I thought I’d post this blog to try and stir some deeper thinking around how an economy (or even a single organisation) can’t hope to raise overall well-being – i.e. both economic and social – unless the primary focus of that economy/ organisation is on elevating productivity.
In relation to each of the tertiary level commerce courses that I’m teaching at the Eastern Institute of Technology, I’m presently teaching students how it is that productivity is the quintessential element that drives growth and financial success. I demonstrate this causation relationship as follows…
Innovation, Marketing & Culture (i.e. based on principles of: inclusivity, collaboration, cooperation and openness) are the three MOST instrumental elements/ factors that determine what level of Productivity is achieved in any organisation/ economy.
Productivity (when maximised at the point that optimum Capacity utilised = Demand) will generate optimum Revenue; which in turn will produce optimum Income – which of course is subject to Taxation (main source of central government revenue). Greater productivity also creates a viable platform on which new employment opportunities can appear (be provided) – and with an increased/ improved labour force, this will in itself create momentum for additional productivity to be realised.
And this is the essential reason why central government needs to be doing everything in its power to encourage and support productivity improvements; for without this emphasis “the pie” will remain pretty much the same size year to year. If “the pie” can’t be increased in size, then central government budgets for redistribution of taxed income should (responsibly) reflect this – and its expenditure in areas which aim to bolster the prosperity of (for argument’s sake) “vulnerable” or “disadvantaged” people needs to fall within the available amount found in this finite “pot of income tax gold”.
On the other hand, if central government was to understand that the most important driving force behind an expansive/ growth economy is productivity – and involved itself in “enabling” people/ organisations/ entities who have the wherewithal to invoke improvements in productivity (e.g. through investment/ innovation/ education) – then it would be highly likely that that economy would experience heightened levels of productivity, financial success and employment and central government would have a GREATER “pot of income tax gold” at its disposal for redirecting to whatever causes/ segments of society it prioritises.
So when the next central government general election rolls around, and the various political leaders are concentrating their advocacy pitches on issues that are about improving the well-being of Kiwis – devoid of points raised in relation “productivity”; stop for a minute and think about “how” their promoted ideologies are going to be afforded.