Never mind the GDP. How are the people doing? (The Globe And Mail)

Thursday, December 12, 2019

By Elizabeth Renzetti for The Globe And Mail

If you looked at pictures of Sydney this week, you knew something was wrong. You knew because of what you couldn’t see – dense smoke from nearby bushfires filled the sky, obscuring the sun and the famous hunchbacked silhouette of the opera house. People were told to stay inside. Smoke alarms went off randomly.

I read a piece in the Sydney Morning Herald by an Australian writer, Mark Mordue, that stopped me short with its blunt sadness. Mr. Mordue described how he was having trouble breathing and thinking, and how he struggled with feelings of futility and depression. “Our dead future is here,” he wrote. At the same time, Australia’s climate policies (or lack thereof) dropped the country to the very bottom of a global ranking issued by environmental think tanks.

A dollar bill with a bunch of flowers on top

Illustration by Hanna Barczyk

There is a profound disconnect in the air, and it smells like something burning. We are told to care about things that no longer seem to have any connection to reality. On one hand, we hear good or bad numbers related to our country’s primary gauge of success – gross domestic product – as if GDP has any meaning at all for the average person’s life. On the other, we try to process the burning and melting and flooding, a collective trepidation that psychologists have labelled “eco-anxiety.”

Fortunately for the people of New Zealand (if not for Australians), there will soon be many more mental-health professionals at schools and clinics to help sort through these issues. That’s because the Labour government of Jacinda Ardern has put mental health at the centre of its first “well-being budget” – a policy framework that does not, for once, prioritize economic growth over all concerns. Ms. Ardern, along with the leaders of Scotland and Iceland – and some celebrated economists – is challenging the notion that GDP is the sole god before which all political leaders must pray.

In Ms. Ardern’s budget speech in May, she noted that her Finance Minister, Grant Robertson, had been thinking about the limitations of gross domestic product as the primary measure of a society’s progress since they were in opposition together; finally, his long-term thinking had a chance to test itself. Ms. Ardern expanded on this idea of a more holistic measurement of growth at the Gates Foundation’s Goalkeeping summit in September: “Economic growth accompanied by worsening social outcomes is not success,” she said. “It is failure.”

In 2018, Nicola Sturgeon, Scotland’s first minister, brought her country into a well-being economic alliance with New Zealand and Iceland. In a recent TED talk, she described it as “a vision that has well-being, not just wealth, at its very heart.” Everything she said cut to the very crux of the global dilemma we find ourselves in. First, by prioritizing people’s health, social mobility and educational prospects, governments begin a dialogue with citizens that shows them they’re valued, and helps dispel disaffection and mistrust. In other words, it pours water on the embers that can flare into populist movements. It’s particularly important now, at a time of profound technological change, to develop more sophisticated measures to understand who is being left behind, and why.

As well, the movement toward a well-being index is a long-term, intergenerational program – completely in contrast to the short-term political frenzy that comes with chasing certain economic goals. As Ms. Sturgeon said, GDP “values activity in the short term that boosts the economy, even if that activity is hugely damaging to the sustainability of our planet in the longer term."

The sustainability aspect may be the most crucial limitation of relying on GDP measures. The Nobel Prize-winning economist Joseph Stiglitz has been leading the discussion about the limitations of this yardstick since producing a ground-breaking report with fellow economists Amartya Sen and Jean-Paul Fitoussi in the wake of the 2008 financial crash. If the harmful effects of runaway growth to the planet’s health aren’t taken into consideration, how can it be considered any measure at all? “Because GDP didn’t include resource depletion and environmental degradation, we typically get an excessively rosy picture,” Dr. Stiglitz, co-author of the new book Measuring What Counts: The Global Movement for Well-Being, wrote last month. He added: “It is possible to construct much better measures of an economy’s health. Governments can and should go well beyond GDP."

If you ask people what constitutes contentment, how they define a good life, what will they say? The researchers at the Canadian Index of Wellbeing at the University of Waterloo did just that, reaching out to people across the country. They heard back about the importance of health and education, community supports and free time, political engagement, clean air and water.

What the Canadian Index of Wellbeing discovered, in its 2016 report, is that there was a profound disconnect between the country’s economic growth (good) and its sense of satisfaction (not so good). Measuring changes between 1994 and 2014, the study found that “the gap between GDP and our well-being is massive and it’s growing. When Canadians go to bed at night, they are not worried about GDP. They are worried about stringing together enough hours of part-time jobs, rising tuition fees, and affordable housing.”

As Ms. Ardern said, in her refreshingly frank fashion, she’s not sure how New Zealand’s first well-being budget will turn out, but her government plans to keep using this new model, and she hopes other countries will follow suit. Because something is broken in the way we measure the health of our countries and our planet. The evidence is outside the window.

Article originally appeared in The Globe And Mail. Read it here.