On Economic Indicators
by Helena Norberg-Hodge. This is an excerpt from the Economic Design dimension of Gaia Education’s Design for Sustainability curriculum.
GDP (Gross Domestic Product) was first introduced as a measure of economic health around World War Two. Since then it has been taken on by every country in the world. Its primary purpose is to provide an easily quantifiable assessment of economic growth by measuring output and income. The result is that the more goods and services are bought and sold — basically, the more money changes hands — the more GDP rises. Today economists and politicians rely on GDP as an indicator of ‘progress’ and increased growth is deemed essential for societal welfare. However, when we examine the impact of increased growth, as measured by GDP, we find that the opposite is true. An increase in GDP is linked to social and environmental breakdown!
Despite what we’ve been taught about “supply and demand” or “natural scarcity.” prices in the marketplace today are the product of political choices. Policymakers look to GDP to validate these choices, assuming that the rate at which GDP rises is a valid measure of the health of society and the economy. It is anything but that. When tap water is so polluted that we must buy our drinking water in plastic bottles, GDP increases. GDP also grows when we pump oil out of the ground and burn it, as though we could do this indefinitely. It increases when we cut down an old-growth forest and turn it into bathroom tissue, as though the services provided by forest ecosystems — including fresh air, water and a stable climate — were unimportant. When more people are sick and need pharmaceutical drugs and hospital care, GDP goes up. If pollution decreases and people are healthy in body and mind, GDP goes down. In other words, the more pollution, illness and breakdown there is in society, the more the economy “grows” and the better off we’re assumed to be.
Growth is normally considered a good thing; it is associated with life itself. But economic growth is quite different. It is actually undermining the conditions necessary for life on the planet at a frightening speed. The process of extraction, production and disposal that contribute to economic growth takes an enormous toll on the environment. On a planet of finite resources we can only extract and produce so much before all non-renewable resources are exhausted. “Sustainable economic growth” has been much touted as the compromise between protecting the environment while carrying on growing the economy. Of course, sustainable growth is not only a contradiction in terms, but it is dangerously misleading.
An international movement is seeking to develop indicators based on an idea of the former King of Bhutan, who proposed “Gross National Happiness” (GNH) rather than GDP as a true measure of economic and social well being. Adopting GNH as a standard would provide a very different picture of the global order. In a survey of more than sixty-five countries conducted from 1999 to 2001, Nigeria turned out to have the highest percentage of people who considered themselves happy. Britain ranked twenty-fourth on this scale, despite boasting a GDP more than twenty-two times higher than that of Nigeria. A BBC poll found that 81% of people surveyed think the government should focus on making them happier rather than wealthier.
At the moment, GDP is a central part of a system that is pushing people and the planet in a disastrous direction. We need economic literacy and economic activism to shift direction. If the multitude of social and environmental movements wake up to the need to link hands to address this common agenda, sufficient pressure can be exerted to bring about meaningful change. With more awareness, people will insist on indicators and systems that support them, their children and the natural world.
This is an excerpt from the Economic Design dimension of Gaia Education’s online course in Design for Sustainability. The course will start on 18 March 2019, so sign up now!
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