SOMETHING to ponder if you’re stuck in one of the many places so hot now that sitting in a darkened room is recommended, giving you more time alone with your thoughts: are we paying the price for a big mistake?
There’s behaviour to regret, of course. Possibly also measurement.
The concept of “uneconomic growth” has been advanced by the 84-year-old economist Herman Daly for much of his life; its premise, that fetishizing GDP growth as an all-important measure of our well-being can incur self-defeating costs like fatal pollution, or a raging climate crisis, only seems to become more topical.
Anyone watching the recent footage of a man having the clothes burned off his back as he tries to spare his town from wildfires in a sweltering area of Spain might agree – we seem to have crossed some fundamental ecological limits in our quest for greater affluence.
There’s a long history of questioning the primacy of gross domestic product, which is a running tally of goods and services a country delivers for consumption. Those questions have become louder now that the continued failure to decisively limit emissions is being compared to “collective suicide”.
But there are also questions about how an economy not based on relentless growth might transition from theory to practice. Daly has described an ideal, steady-state model; he likens it to a helicopter that occasionally hovers, versus an airplane that must move forward or crash.
A steady-state economy that taps the brakes on GDP may not be suitable for a developing country where maintaining growth is a matter of life and death. But wealthier countries, the thinking goes, could set down more judicious markers for their own well-being.
Of course, opinions might differ on the “trivial” consumption these wealthy countries should shun to attain a steadier state. A superyacht that retails for $500 million? Okay. How about a new air conditioner that can make life more pleasant, but adds to emissions?
Exploring the uneconomic aspects of growth is just one way experts are trying to help people grasp what’s at stake. In this case, there are some real-world applications. The Genuine Progress Indicator, or GPI, was co-developed by Daly as a GDP alternative that deducts for negative environmental impacts. It’s been
deployed in places like Canada and Hawaii.
GDP as an instrument of war
Like the V2 rocket and computers, GDP was in many ways a World War II invention.
The British economist John Maynard Keynes published his pamphlet “How to Pay for the War”, in which he complained about a lack of reliable domestic economic statistics, in 1940. A Treasury official took note, and the UK disclosed the first modern set of national accounts the following year. An official GDP figure appeared a few years after that.
In the US, war planning also prompted the need for a comprehensive measure of resources at hand; economists built on the work of Simon Kuznets to officially publish the estimated value of all of the country’s goods and services in 1942. Soon after that, GDP became a global standard.
A growing obsession with it as a defining benchmark followed. It’s an easy way to let everyone know your economy is still dominant, or in the mix to get there. The IMF, currently headquartered in Washington, D.C., is supposed to keep its principal office in the member country with the biggest quota formulated using GDP. That may become a bone of contention in the future.
That is, if GDP isn’t replaced by another metric before then – one potentially designed to help fight yet another war, this time against climate change.
The effort to nudge our collective focus away from GDP and towards elements of growth that are uneconomic isn’t the same thing as the degrowth movement, which has been both widely popular and widely panned. That’s because it’s not about eliminating growth, as much as it’s about making growth smarter.
Aspirations to move beyond GDP to a more agile gauge are widely shared.
In 2008, the French government established a commission to look into whether an over-reliance on GDP had prevented policymakers from seeing the global financial crisis coming, and responding adequately (answer, mostly: “yes”).
“Those attempting to guide the economy and our societies are like pilots trying to steer a course without a compass,” the commission concluded in its report.
It’s worth noting that Daly is open about how Christianity has influenced his economic views, and that he’s worked in close partnership with a theologian. Perhaps assuming that we really can transition away from such a significant aspect of modern life as GDP requires a good deal of faith.
On the Strategic Intelligence platform, you can find feeds of expert analysis related to Economic Progress, Sustainable Development and hundreds of additional topics.
World Economic Forum
Sat Jul 30 2022
A steady-state economy that taps the brakes on GDP may not be suitable for a developing country where maintaining growth is a matter of life and death. - REUTERS
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.
NFOF will be operational in November 2024 with funding of RM1 bil
PM Anwar Ibrahim said NFOF will support venture capital fund managers to invest in startup companies with RM300 million set aside for 2025.