From refilling a leaky bucket to building a better economy

Earth with stock market information superimposed

Katherine Trebeck

Katherine Trebeck
Senior Researcher, Oxfam GB

Wednesday 29 March 2017 

Katherine will chair our upcoming event Gross Domestic Problem: Measuring what matters on Tuesday 18 April, 2pm-4.30pm. Speakers include Professor Lorenzo Fioramonti, Professor Sir Harry Burns, Professor Karen Turner and IPPI Executive Director David Wilson. Free event: registration essential.

Lorenzo Fioramonti recognises that the fault lines of our current economic system are being prised wide open by populist politicians. They prey on the failure of orthodox economic policy making to deliver social justice. The current economic model has not only undermined fulfilment of our real needs, it is also pushing our planet to breaking point.

Fioramonti is amongst those of us who sympathise with a critique of the current economic system, yet who want to resist the populist scape-goating. Instead of scape-goats, we need to call out the inadequacy of conventional mechanisms, but then offer and enact solutions.

Solutions to inequality and environmental destruction will be enabled by aligning our measures of economic and national success with the goal of creating a sustainable, socially just world.

While pursuit of GDP remains a core goal of policy makers (and, for that matter, while short term profit remains a core goal of businesses), the solutions we currently see emerging exist despite, not because of, the system.

Rewarding failure

The GDP system is one that rewards failure – failure to count what really matters; failure to get things right in the first place; failure to prevent harm; failure to cherish the environment; and failure to configure our economy in a way that works for the 99%, rather than the 1%.

This system is one of fixing what we break, constantly trying to refill a leaky bucket rather than stopping the leak.

This demands more resources (both financial and environmental), more effort, more political manoeuvring, and more patience than need be. It is a system premised on getting the economy to grow bigger, almost regardless of the damage to people or the environment that this does. Then there is a fraught and ineffective effort to reclaim a portion of money for the public purse via taxes. This is then channelled into helping people cope with the stress and insecurity of a growth-ist economy and cleaning up the associated environmental mess.

The expenditure on helping people cope with the damage done by a GDP-economy include tax credits for those whose jobs do not pay enough to live on; therapy and medical treatment for those alienated and stressed by the precariousness of the labour market; out of work welfare payments for those cast aside by companies who downsize in their quest for short term shareholder value; environmental remediation and cleaning up pollution; and flood defences and shelters for those whose homes are flooded as climate chaos worsens. Such expenditure has been termed by some as ‘failure demand’ – and critiquing the necessity of such provision is not in any way a dismissal of its importance under the current regime. But, we need to acknowledge that this is a regime that counts such expenditure as ‘growth’ and a process of apparent ‘development’.

Getting it right – first time around

If Scotland can bring itself to imagine a future beyond GDP it will begin to see an opportunity to design the economy so that it works for more of its people.

It will be able to assess itself against the goal of creating good lives for people in a sustainable way, rather than tallying up failure demand as a positive on the GDP ledger.

Scotland’s economy beyond-GDP will be one that rewards businesses for creating good jobs rather than shedding labour at every opportunity and in which businesses internalise and reduce environmental impact rather than passing the buck to communities downstream.

In a post-GDP Scotland, the success of our health system will be measured by how healthy people are, not by how much we spend on the health system.

Perhaps most importantly, the hundreds of beautiful initiatives (see here for examples) currently under the radar in Scotland, those that that offer a solution to our broken economic model and which are an antidote to populism and simplistic scape-goating, will become the mainstream rather than the exception. They will be seen by policy makers who look beyond GDP as pioneers that demonstrate feasibility and desirability of a different, healthier, more equal and sustainable Scotland.