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world which ignores everything except the movement of capital, yet many economists and politicians are stuck in this outdated way of thinking.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€
Without a doubt all business have been negatively impacted by the pandemic with some being hit more than others. The dirty and climate-destroying fossil fuel industry has really been hit hard (unfortunately it’s the workers who have been hurt by this and not the lying executives) and the industry isn’t even benefiting from reduced gas prices at the pump. On the other hand renewable energy companies are doing fine with only a slow down and not an industry-stopping problem. Renewable energy growth is expected this year with more utilities investing in renewable instead of fossil fuel because renewable are still cheaper than carbon-intensive alternatives.
Even the decline in electricity use in recent weeks as businesses halted operations could help renewables, according to analysts at Raymond James & Associates. Thatâ€™s because utilities, as revenue suffers, will try to get more electricity from wind and solar farms, which cost little to operate, and less from power plants fueled by fossil fuels.
â€œRenewables are on a growth trajectory today that I think isnâ€™t going to be set back long term,â€ said Dan Reicher, the founding executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford University and an assistant energy secretary in the Clinton administration. â€œThis will be a bump in the road.â€
You already know you’re working too many hours, so let’s change that and save the planet in the process. Economic growth has physical limits and we’re hitting those already as we run out of finite resources, or those resources are getting harder and harder to reach like oil. So to maintain growth we need to switch to a renewable energy based economy and fast. We can also just work less and focus on decreasing the growth of consumer capitalism.
This is where the idea of degrowth comes in. Degrowing our economy focuses on getting rid of things awe don’t need and are incredibly destructive to the environment (like fast fashion) and focusing our attention to bettering society as a whole (like free daycare). Another way to degrowth the economy is to reduce our working weeks to produce more jobs and give everybody more leisure. Aren’t we all working for the weekend anyway?
To get emissions to zero, it will involve a kind of â€œdegrowth,â€ but one targeted specifically at fossil-fuel consumption. â€œThat doesnâ€™t mean we have to degrow everything,â€ Pollin said. â€œWe really need to degrow the fossil fuel industry to zero, but massively expand the clean energy systems, the investments in renewable energy and energy efficiency.â€ This is essentially the Green New Deal: a push to increase renewable energy while eliminating fossil fuels, and including an effort to create a just transition for the people who have jobs in that sector.
To Pollin, even this would be a radical improvement. A plan to get to zero carbon emissions in 30 years would mean shutting down one of the worldâ€™s most powerful industries. He thinks that that is ambitious enough without trying to implement other broad societal changes.
â€œIf we take the climate science seriously, we only have a few decades to make huge progress,” Pollin said. “And whether I like it or not, weâ€™re not going to overthrow capitalism in that time.â€