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This is Part II of a two-part column questioning the standard GDP narrative. See Part I here.
Three decades of COP meetings have been unable to bring down global carbon emissions because of our entrenched belief that human well-being is predicated on raising GDP. Since an increase in GDP under present conditions of historic inequalities cannot happen without increasing GHG emissions alongside, it ought to be no surprise that global efforts for thirty long years have failed to bring down emissions, even though humanity is at the edge of the precipice of a grave ecological and climate catastrophe. The simple point being made is that to confront climate change with any sincerity, we are first required to call the bluff on GDP being the marker of human well-being.
Per capita GDP hides the appalling inequality across the world today
To be fair, the critique of GDP is not new. Its many shortcomings are common knowledge. We all know it counts good things — and bad. So, while increase in production adds to GDP, so does the clean-up of dirty air and water! It omits important activities like what mothers do to sustain the household, and what people do for each other in the community, because these transactions are not happening via the market. It considers nature to be a mere exploitable resource. Perhaps the most misleading feature of GDP is that it is a measure of averages – so when we talk of per capita GDP (income per person in the country) it obscures how this income is distributed.
Sample this for a ‘misleading measure’ check: the per capita GDP in India today is roughly ₹1,84,000 per year. This implies that the average household in India, which has five members, has an annual income of ₹920,000 per year, or ₹76,666 per month. The reality is that 80% of Indian households earn less than ₹20,000 per month! In other words, per capita GDP hides the appalling inequality across the world today.
We need clean air and water, non-toxic food, stable climate and an environment in which all species thrive and sustain. We need leisure, and time to ponder. We need to have political voice — a say in affairs that matter to us
But even if these accounting and statistical flaws of GDP were eliminated, we need to realize it will still not measure human well-being even remotely. We humans are multidimensional beings. We have a diverse set of needs — all of which are critical. Just as a healthy heart is of little use in a body where the liver is giving way or where the kidneys function only at 50%, GDP is a most inadequate and misleading measure of human well-being. All of us seek a prosperous, fulfilling, meaningful life. So, any societal vision and design that cannot provide the opportunity for such a life for all its members is doomed from the start.
A good life entails basics like food, shelter, sanitation. It means affordable healthcare and education to enable the body and the mind. It then involves offering each of us work through which we can meaningfully contribute, and feel a sense of belonging, dignity and self-worth — and not just some meaningless employment that merely ensures bodily survival! We need healthy relationships and a sense of community. We need clean air and water, non-toxic food, stable climate and an environment in which all species thrive and sustain. We need leisure, and time to ponder. We need to have political voice — a say in affairs that matter to us. All this is necessary.
What purpose are democractic governments meant to serve other than ensuring the well-being of the societies that elect them
Yes, the 21st century world is very complex. So complex, that any serious thinker could rightly come to the conclusion that we really have no handles to maneuver or change it. However, the only way out is to ask fundamental questions, approach things from first principles. That could be our only hope for both truth and simplification. We have to ask, ‘What comprises human well-being?’ Because what purpose are democractic governments meant to serve other than ensuring the well-being of the societies that elect them. GDP could at best be a means to those ends. It cannot be an end in itself. We need to replace the ‘single, objective, quantifiable’ number of GDP with a dashboard of metrics that give a true picture of how society is faring on each of the aforementioned components of a prosperous, fulfilling, meaningful life.
Let a truer measure of societal well-being than GDP arise organically from our villages, towns, and cities. Our only hope of combating climate change rests on this reset
Fortunately, academicians have not lacked in asking these questions. The ‘Beyond GDP’ project has been underway for decades — not just in theory but also as experiments here and there. From the GNH of Bhutan, to the GPI of the ecological economists, to Kate Raworth’s ‘Doughnut’, measures abound. We in India could draw from these, but design one that works best for our context. And in our case, not only do we need to monitor well-being across the various dimensions that matter in human life, we need to collect and report the data at a level at least as small as a district.
This would help us understand and respond to the specific needs and constraints at the grassroots level of the polity. And much of this response, planning, and decision-making ought to be done by those who reside there. What we value and measure depends critically on who carries out the exercise. Let a truer measure of societal well-being than GDP arise organically from our villages, towns, and cities. Our only hope of combating climate change rests on this reset.
Let’s get the goal of our society and economy right. Climate balance, and much else will follow suit
India has over 30 million students at the undergraduate and postgraduate levels. Imagine a biennial exercise where a tenth of them, in groups of 10, along with a teacher spends a month of their summer break in a village, or an equivalent urban agglomeration collecting data on this multi-dimensional measure of well-being. We could easily sample upto 25% of the country in every round. What an exposure to ground realities, of voluntary national service, of character and nation-building, and low-cost, honest, accurate data collection it could be!
Such a revamp will also earn us kudos from top notch Systems thinkers. For Systems theory tells us that for changing large and complex systems, we need to identify leverage points. A leverage point is where a small shift in something causes large, desired changes in the overall system. Changing the goal of a system is amongst the top two or three known leverage points to date. Let’s get the goal of our society and economy right. Climate balance, and much else will follow suit. (Concluded)
An earlier part of this two-part column discussed how and why GDP is a flawed measure of overall well being. See: GDP is a flawed measure of well-being.