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Reevaluating GDP

ETHOS GENESIS (2015) is a documentary film that emphasizes the need for a paradigm shift in the way we consume products if we are to create meaningful and sustainable change

Growth in GDP (gross domestic product) simply means that, currently, the success of society today is measured by how much we can keep producing more on a finite planet of resources.

Ethos is defined as ‘the fundamental values and beliefs of a specific person, people, or culture’, or even more specifically, the ethos of a people stems from the values of the culture. Occasional, an individual may deviate from the social norm, but the beliefs that most people derive from their society can, at least to a certain extent, be generalised.

If we are born in a Muslim country, we will think it is normal for women to wear a hijab or burqaIn other words, if we are born in China, we will most likely think it is perfectly normal to slurp our soup in public; if we are born in Morocco, we will most likely think it is normal for women to wear a hijab or burqa (see picture right); if we are born in Germany, we will most likely consider crossing the road when the pedestrian light is red as highly irresponsible, especially when done in front of children.

These beliefs are passed on to the people from the society, but there are also global values, and one such global ethos that pretty much everyone believes is that being able to buy all the things we want is a good thing.

Sounds reasonable, right?

Growth in GDP (gross domestic product) simply means that, currently, the success of society today is measured by how much we can keep producing more and more on a finite planet of resourcesThe economy of modern societies is based on this very principle, but economics takes this ethos even further because the more a country produces all the things that people want, the more developed that country is then considered to be.

Growth in GDP (gross domestic product) means growth in the gross domestic productivity of a country; basically, the success of modern societies is measured by how many things a country is producing (how much GDP is growing).

I work in education. This summer I have been teaching Chinese economics, business, and finance students in the UK, getting their English level ready for their upcoming undergraduate degrees at one of the most prestigious business schools in the country.

In lessons, we have covered such interesting global issues as the ageing population, food security (sustainable and healthy food production), and the effects of tourism on host communities.

So what is our current ethos teaching today’s students¬†about such topics, and their possible economic solutions? What can we expect from the economists and entrepreneurs of the future?

First let’s look briefly at the ageing population. Throughout the world and throughout history, the young have always outnumbered the old. However, over the next 40 years it is now expected that the population over 60 will grow by 1 billion to over 2 billion. By 2050 there will only be 4 working people for every elderly person.

This is a problem because someone needs to pay for these people when they retire. However, there are solutions that are being put forward. The one that is currently being implemented is to gradually increase the working age so people work longer. This will allow the elderly to continue to earn and work so that GDP can rise and increased productivity can be maintained.

With regard to food security, the problem is that the entire global¬†population is rapidly increasing, and we already are unable to feed everyone. More than 40% of the Earth’s land has been cleared for agriculture already. Thus, experts are racking their brains trying to find ways to increase productivity on that land we already use. Solutions that are currently being developed include advancing¬†GMO food technology so that crops can withstand extreme climate change, and cloning animals so that they require less feed.

The negative effects of tourism on host communities are numerous and the subject for another article altogether, but the ethos on solving these problems is the same as the previous two; namely, find ways to advance productivity in these areas and that will enhance development, and thus more people will be able to buy what they want.

Notice that I write here ‘want’ and not ‘need’. I will come to that shortly, but first¬†let me tell you some facts which are not being discussed by the experts¬†‘solving’¬†these problems.

With regard to food, as much as 40% of all the food produced in the USA never gets eaten. In the UK, this is estimated to be as much as 50%. Supermarkets deliberately overstock their shelves in order to make aisles look appealing to consumers, while the consumers themselves currently buy and throw away as much as 1/3 of their food each year. (watch a video here)

Furthermore, although the current population is an estimated 7 billion and expected to rise to 9 billion as soon as 2040, we are currently producing enough food to feed an estimated 10 billion people. Most of that food is grains, but 50% of the grain we produce is fed to livestock. It just gets worse. 40% of the fish we catch each year are discarded; yet it is estimated that we could see fishless oceans as soon as 2048.

As for the growing ageing population, doesn’t trying to keep people working longer seem rather ridiculous¬†when we consider that GDP is based on producing even more?

