (1970) ‘A cost benefit study of education in New Zealand,’ New Zealand Journal of Educational Studies, 5, 1, 33-46.

Rosenberg, W. (1977) ‘Full employment: the fulcrum of social welfare,’ in A.D. Trlin (ed) Social Welfare and New Zealand Society, Methuen, Wellington, 45-60.

Royal Commission of Inquiry (1976) Social Security in New Zealand: Report of the Royal Commission of Inquiry, Government Printer, Wellington.

Task Force on Economic and Social Planning (1976) New Zealand at the Turning Point, Wellington.