KELVIN'S BLOG: More 'fake growth'. Just what we need!

We’ve just had another bout of breathless reporting from journalists, economists and commentators about our economic growth, accompanying the release of the Mid Year Economic and Fiscal Outlook. Remarkably, people who ought to know better continue to talk about GDP, but make no mention of GDP per capita.

In Australia’s case, nearly all our growth comes from population growth. This is fake growth. If more people come and live in your street, an economist or a journalist is likely to tell you “your street is richer”, having added up the wealth of everyone living in the street. But it doesn’t make you  personally any richer. Indeed you are likely to be worse off, given the prospect of more traffic in your street, trees being cut down for extra dwellings, and more competition for open space.

For journalists and commentators to keep reporting GDP, without reporting GDP per capita, is breathtakingly dishonest. People are interested in knowing the size of the cake, but they also want to know how many people it is being shared out amongst. Ignoring the latter is like reporting one team’s score in a football match in great detail, but saying nothing at all about the other team’s score! Or reporting the distance an athlete ran, but not the time it took them.

Of course it would be even better if we moved on from using economic growth to using more useful indicators of performance. Greta Thunberg was right at the United Nations to call “endless economic growth” a fairytale. It is a fairytale. Nobel Prize winning economist Joseph Stiglitz has pointed out that GDP fails to capture the impact of climate change. It is hard to see how we can launch an effective attack on climate change while we make GDP our key performance indicator.

And, as has been pointed out many times, it is full of flaws as a performance indicator. As Iceland’s Prime Minister Katrin Jakobsdottir noted recently, if a man has sex with a prostitute rather than his wife, GDP is increased. That doesn’t make it a good idea.

Prime Minister Jacobsdottir, Scottish First Minister Nicola Sturgeon and New Zealand Prime Minister Jacinda Ardern have put forward a ”well-being” agenda as an alternative to GDP. It is much more likely to improve our lives, AND save the planet, than the Ponzi scheme of population growth fuelled never-ending expansion we are on.

The Hon. Kelvin Thomson
National Committee
Sustainable Australia Party