The GDP doctrine
IN ordinary people's understanding of economics, GDP indicators focus largely on market transactions, and are prejudiced towards increased production, consumption and investment, whether this output is essential or desirable. In simple economic terms, it is an algebraic aggregation of the total value of all products and services bought and sold in an economy. What exactly does this mean?
Unfortunately, the actual meaning is not only highly disturbing, but also quite alarming.
When a country cuts down its trees and sells them as timber, it adds to its GDP. When a country fights a war, kills people, and makes shells and bullets to kill more, it amplifies its GDP growth. When a country grabs indigenous lands and gives them away to big corporations, its GDP increases. When an air-conditioned mall replaces a country's last playground or when its last river is filled with industrial waste, that country's GDP flies high.
In the GDP world, a dead tree is more valuable than a living one, contaminated air is more progressive than sparkling air, a smoker's blackened lungs reflect higher income and profit than healthy lungs.
The GDP growth doctrine made us believe in a slanted idea of progress. It distorted our rational thoughts and made us believe our lives will be more air-conditioned and perfumed with more Dominos and McDonalds in our cities. More high-rise buildings, fried chicken, Coca-Cola, and chewing gums qualify us as a civilised nation. We believe that a higher GDP growth is the ultimate answer to our misery. GDP lionisation thus implanting unbridled materialism into our national economic behaviour at the cost of our environment, cultural heritage, and community ties.
There is more. GDP as an indicator not only proves unable to value a nation's meaning of human, social, cultural and ecological capital, but does not reflect the unequal distribution of wealth. The so-called Horse-Sparrow Theory: "If you feed the horse enough oats, some will pass through to the road for the sparrows," failed pathetically since wealth, with its inherent connection to greed, never leaked through to those at the bottom.
Thus, it is Economics 101 that the co-existence of a handsomely growing GDP and mass poverty is the usual scenario that exists in a large number of developing countries across the globe. India, surely, could be an ideal example.
It is vital for us to be aware that a large part of India's economic progress has been at the cost of her land, forests, air and rivers, the use of which displaced millions of poor farmers and indigenous families. Though India's economic progress made it the 5th biggest economy -- with a GDP of $3.3 trillion -- shockingly, it has the world's largest number of children suffering from malnutrition.
The so-called Indian economic reform of the early 1990s, aimed at a higher GDP growth rate, not only brought India's rural agrarian economies to the verge of collapse but also greatly raised the inequality level, and the number of farmers committing suicide rose alarmingly.
However, our narrow political/economic vision has always made us envy India for its "double digit" growth rate. Can we be unwise enough to blindly follow India's footsteps when clearly while India grew fabulously rich its people remained depressingly poor? India hides its 500 million poor with the assistance of a GDP mask.
Undoubtedly and unfortunately, GDP gives us the wrong picture. It not only misguided us for long but is driving our society in the wrong direction, inflicting greed and cash-oriented values on our minds and souls.
Our sole reliance on GDP indicators while deciding on national policies forces us to confront false choices and make ridiculous trade-offs between economic output and people's well being. Doesn't what we measure overwhelmingly affect what we do?
Interestingly, economist Simon Kuznets, who guided the US Department of Commerce in standardising GDP measurement in the early 1930s, himself nullified GDP's use as a general indication of a society's welfare.
In his words: "The welfare of a nation can scarcely be derived from a measure of national income." Kuznets was wise enough to limit the scope of his own invention. And we were greedy enough to ignore Kuznets!
Now what do we do about it? Interestingly, the notion of corresponding happiness with economic progress had been long adopted by our neighbour. Bhutan was one of the few countries to bluntly reject the World Bank's stand for adopting and applying GDP indicators as the "only perfect model" in classifying economies.
Instead, it developed a powerful model with relatively richer and more compassionate indicators of success/progress, and implemented it for the last three decades. They named it GNH. Gross National Happiness.
How did they do it? Is it that simple, or even possible, to measure happiness? Isn't happiness a subjective and non-economic term? How practical it is to collaborate happiness with a nation's progress? Does happiness matter in the discourse of economics? Is happiness a state of mind created only through a monetary transaction, and thus could be best measured by one's purchasing power?
Unexpectedly, the Bhutanese model answers them all. It considers the subjectivity and non-economic nature of happiness, and identifies it as a collective public good that all citizens are entitled to have. Apart from economic wellness, the Bhutanese GNH model puts equal weight on other non-economic elements -- spiritual development, community values, ecological diversity, time utilisation, living standards, and quality of governance.
Therefore, rather than getting carried away with the most prevalent scam of our time -- "the GDP doctrine" -- the creation of collective happiness through cultural, political, ecological and spiritual cohesion became the decisive guiding goal for its development agenda.
How did we allow the GDP indicators to steer our economic and political life for so long? Why did we remain so loyal to such a flawed measure? Were we too busy pleasing our economic mentors that we simply had no other choice but to swallow their recipe?
Or is it because the World Bank continued to designate GDP as the only perfect indicator of branding different economies, and we surely have proven ourselves to be the well-behaved subject of the empire of the World Bank!
Nonetheless, it is certain that without such an absurd obligation towards GDP indicators, our policy-makers' minds and brains would surely be more resolute toward ensuring the well-being of our people. Therefore, can we think of a world without the burden of GDP, and create a more relevant and a more compassionate way to define progress?