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This is Part I of a two-part column questioning the standard GDP narrative. See Part II here.
“Please Sir, can I have some more?” This is Oliver Twist’s refrain in Dickens’ novel about abject poverty and the cruel treatment of orphans in industrialising Britain. When it comes to fossil fuels, ‘the cloud elites’ of today’s global world seem to be ‘saying’ something similar to environmental authorities the world over. The only difference is that, unlike today’s gentry, Oliver Twist was poor.
This only indicates that the imminent seriousness of climate change has not been adequately grasped. To illustrate our predicament, consider a thought experiment.
Limiting global warming to 1.5C is no rosy scenario
You stand before a wall with a small metal plate on it. We ask you to touch it. You withdraw your finger. The reason is that the plate is a bit warmer than your body and getting hotter. Now imagine that you are standing on a large metal plate which is becoming warmer than your body. Again, you jump off the plate soon. But what if the plate is so large (and expanding so fast) that you cannot jump off? Wherever you leap to, the plate is still under your feet. Moreover, it is getting hotter perceptibly fast. There is no place to run to. You risk eventual vaporisation.
The basic flaw with a market-led economy is that it does not produce for all people — it only produces for those who have buying power, or put simply, for those who have money
Something like this is what is happening to us, the earth and its atmosphere. The difference between touching something ‘outside’ you which is warming and experiencing (through heat transfer) the rise in temperature of one’s own body is narrowing. Notice how readily we know we have fever, even if our body temperature rises just a little, from a normal of 98.4 to 99F. Imagine that it rises to 101.1F, and keeps rising… The physics of heat transfer will ensure that if the earth, with its atmosphere and the oceans all rise by 1.5C (2.7F), eventually, so too will all our bodies. Nor is this higher body temperature going to be accepted as ‘the new normal’. (Remember the recent pandemic: everyone knew something unusual was happening). Species heat death is a distinct possibility.
Poverty can be reduced much faster through growth with a lower intensity of energy-use
COP29 is underway in Azerbaijan. It is indisputably the most important gathering to combat climate change. When the Paris Agreement became effective in late 2016, greenhouse gas (GHG) emissions were to be cut by 43% by 2030 to limit global warming to 1.5C. Global emissions in 2016 were about 48GT of CO2 equivalent. For us to be on course to 1.5C, our emissions in 2023 ideally ought to have been 38GT. Actual emissions in 2023 were over 50GT.
Two clarifications are important before we proceed. One, limiting global warming to 1.5C is no rosy scenario. We are at about 1.1C right now, and climate emergencies in different parts of the world fill the news virtually every day. So, 1.5C is a much worse future than what we are experiencing today. Two, the number 29 in COP29 implies that we have been having these ‘high-level global’ meetings for three decades now. And the only thing we have to show as output for all these costly meetings is a steady growth of GHG emissions. Should we be disappointed? Surprised? Shocked? Or, was this inevitable? This column contends it was inevitable. Here’s why.
Unless we do away with our obsession with GDP, and find both a better measure, and a different pathway to universal human well-being, there is no way to avert climate catastrophe
While humans are bound to try and save our planet when it is in crisis, our more constant and primary endeavour is to work for our material betterment. We form tribes or nations in order to have socio-economic-political systems that would ensure the welfare of the constituent members. In this journey, the dominant understanding is that if a country is to ensure the well-being of its citizens, it needs to grow its economy, or in other words raise its GDP.
What is the GDP belief? Where has it come from? The assumption is that ‘societies who produce and consume more than others are better’. This belief has been drilled into us by economists and policymakers, and amplified by the media. The GDP was a measure developed by American economist Simon Kuznets in 1934. Kuznets himself had warned in his report that GDP is a mere national income statistic; it is no measure of welfare. However, this measure proved remarkably effective in the USA during WWII for mobilisation efforts. And then, in the late 1940s, Cold War circumstances ensured that it became the key measure of a country’s economic strength. Its adoption by countries across the world was both willing and coerced. Consequently, governments understood their role to be encouraging and facilitating the production of goods and services.
GDP morphed from being a mere policy tool to becoming the dominant policy goal of all governments and their advisers
In the 1990s, as free-market economics took hold, state policies began promoting the production of goods and services by private enterprises. GDP morphed from being a mere policy tool to becoming the dominant policy goal of all governments and their advisers. Like everyone, governments are also living up to the adage, ‘Tell me how you’re going to measure me, and I’ll tell you how I’ll behave.’
GDP has been soaring in India for the last three decades. In reality though, anyone looking at India with eyes even half-open would see a completely different picture. The basic flaw with a market-led economy is that it does not produce for all people — it only produces for those who have buying power, or put simply, for those who have money. And it produces what those with money wish to buy, and not what the hundreds of millions may need. So yes, on the surface, India has sparkling malls, luxury cars, smartphones and international vacations. But alas, these goodies are accessible only to the top 5% of the Indian population. More than half of the population is struggling to get clean drinking water, balanced nutrition, decent housing and sanitation, secure and dignified jobs, healthcare and education, and (despite the vote) has no means of making its voice heard.
However, all of the above contradictions pale in comparison to the existential threat trying to raise GDPs comes with. Increasing production of goods and services does not happen out of thin air. Production requires material resources. It requires energy. In other words, increasing GDP translates directly to increasing emissions.
Thus, if we stick to the belief that the well-being of our people, especially the poor, rests solely on increasing production of goods and services (for those who can afford them), and all governmental and business action is geared to that, we must be naïve to believe global emissions would also come down concurrently.
More than half of the population is struggling to get clean drinking water, balanced nutrition, decent housing and sanitation, secure and dignified jobs, healthcare and education, and (despite the vote) has no means of making its voice heard
Mere GDP growth does not, by itself, reduce poverty, even if it increases emissions. In fact, certain kinds of growth (which involve an increase in the production of luxury goods, such as air travel) actually increase both emissions and inequality. So, the pattern of growth also has to be just. There is research to show that poverty can be reduced much faster through growth with a lower intensity of energy-use (for instance, involving less air travel).
The point of this column is that unless we do away with our obsession with GDP, and find both a better measure, and a different pathway to universal human well-being, there is no way to avert climate catastrophe. (To be concluded)
The next part of column discusses how GDP works, and what could be an alternative approach. See: Replace GDP to avert climate catastrophe.