Economics has become the currency of policy and GDP our gold standard for success. We have taken GDP as our chosen measure of prosperity and well-being, and as a result raising the GDP has been the single most important policy goal of governments across the world for most of the last century. (Jackson, 2009)
However, there are some truly fundamental flaws with taking GDP as the benchmark by which we judge our progress.
For one, GDP makes no attempt to distinguish the productive from the destructive. It simply tallies up all movement of money to give a figure for ‘economy activity’. By such reckonings the most economically productive citizen is the cancer patient who totals his car on the way to meet with his divorce lawyer, and Katrina was a huge boost to the American economy. (Mckibben, 2007)
But that’s not the half of it. What GDP clocks as productive may be shocking, but what it fails to account for is downright dangerous.
GDP gives no hint or sign of the rate at which we are haemorrhaging Natural Capital – the environmental goods and services that flow from nature to humanity. In 2008 the TEEB Interim Report found that globally we were losing Natural Capital at a rate of between $2-4 trillion. The banking crisis in 2008 caused the loss of financial capital amounting to around $2.5 trillion. One sent world leaders into panic and saw unprecedented sums of money committed with barely a moment’s hesitation, the other passed completely below the radar, and continues to do so.
The survival of humanity depends on the continued provision of ecosystem services (Millennium Ecosystem Assessment, 2005) – and therefore, by default, so does our economy. This simple and, you’d hope, blindingly obvious reality is something that somehow seems to get overlooked, time and time again.
The blind pursuit of economic growth and ever increasing GDP is a dangerous road. It can also lead us to some slightly bizarre predicaments, some of which can hit pretty close to home.
Take, for example, my home. I have the fairly unique position of being a UK home owner aged 20. I can do this because my lovely, low-impact home cost me a grand total of around £3000. Provision of affordable housing is a major issue in the UK today, with most young people unable to get a foot on the property ladder and the government struggling to address this. And yet, here I am sat in my very cosy comfortable home.
How can this be? Part of the problem may be that, although there are solutions out there, within the framework of our current economic system we can’t actually afford to make housing too affordable, because truly affordable housing doesn’t do much for the GDP...