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by: Rutger Hoesktra

Gross Domestic Product (GDP), the way we measure economic growth, has become the primary measure of success of societies. Countries that have a high GDP are considered important and governments that experience high economic growth are admired. As a result, there is a dominant narrative in society that “growth is good”.

But we have known for many decades that this narrative is flawed and that GDP is not a comprehensive measure of success. It does not measure important components of wellbeing such as health, education and social relationships. As far back as 1968, Robert Kennedy already proclaimed that GDP “measures everything….. except that which makes life worthwhile”.

Crucially, GDP also does not account for the growth in environmental degradation or growth in inequalities that are caused by growth in GDP.

To remedy this gap, many hundreds of alternatives for measuring economic success have been suggested: the Human Development Index, Sustainable Development Goals (SDGs), Genuine Progress Indicator, Ecological Footprint, Happy Planet Index, Adjusted Net Savings, Comprehensive Wealth, and the Inclusive Wealth Index. Many brilliant scientists, thought leaders and important institutes have contributed to this impressive body of research, which is foundational to the creation of a Wellbeing Economy, an economy that delivers social justice on a healthy planet.

Yet, despite 50 years of understanding the drawbacks of  GDP and the introduction of hundreds of alternative ‘Beyond-GDP’ measures of economic success, it seems that the “growth is good” economic narrative is becoming stronger every day. But now,  more than ever before, we need our economy and society to focus on delivering wellbeing, sustainability, and equity. The election of Joe Biden, the introduction of climate targets in China and Europe, marches for racial justice and climate action are all signs of  the dire need and public demand to ‘Build Back Better’ after the COVID-19 pandemic. There has never been  a better time to replace the growth narrative. WEAll’s  new briefing paper describes a three-pronged strategy which should be adopted to do just that:

1) Harmonise. There are simply too many Beyond-GDP alternatives and new ones are being created every month. One of the most powerful features of GDP is that it is measured in the same way all over the world. The United Nations and OECD played a crucial role in developing a global economic accounting framework: the System of National Accounts, which allows for the global comparison of GDP. We need the United Nations and other international institutions to step up and help harmonise Beyond-GDP indicators to ensure there are consistent measures of success for the performance of a Wellbeing Economy.

2) Develop Policy Tools. Statistics help us to measure how things have developed in the past. But policy makers also need advice about their policy options in the future. Macro-economists have developed many tools to help inform difficult policy decisions, mainly focused on GDP growth. This community needs to create tools which show governments how to enhance wellbeing, sustainability and equity in their societies. A prime example of such a tool is New Zealand’s pioneering Wellbeing Budget that is designed expressly to prioritise the wellbeing of citizens.   

3) Change the Social Narrative. This strategy will only be successful if it manages to change societal discourse on economic success. Currently, our media plays a key role in spreading the “growth is good” economic narrative. The development of globally harmonised statistics and policy tools will help journalists and the general public to shift their belief on economic success to a narrative which values wellbeing, sustainability, and equity. If you would like to learn more about these ideas, download and share our new paper here and attend our upcoming webinar on November 20th at 9am EST/ 2pm UK. Register through the WEAll Citizens Platform here.

Download the Measuring the Wellbeing Economy Briefing Paper PDF

by Amanda Janoo

Tomorrow is the US election. The stakes are high. Our country is currently experiencing a pandemic, social unrest and whether we like to acknowledge it or not, an environmental crisis. As millions of Americans are thrust into poverty and COVID-19 cases soar, we urgently need bold recovery strategies that can protect and promote the areas of life most vital for our wellbeing.

The other day my best friend Johanna reached out, because she was confused by news headlines that announced “record growth” of the US economy in recent months.

“Does this mean that our economy is actually doing really well?”, she asked.

Initially, I thought about explaining how growth rates are misleading because they are highest when you start with lower numbers (as this record growth was only possible due to a record decline) or about the delayed impacts of government stimulus.

Instead, I just asked, “Do you think the economy’s doing well?” Johanna responded by saying, “I don’t think so… but I don’t know a lot about the economy”.

This is not the first time I’ve had this kind of conversation in the US. The word “economy” has a unique power here. Every policy or program can be justified or discredited by its impact on “the economy”. We keep talking about the effects of COVID-19 on our economy and the need to “get the economy going again”, as if we are not a part of it. We have bought into a narrative of the economy as some abstract overlord that we’re meant to promote above all else, without having clarity on what it actually is and how it relates to our lived realities.