What our students are not being taught is that we are attempting to infinitely produce more and more stuff on a finite planet. On the contrary, economics and business students are being taught that a good economy actually depends on it.

Manfred Max-Neef¬†(here) is one economist who disagrees.¬†According to him, “growth is not the same as development, and development does not necessarily require growth.” Max-Neef¬†defines fundamental needs as having food, health, friendship, education, responsibility, recreation, equal rights, and the ability to be creative – to name just a few.

But one ‘need’ that he never mentions is material objects. Why?

Well, it is universally accepted among psychologists today that the more we want and the more we have does not positively correlate with our own well-being. In fact, it negatively correlates. In other words, wanting more and having more actually makes us less happy.

Bhutan is the last great Himalayan Buddhist kingdom and the only country on earth to measure happiness and well being, rather than economic growth, as its indicator for progress (here).

GNH measures a country's success based on the peoples' sense of being well-governed, satisfaction with the pace of economic development, and their sense of cultural and national belongingGross National Happiness (GNH) was put forward in 1972 by the country’s fourth King,¬†Jigme Singye Wangchuck.

For more than thirty years, the concept of GNH has been rejected by policy makers and economists outside Bhutan due to its subjective nature and the lack of a quantitative definition.

Unlike GDP, which is simply the calculation of business investment plus consumer spending plus government spending plus net exports, GNH also considers¬†the peoples’ sense of being well-governed, their relationship with the environment, satisfaction with the pace of economic development, and their sense of cultural and national belonging.

Manfred Max-Neef works with the country of Bhutan as well as with numerous other projects, especially in South America, helping to put well-being and happiness first, and he points out that not all aspects of happiness can be measurable because happiness is subjective Рyou just ask the people how they feel.

If a country decided to cut down all its trees for example, according to GDP this would be a good thing because more timber is produced which can then be sold, increasing economic growthNevertheless, he explains¬†that there are many environmental and social and economic components of well-being that can be calculated along with the spending that is measured by GDP to give a much more accurate indication of a country’s development, and that indicator is called the genuine progress indicator, or GPI (here)

If a country decided to cut down all its trees for example, according to GDP this would be a good thing because more timber is produced which can then be sold, increasing economic growth.

Canada is currently allowing companies to rip up areas of wilderness the size of small countries in the Alberta tar sands in order to extract oil. According to GDP, more is being produced and more is being sold; thus creating economic growth.

GPI takes into account 26 measures, including environmental degradation, inequality and social well-beingTherefore, GDP only measures what is produced, but ignores what is required to create that production. GPI, on the other hand, not only adds but also subtracts.

GPI takes into account 26 measures, including environmental degradation, inequality and social well-being. It also shows that when all of these measures are factored in, progress in the developed world has been largely illusory.

The fact is that the more our ethos promotes consumption as a positive goal, the more detrimental it is for the environment, and for our own state of mind.

GDP is based on the principle of consumption, even if GPI demonstrates clearly that the way to develop well-being for people, planet, and all life is not to keep consumingThis graph shows GDP and GPI since the 1960s in the USA – the country with the economy that every other country around the world once aspired to emulate (here)

The real madness shown in this graph is that our entire economic system is based on GDP and the principle of consumption, even if GPI demonstrates clearly that the way to develop well-being for people, planet, and all life is not to keep consuming.

We have to stop pursuing happiness through material gain, and instead experience the happiness that both the buddhists of Bhutan and social scientists of the West claim increases when we stop looking to the external and wanting for things to make us happy.

In order to consume only enough to meet our needs, we have to begin viewing economics differently. We need a new ethos:

ETHOS (2011) was a film hosted by Woody Harrelson which emphasizes the need for a paradigm shift in the way we consume products if we are to create meaningful and sustainable change and create a world where we can live harmoniously in a clean environment.

Presented here is the 2015 WUWE Edit of the film that includes hard hitting footage from the unreleased original edit, the original material produced for the final release, as well as new footage that leads to a more powerful conclusion. Enjoy and please share!

So what do you think?

Should we stop permanent growth on a finite planet and how could we do it?

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This entry was posted on October 16, 2015 by in newspaper, posts.