Is chasing GDP growth the only way to prosperity?
Authors: Stephen Bevan
Professor Stephen Bevan
12 April 2013
Like it or not, Gross Domestic Product – GDP – has become one of the most important statistics of the modern age, the data of which is regularly argued over by politicians and economists. The anxious wait each quarter for the latest estimate of GDP from the Office of National Statistics (ONS) reminds me of the way the Faithful waited to see the white smoke emerge from the Vatican chimney during the election of Pope Francis last month.
Economists like Jonathan Portes of the National Institute for Social and Economic Research (NIESR) must be getting weary of warning us all not to read much into one set of figures and to take a longer view. But we all know that the next set of figures will tell us if we are in a ‘triple dip’ recession or not, so most journalists will probably ignore Mr Portes’ sage advice and will use the data to either hail recovery, or condemn further decline...
Beyond this GDP frenzy, however, a growing number of thoughtful people are asking whether this singular focus on GDP is getting us anywhere. Indeed, some are arguing that it can be doing real, long-term damage. Yesterday, I was among speakers at a seminar organised by the ALDE political grouping in the European Parliament debating this issue, and how we navigate the tension between ‘Qualitative development and Quantitative growth’. Organised and chaired by Sir Graham Watson, MEP and Dr Antonya Parvanova MEP, (Co-President of The Work Foundation’s Fit for Work Europe Coalition, by the way), the event attracted speakers from the European Commission, WHO Europe, academia and prominent NGOs.
The debate went beyond the ‘happiness’ or subjective wellbeing movement which has been a feature of recent initiatives in the USA, UK and France (not forgetting the redoubtable in Bhutan, which has gone further than any of them). Instead, we discussed how citizens, policy makers and opinion leaders might better use the emerging evidence base to improve quality of life and inequality, move away from silo-budgeting and explore social return on investment models. Speakers pointed out the dangers of a dash to increase consumption as a way of kick-starting growth, especially if this consumption led to negative consequences for public health, inequality or social cohesion which – in the long-run –is more expensive to society.
My own presentation focused on three challenges in the EU labour market:
• The often non-economic scarring effect of youth unemployment, drawing on the work of colleagues at The Work Foundation who have looked at international experiences of managing youth unemployment.
• The decline in job quality or ‘Good Work’ in recent years and how this may affect employee engagement, productivity and wellbeing.
• The growing burden of chronic illness in the EU’s working age population and how, if ignored, it could be a major impediment to competitiveness, social inclusion and the reduction of social inequality.
Overall, the event concluded that chasing GDP growth alone was a fool’s errand and that more cutting-edge thinking was needed to find practical alternatives which can act as a ‘corrective’ to some of the perverse incentives inherent in the current system.
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