To be clear, we are the economy. It is simply a word for the way that we produce and provide for one another. So, the question is not, “how is the economy doing”? The question is, “how are we doing?  

In looking at the current state of affairs in the US, we’re not doing great. In my small town of Vermont, a lot of people, including Johanna, have become unemployed during the pandemic. Most of my family and friends here are struggling to make ends meet, as we head into winter and wait anxiously for the federal government to come to an agreement on another stimulus package. This makes news stories of booming billionaires and soaring stocks feel that much more raw.

In looking towards the months ahead, the US government will have to step up. The economic recovery strategies that we implement have the potential to be transformative. Now more than ever, we need to make sure we are providing one another with the things we need most.

If we focus on the areas of life most important for our wellbeing, we can rebuild a more just, equitable and sustainable economy.

With this vision in mind, WEAll developed a short briefing paper which outlines ‘5 principles to help guide US recovery efforts towards a wellbeing economy’:

1)    Economic Freedom

We have allowed our economy to become increasingly controlled by fewer and fewer corporations, limiting our avenues for economic self-determination and empowerment. We must revitalize democracy and allow people to have a say, over the shape and form of our recovery efforts. We must rebuild by providing communities and states with the resources and autonomy required to effectively respond to the unique needs of their people. In order to expand our economic freedoms, we must uplift our voices, while decentralizing wealth and power, so that each contribute to rebuilding an economy that works for us all.

2)    Economic Security

History shows that protecting livelihoods is the most powerful action a government can take, to prevent a spiraling economic depression and social collapse. As the richest country in history, the United States has the wealth and capacity to ensure that no individual falls into poverty during the COVID-19 crisis. The $600-a-week unemployment support was critical for Johanna and many other families in my community. We need to expand such income support programs to all Americans and prioritize affording every American foundational services, such as medical care.  

3)    Economic Resilience

This pandemic has illustrated just how fragile our current systems are. Resilience can only come when we begin to prioritize balance over growth. We must ensure that our recovery efforts actively regenerate our natural environment, promote community vitality, and prevent future crisis and shocks. Our future stimulus should not put another $500 billion into big business; instead, it should rebalance our economy by promoting small businesses, social enterprises and circular economy initiatives that are vital for a resilient and adaptive economy.

4)     Economic Justice

Our economy has been built on centuries of subjugation, exploitation, and exclusion. We have an opportunity to heal the wounds of this historic injustice. Now more than then ever, we need to ensure that the weight of this recovery does not fall on those who are already struggling the most. We can reduce inequalities and rebuild an economy that promotes fairness, equity, and social justice at its core, by reallocating spending away from incarceration and the police, towards Wellbeing Economy initiatives, such as student debt forgiveness.

Now is the time to live up to our proclamation that “all persons are created equal and have a right to life, liberty and the pursuit of happiness”. 

5)    Economic Leadership

The United States has been a major driver of the economic globalization that now binds our world together. We must not retreat within ourselves at this critical moment. Now is the time for the US to be a leader in supporting global environmental and economic development initiatives, and promoting long overdue initiatives, such as closing offshore bank accounts and tax loopholes. We can respond to this crisis by joining other visionary leaders to reform our global economic system in the interest of peace and prosperity for all.

In the full briefing paper, we ground these bold principles in concrete policy proposals, illustrating that a different economic system is not only possible, but also achievable through strategic action. However, we recognize that this list of policy proposals is far from exhaustive. Across the country, visionary thinkers, organizations, communities, and activists are promoting policy reforms to build a more just and sustainable future, which we are committed to supporting.

One of my favorite quotes of all time, feels especially relevant now:

Our strategy should be not only to confront empires, but to lay siege to it. To deprive it of oxygen. To shame it. To mock it. With our art, our music, our literature, our stubbornness, our joy, our brilliance, our sheer relentlessness – and our ability to tell our own stories. Stories that are different from the ones we’re being brainwashed to believe…

Remember this: We be many, and they be few. They need us more than we need them.

Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.”

Arundhati Roy

On this day before our election, I hope we can remember that “we are many” and we, collectively, are the economy. And since we live in a democracy, we get to make the rules. People like my friend Johanna should feel that they do “know about the economy”, because we know our own needs.

The votes we cast tomorrow are important, not only at the federal level, but at the local and state level as well. Now is the time to move beyond outdated economic thinking and implement bold economic recovery measures to heal historic injustices, rebalance power, and regenerate our natural world.

Now is the time to build a Wellbeing Economy in America.

Download the 5 Principles Briefing Paper PDF