Saturday, December 15, 2012

The Dilemma of Growth

I know I'm not always that good at explaining things when I talk about stuff I already know or take for granted. Sometimes I assume that other people will have the same knowledge and understanding than me but just stating " we can't have more growth" is maybe not enough for those who haven't contemplated on the "why growth" question in our economy a bit more.

So why is GDP (Gross Domestic Product) not a good measurement for quality of life or social progress?
This measurement assumes that more spending in the economy will make us "happier", which is not the case. It is to a certain point. For example, undeveloped countries should be allowed to increase their material well-being but developed countries do not increase their "happiness" as GDP increases. GDP ignores throughput (simply put; the raw material processed during a certain time) and our ecological limits to unlimited growth. It measures the “wrong things” because, for instance, redistribution of resources to developing countries would likely slow GDP and, another example, environmental catastrophes are likely to increase GDP as spending would increase after such an event.
I think that is one of the reasons there is no genuine progress in, for example, the climate negotiations: almost all things that would be good for the planet are not so good for GDP or growth in the economy and politicians are usually focused on that. As we all know, COP18, the climate negotiations in Doha ended, again, without much results at all.

If you want to learn more you can read, among others, Tim Jackson's "Prosperity Without Growth", Richard Heinberg's "the End of Growth" or "Bankrupting Nature" by Anders Wijkman and Johan Rockström.

Some interesting posts recently in Swedish the topic as well:
Heinberg's five axioms of sustainability (in English here)
Cervenka in SVD

So far it's only Bhutan which measures their progress in a different way with a Gross National Happiness index instead of GDP. Perhaps it would be time for us to change as well?