"When philosophy paints its grey in grey then has a shape of life grown old. By philosophy's grey in grey it cannot be rejuvenated but only understood. The owl of Minerva spreads its wings only with the falling of dusk." -- G.W.F. Hegel, 'Preface', Philosophy of Right.
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'Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainity and agitation distinquish the bourgeois epoch from all earlier ones ... All that is solid melts into air, all that is holy is profaned.' Marx
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Treasury, capability development
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January 9, 2008
Back to the speech, entitled "Addressing Extreme Disadvantage Through Investment in Capability Development", which was given by Dr Ken Henry, Secretary to the Treasury, to the Australian Institute of Health and Welfare Conference "Australia’s Welfare 2007. Henry starts by saying that:
If I were to identify two fundamental roles for government they would be these. First, to provide sustainable macroeconomic growth, with low and stable inflation and unemployment, through sound macroeconomic frameworks and the maintenance of well functioning markets. And second, to ensure that all Australians share in the nation’s prosperity.
And then to his credit he addresses how to measure 'sharing prosperity:
From the Treasury perspective, there is far more to sharing prosperity than simply ensuring that income is redistributed in a way that avoids inequality widening over time beyond some arbitrary level. To our minds, the distributional goals of government must relate to a much broader concept of prosperity, or wellbeing; one that goes well beyond standard inequality measures, or poverty line constructs, based on crude statistical measures of dispersion around mean or median income. These traditional income based measures of poverty and disadvantage are just too simplistic for the task. The dispersion of money income is of consequence, to be sure, but it is not enough.
He suggests a better way is to use Amartya Sen’s concept of disadvantage as capability deprivation, as this enables us to expand the traditional focus on poverty measurement to develop indicators of deprivation and social exclusion.
What then does Treasury mean by this:
Sen emphasises what he refers to as ‘substantive freedoms’ — including political and civil liberty, social inclusion, literacy and economic security — that, of themselves, form ‘constituent components’ of development. Among the capabilities of importance to poverty analysis, Sen identifies one subset including such things as the capability ‘to meet nutritional requirements, to escape avoidable disease, to be sheltered, to be clothed, to be able to travel, and to be educated’. Poverty lines, defined in income terms for example, that captured these capabilities would not vary much from one community to another and would not, for the same reason, vary much over time. In other words, they might provide the basis for an absolute poverty line measure. But Sen also notes that a second subset of other relevant capabilities of considerable interest to the classical economists — such as the capability to live without shame, the capability to participate in the activities of the community, and the capability of enjoying self-respect — provides a basis for relative poverty comparisons.
Henry says that including all of these elements in an all-encompassing measure of poverty (or disadvantage) — built on a person’s endowment of capabilities, rather than their command over commodities — would be quite a challenge. So its not surprising that, despite an increasing interest in such a broad measure of disadvantage, no universally accepted measure has been developed. What Treasury has done is adopt the broad conceptualisations of wellbeing and disadvantage being used for various analytical purposes:
we in the Treasury have developed a wellbeing framework as a descriptive tool to provide context for public policy advice. It is built on elements of Sen’s capabilities framework within the context of a generalised-utilitarian framework. This quite broad conceptual framework anchors the objective and thorough analysis of policy options that is central to the Treasury’s role.
Well-being has three components---healthy living; autonomy and participation; and social cohesion, and Treasury's policy approach is not to ensure equality of outcome Policy makers should be concerned with opportunities. Specifically, they should be concerned to ensure that individuals are endowed with capabilities that allow them the freedom to choose to live their lives in ways that have real meaning and real value.
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Reminds me of Marshall's rights. Since we've morphed from a society into an economy it's appropriate for treasury.