Traditional economists ignore reality to justify their thinking, and anyone who studies economics is well aware of this. From the myth of the “rational human” to trickle down economics, to the very idea markets are “natural” all ignore the actual state of the world and people. Due to the mainstream adoptions of these myths (and others), researchers interested in economics are pushing back and trying to revive the field to better reflect reality.
One such effort is found in ecological circles which are trying to get policymakers and thinkers to acknowledge that the planet itself is key to economic practices.
Ecological economics offers an opportunity to make the transition to an economic system that is designed to promote human and planetary health from the outset, rather than one where social and environmental externalities must be constantly corrected after the fact. Important ideas from ecological economics include the use of a multidimensional framework to evaluate economic and social performance, the prioritisation of wellbeing and environmental goals in decision making, policy design and evaluation that take complex relationships into account, and the role of provisioning systems (the physical and social systems that link resource use and social outcomes). We discuss possible interventions at the national scale that could promote public health and that align with the prioritisation of social and ecological objectives, including universal basic income or services and sovereign money creation. Overall, we lay the foundations for additional integration of ecological economics principles and pluralist economic thinking into public and planetary health scholarship and practice.
The more a CEO is paid the worst customers are treated. Everyone knows inequality is bad for our society, but now shareholders might start caring because inequality within companies produces negative results. Customers are less satisfied with companies with high CEO compensations, and internally the companies suffer from inefficiency and lower morale.
This article adopts a marketing perspective to examine how wage inequality between top managers and their employees may have customer-related consequences (i.e., customer-directed effort, customer-directed opportunism, and customer-oriented culture) that affect customer satisfaction and firm performance. Surprisingly, marketing scholars and practitioners have largely neglected this pressing societal issue. The authors collect a cross-industry, multisource data set, including responses by top-level managers and objective data on wage inequality and firm performance from 106 business-to-business-focused firms (Study 1). In addition, they analyze multisource longitudinal panel data covering 521 firm-year observations for business-to-consumer-focused firms (Study 2). The results consistently reveal that wage inequality harms customer satisfaction. This relationship is mediated by customer-directed opportunism and customer-oriented culture but not customer-directed effort. Moreover, while wage inequality has a positive direct effect on short-term firm profitability, this effect is dampened by the negative indirect effect through customer-related consequences and customer satisfaction. Importantly, the positive direct effect of wage inequality on short-term profitability vanishes in the long run, whereas the adverse effect through customer satisfaction persists, leading to a nonsignificant total effect on long-term profitability. These findings may guide researchers, managers, shareholders, and policy makers in addressing the challenge of rising wage inequality.
Reagan-era economic thinking focuses on the Gross Domestic Product (GDP) as the bellwether for how well society is doing. It’s a narrow view of the world which ignores everything except the movement of capital, yet many economists and politicians are stuck in this outdated way of thinking. In this context, and with the influential power economists have, it’s noteworthy that Cambridge economist is openly advocating to not use GDP and focus instead on making a sustainable society. We need to plan ahead for the future and build a better tomorrow instead of punishing future generations with an unsustainable economic system for short term wealth now.
“A focus on GDP without proper regard for environmental degradation or inequality has been a disaster for global ecosystems and undermined social cohesion,” said Prof Diane Coyle, who leads “Beyond GDP’ research at Cambridge’s Bennett Institute for Public Policy and is a key speaker at Tuesday’s public event.
“Statistics are the lens through which we see the world, but they have made nature invisible to policymakers. Twenty-first century progress cannot be measured using 20th-century statistics,” she said.
In 2009 we looked at how Bhutan uses Gross National Happiness instead of the bizarre Gross Domestic Product (GDP) measurement to see how “successful” the country is. The GDP doesn’t reflect lives lived since things like oil spills and other disasters actually make the GDP go up despite the damage done. GDP is disconnected from reality.
Now, in the UK people want the government to care more about health and well being before upping the GDP numbers.
â€œItâ€™s clear the vast majority of the public think we should worry more about peopleâ€™s health and wellbeing than economic growth,â€ said Fran Boait, the executive director of Positive Money. â€œThe government must not be tempted to pursue policies that would boost GDP at the expense of lives, wellbeing and the environment.â€
In a report entitledThe Tragedy of Growth, backed by politicians from several parties, including Clive Lewis of Labour, the Green party MP Caroline Lucas, and the former Conservative environment minister Lord Deben, who chairs the committee on climate change, campaigners call for a shift away from GDP as the governmentâ€™s core measure of success.
Amsterdam is embracing an ecological approach to their economy by looking at it as if it’s a doughnut. Of course, it’s not a literal snack they are using, it’s a metaphor to visualize how different aspects of life interact with each other in an economic model. Classical economic models assume there’s always an external source of input and an external output where waste can be dumped (like the sea, air, landfills, etc.); but ecological models take into consideration the whole economic system. As a result these doughnut models capture reality much better since it’s no longer possible to socialize the costs of waste from running a modern economy.
â€œWithin these two boundaries, between the social foundation that is on the inside and the ecological ceiling, there is this doughnut-shaped space where it is possible to meet the needs of all within the means of the living planet,â€ says Ilektra Kouloumpi, a senior strategist at Circle Economy, a nonprofit that has been working with Raworth, along with the nonprofits Biomimicry 3.8 and C40 Cities, to help the Amsterdam government adopt the doughnut model to make policy decisions. â€œThe overarching question is: How can our city be home to thriving people, in a thriving place, while respecting the well-being of all people and the health of the whole planet?â€