Faith and reason: Prosperity lies not in GDP

It is received, standard wisdom that the only way out of our economic doldrums is to grow the economy. More must mean better: more money, more output, more jobs, more spending, more profits, more tax revenue to fund more government services.

That dovetails with the Government's aim of closing the income gap with Australia by 2025. To achieve this, its 2025 Taskforce says our economy must grow faster than Australia's by 2% a year. Cut government spending, the task force urged last week, cut taxes, cut the youth minimum wage, cut some benefits, sell assets.

Underlying this programme is the conviction that growing our gross domestic product indefinitely has to be good, because more economic activity means more cash, more choice and more happiness.

But GDP measures money flows, not wellbeing. The Christchurch earthquake, for example, is giving GDP a fillip by generating jobs and spending on repairs. A tsunami in Dunedin, an earthquake in Wellington and an eruption of Auckland's volcanic cones would do wonders for GDP - and slice wellbeing to the bone.

GDP also ignores unpaid work and pollution, which affect wellbeing for better and for worse.

Task force aside, stoking the financial debacle of 2008 was an unwavering focus on growth. Governments relaxed controls on the financial sector to promote it. Banks unleashed credit and devised shonky financial products. Businesses borrowed to keep up with rising demand. Householders piled up debt to consume, consume, consume.

All went swimmingly till this self-indulgent orgy exploded, much in the manner of Monty Python's Mr Creosote, who stuffed himself till he burst.

Governments then rushed to bail out the financial sector, whose machinations had triggered the meltdown. In New York, Goldman Sachs bank executives gleefully celebrated their $US6 billion ($NZ7.6 billion) taxpayer bail-out by paying themselves $2.6 billion in bonuses. Meanwhile, multitudes who had saved rather than spent saw their savings sluiced away.

Ominously, major financial crises are occurring at shorter and shorter intervals - yet economists still tout growth as the perfect cure. The stability of our present economic structures stands or falls on growth.

To any thoughtful observer, it must seem odd that the remedy for our economic ills is to swig a hefty dose of what caused them. It is like trying to stem a cholera epidemic by requiring everyone to drink contaminated water.

No wonder, then, that alarm bells are ringing at the implications for a finite planet of endless growth, compounded by a burgeoning world population. Mineral resources will run down faster, fossil fuel emissions will rise, climate change will intensify, the environment will be degraded.

At recent growth rates, it is estimated the global economy will be 80 times bigger in 2100 than it was in 1950.

Is there an alternative?
Emphatically yes, and economist Tim Jackson, economics commissioner on Britain's Sustainable Development Commission and author of Prosperity Without Growth: Economics for a Finite Planet, is among those spelling it out with growing urgency.

It lies in reorienting economies to make them sustainable in planetary terms, and opening the public and political imagination to the idea of prosperity without growth.

Central to Jackson's theme is enlarging the notion of prosperity to lift it beyond a fixation with money and possessions.

"Prosperity transcends material concerns," he says. "It resides in the quality of our lives and in the health and happiness of our families. It is present in the strength of our relationships and our trust in the community.

"It is evidenced by our satisfaction at work and our sense of shared meaning and purpose. It hangs on our potential to participate fully in the life of society.

"Prosperity consists in our ability to flourish as human beings - within the ecological limits of a finite planet."

Task force, please take note.

A society shaped with those values at the core will look very different from one driven by the mantra of economic growth. The role of government will also be pivotal in maintaining a steady focus on the common good.

Politicians, however, are caught in a dilemma. As Jackson says, "To resist growth is to risk economic and social collapse. To pursue it relentlessly is to endanger the ecosystems on which we depend for long-term survival."

So he spells out an economics that would nudge countries, communities and individuals towards prosperity without growth.

Perhaps surprisingly, his secular vision accords with what all the world's major religions advocate for a healthy society, with a contemporary environmental twist. In Christianity, the metaphor is the kingdom, or common wealth, of God. Getting rich is a sideshow.

 - Ian Harris is a journalist and commentator.

 

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