As a measurement of progress, GDP has been controversial since its inception.
In a nutshell
- GDP does not reflect the changes in how we work, what we value and what we pay for today.
- Alternative numbers, rankings and indexes that measure how we treat people and our environment (rather than pure production) demonstrates the immense value shift happening around the world.
Focused on economic progress to the exclusion of the welfare of people and environment, it has nevertheless become the most important indicator of the success of a nation.
When we look at the cultural milieu today and the values and beliefs that many people hold (not all people, admittedly), much of it is a reaction to the results of single-minded pursuit of economic development embodied by the GDP.
Following financial crises, high level corruption without punishment and rising inequality, anti-capitalism and anti-establishment sentiment is at a high. The ever more dramatic effects of climate change are forcing acknowledgment of the correlation between industry and climate change, and the realisation that solutions to social and environmental problems are intrinsically tied to economy (again, admittedly not for all people).
“The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile.”
– Robert Kennedy, 1968
The search for happiness and fulfillment is also less correlated with money. Instead, it is sought through balance, wellbeing and self-growth. At street level, these values can be seen in the growing desire for jobs that are fulfilling, the shift to holistic health and mindfulness, conscientiousness about the services and goods we choose to buy, and indeed eschewing material goods for rewarding experiences. While one may say this cultural outlook predominates in affluent developed countries, as more people around the world reach middle class status, similar expressions of these values are expected to grow.
Because the GDP measure was developed at a time when physical manufacturing, production, quantity and output was the basis of the economy, it does not reflect the very visible changes in how we work, what we value and what we pay for today. Today’s workforce is digital, mobile, flexible, with diverse family and household roles. We live in a service-led and experience-orientated economy. And in the digital age, much of what we value is intangible; things that we used to pay for, like communications and entertainment, are now free. Nor is the GDP great at accounting for the human creative, intellectual and network capital that are today’s growth drivers – especially so in a country like New Zealand which is geographically remote but economically affluent and thriving on being technologically advanced.