Persons working with numbers enjoy doing so because numbers reflect exactness. No number is like another and any number gives a very specific dimension to something. For instance, 80 per cent means something which 79 per cent or 81 per cent do not. Moreover persons working with numbers know that there is no finiteness in numbers. Any number can always be improved by adding just one to it.
On the other hand we need to accept that there are things in life that are so complex and diverse that they cannot be reduced to one single number or even a series of numbers. The economy is one such thing. Economic statistics are very often based on averages and these averages misrepresent what really happens in people’s lives.
The example I always give in this regard is that single person who is unemployed and actively seeking for a job. We may all be happy that the rate of unemployment is going down (this is an average rate in itself). However, for that person who is unemployed and actively seeking a job and cannot find one, it is a most dramatic situation, which any average cannot simply hide or send away.
If we turn our attention to the economy, we measure economic growth through the gross domestic product (GDP), that is the total value of goods produced and services provided in a country during one year. We have always done this and it is more than likely that we will continue doing so.
The problem with growth in the GDP is that as a number it does not tell us whether our economy is becoming more sustainable or whether people feel more satisfied with their lives
On the other hand, there are two elements that need to be considered, which show that by simply measuring the GDP, we may be hiding something.
The first element is quantitative. There are other numbers that need to be considered and which may show that growth in the GDP, although very real, may not tell the whole story. The other is more qualitative.
This week I will focus more on the qualitative element, leaving the quantitative element to next week.
The fundamental principle here is whether tracking the GDP is enough to ensure that any country meets its economic goals. If one of those goals is a more just economy (as I am sure it is), then the GDP does not tell us much. Moreover we can no longer measure poverty the way we have done over the last decades.
There may be less people today who are materially poor than there were two or three decades ago, as more persons today have access to products that provide comfort in one’s life.
However, today’s society may be providing with a new category of poor people, which may be very hard to define. For instance, one may consider eating habits of the population which will eventually lead to a better or worse quality of life, from a health or social perspective. One may also consider as another example access to leisure time, which will determine our mental health being.
None of these things will end up reflected in the GDP. If prosperity is not broadly shared and transformed into a better quality of life in all its perspectives, does growth in the GDP provide much comfort?
Another goal is sustainability. We may all be very happy with a growing GDP. However, if that growth is also destroying our environment (think of ever-shrinking open spaces for leisure), is this something that we should be smiling about? If the growth that we have is short-term and actually diminishes the potential for environmentally sustainable long-term growth, should we still be very happy at the growing GDP?
A third aspect to consider is technology. One of the statistics that is often cited is that around 80 per cent of the population have online access. This is no doubt a good figure. However, is technology really driving our economy?
What intellectual property is being created in our economy? What knowledge acquired through research is being created? These are all intangible assets that are hard to measure. On the other hand, they all have an impact on our future economic growth.
With regard to technology and IT literacy, it is worth understanding what we use IT for in our daily lives? Are we fast becoming a social media economy, because we essentially use IT to access social media as opposed to becoming more knowledgeable, more productive, more efficient?
The problem with growth in the GDP is that as a number it does not tell us whether our economy is becoming more sustainable or whether people feel more satisfied with their lives. If these aspects are not improving, then our economy is not working as it should.