Growth you say? When GDP just ain’t enough…

Forget the so-called ‘green shoots’, Katherine Trebeck argues that the growth being reported by some, is not the kind to be celebrated. 

Next week, Oxfam will release a paper which warns that austerity measures being pursued across Europe are dangerous. In fact, current policies are threatening to undermine decades of progress, create a divided Europe, and entrench poverty for a generation.

Yet here in Britain some people are claiming that austerity is in fact working, that ‘growth is back’, that we’re seeing ‘green shoots of recovery’ and lauding the rise in house prices and signs that people are spending again.

But, think for a moment, and then tell me if this is the sort of growth you feel like celebrating:

No? Me neither.

This is why those welcoming the recent incremental rise in GDP are focusing too narrowly on one target. Even the Economist is asking:  Recovery? What recovery?

Gross Domestic Product (GDP) does not reflect the reality of people’s lives. It is not even a good measure of the economy – it ignores the quality of jobs and the balance and sustainability of economy growth.

More than that, it is consumption-orientated and distribution-blind. It takes us to the wrong destination, towards an unhealthily unequal society that consumes more and more without regard to the planet, let alone what really makes people’s lives fulfilling.

This is starkly illustrated by the findings of the Joseph Rowntree Foundation Monitoring Poverty and Social Exclusion 2009 project. These showed that even before the recession began, other indicators of our socio-economic circumstances were showing signs of deterioration. For example: the unemployment rate for 16 to 24 year olds was already rising; the number of people in low income households had begun to rise; and the number of children in low income households where one adult works began increasing – all prior
to the recession.

And now GDP is suggesting thing are getting back on track… But they are not. The lives of people Oxfam works with show otherwise. They tell us about more insecurity, about lack of sufficient – let alone decent – work, and an inability to make ends meet. They tell us about growing stress as a result of cuts, in welfare and other desperately needed services, the vast majority of which are yet to come. And looking beyond those communities, we see a country becoming more and more fractured, more unequal, and where people are more
suspicious of each other and more hostile to those in need.

Celebration of own-goals like apparent job growth (which hides the rise in zero-hour contracts), or the rise in house prices (which is actually driven by more debt and shuts out an entire generation) is inevitable if we look at growth in its blandest, most ‘unnuanced’ sense. And we will keep on scoring these own-goals if we keep assessing the ‘success’ of austerity through the wrong prism.

Such contradictions – between what GDP tells us and what is going on in our communities – underscore a need to focus on those areas of life, development and growth that truly shape our collective prosperity. And this means creating, developing and utilising a more representative measure of progress (such as the Oxfam Humankind Index for Scotland). Doing so is vital in ensuring existing resources are distributed and spent in a manner that is sustainable, smarter and simpler.

Through use of the right measure, better measures and more appropriate measures, it might be possible to get policy makers to focus instead on incomes sufficient everyone to live on rather than total income (much of which is increasingly going to the richest); the quality of jobs, not just the number of jobs; how we protect and preserve the planet, rather than how many roads we build; and how our communities are faring, rather than simply how much they are buying… 

In other words, growth of the good stuff!

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Author: Katherine Trebeck
Archive blog. Originally posted on Oxfam Policy & Practice.