These countries are looking beyond GDP and economic growth

“The need for a new type of economy has never been better understood,” Scotland’s First Minister, Nicola Sturgeon, told CNBC. “Which I think is why we’re seeing more and more interest in the economy that’s thriving, both here in Scotland and around the world.”

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LONDON – For small but growing countries, the global financial system is no longer suitable.

Most are led by women, Finland, Iceland, Scotland, Wales and New Zealand are all members of the Wellbeing Economy Governments alliance. The partnership, which is expected to expand in the coming months, aims to transform the global economy to support people and the planet by 2040.

This means abandoning the idea that the rate of change in household income is a good sign of progress, and instead reforming the economic system to provide a better life for all people in harmony with the environment.

“The need for a new type of economy has never been better understood,” Scotland’s First Minister, Nicola Sturgeon, told CNBC. “Which I think is why we’re seeing more and more interest in the economy that’s thriving, both here in Scotland and around the world.”

Urging other policymakers to consider an economic approach to well-being, Sturgeon said many of the world’s challenges, such as natural disasters, biodiversity loss and livelihood crises, “are raising important questions about what we need – and what our economy is growing. .”

“Building a healthy economy is a huge challenge for any country, at any time, and the challenges we’re facing make it even harder – but they also underline why we need to change this urgently,” Sturgeon said. “We have made progress in the last five years, but we still have a lot to do.”

I often say that we need to move from power, profit and leadership to people, the planet and development.

Sandrine Dixson-Declève

Co-President of the Club of Rome

In the past few months, New Zealand published its first Wellbeing Report; The European Union recognized the need to transition to a health economy; and the World Health Organization launched a program that wants health to be at the heart of economic recovery.

Australia, Canada and Costa Rica are among the countries that have worked together with the Wellbeing Economy Partnership in recent months, and the “growth economy” advocates believe that it is only a matter of time before more countries join the well-being movement. . The post-growth movement is one that rejects the need for continuous economic growth.

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Dominick Stephens, New Zealand’s chief economic adviser to the Treasury, hailed the country’s first public health report as a “significant moment,” saying it aims to give policymakers a broad picture of life in the South Pacific nation. .

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“We want to look beyond GDP to understand progress, but we don’t have one area of ​​health — so we have to look at multiple indicators and evidence to understand progress in this broader sense,” Stephens told CNBC.

“This helps us all understand where New Zealand is doing well, where we are lagging and how life is different for different people in our country.”

Some of the research published on Nov. 24, the report showed a large and growing gap between the well-being of older citizens and that of younger citizens, with older citizens performing better on various measures.

Most are led by women, Finland, Iceland, Scotland, Wales and New Zealand are all members of the Wellbeing Economy Governments coalition.

Fiona Goodall | Getty Images | Getty Images

The Treasury identified three key areas for improvement: mental health; academic achievement; and housing affordability and quality.

Stephens said while the report would not be the final word, it was up to New Zealanders to decide how they were affected by the crisis and what they could do to address it.

“We don’t have a silver bullet in New Zealand for how to do Wellbeing Reporting,” Stephens said. “Different countries have taken different approaches. We, in some ways, make airplanes as we fly them.”

“More countries experimenting with different ways of integrating health analytics into policy means more opportunities for New Zealand, and other countries, to learn from others’ experiences,” he added.

The ‘Limits to Growth’ – 50 years to go

The expansion of this economic reform will come six decades after the Club of Rome think tank published its report “Limits to Growth”.

The 1972 book warned that the world’s economy will not be able to support economic growth and population growth and will therefore collapse by the end of this century. More to the point – and following a dire reversal of predictions at the time – the world has gone in the direction the book’s authors predicted it would.

Economists and economists told CNBC that the world’s leading scientists have said about the risk of global warming of 1.5 degrees Celsius – the most important requirement for warming that makes it dangerous – underlines the need to end the trend and growth. all the money.

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“If they didn’t realize 50 years ago that we already need to move, I think now is the time because we are facing many challenges,” Sandrine Dixson-Declève, president of the professional group Club of Rome, said. CNBC via phone.

The term “polycrisis” refers to crises that occur in several global systems and are intertwined in such a way that they cause harm greater than the sum of the problems.

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“It’s not just that our planet is sick because of unsustainable growth, because we’ve gone too far from the efficient use of natural resources, but our people are getting sicker, and our young people are making less money,” said Dixson-Declève.

When asked if this means he believes there is no other way to find a better way, Dixson-Declève replied, “Yes, absolutely. I often say that we need to move away from power, profit and leadership to people, the world and development.”

How important is GDP?

US President Robert F. Kennedy once said that a country’s GDP measures everything “except what makes life worthwhile.”

Critics of GDP, which represents the value of goods and services in real time, argue that the indicator is misleading because it measures the “good, the bad and the ugly” of economic activities and calls them all good.

GDP does not take into account, for example, unpaid work, nor does it distinguish between economic activities that contribute positively or negatively to the health and well-being of people and the environment.

I think it just shows our lack of imagination. We cannot even imagine an economy that is better than growth.

Katherine Trebeck

Co-founder of the Wellbeing Economy Alliance

In the UK, Rishi Sunak said in his first speech as prime minister that Liz Truss’ predecessors had made no mistake in wanting to boost the country’s economic growth. “It’s a good goal,” Sunak said outside Downing Street on Oct. 25.

Three months earlier, opposition Labor Party leader Keir Starmer said Britain needed three things to fix its broken alliance. “Grow. Grow. And grow.”

“I think it just shows our lack of imagination. We can’t even imagine an economy that is better than growth,” said Katherine Trebeck, founder of the Wellbeing Economy Alliance, a group of education, business and civil society.

“The best we can do is put good terms ahead of growth – sustainable growth, green growth, inclusive growth, sharing – but we are not allowed to be optimistic that the growth economy is the path of the 20th century,” he said. he added.

“The countries with the highest incomes have enough for all purposes but there is a huge gap in the richest countries. So, what they need to do is think about how to distribute and appreciate the wealth,” said Trebeck.

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“I use the phrase that they need to realize that they have arrived. The work of growing up is done and they need to now move on to the second task of making themselves at home.”

Trebeck described economics as a “buzzword” that includes movements such as “growth,” “economic” or cyclical and dynamic rather than the other way around.

“I think there is a great moral responsibility [on high-income countries] “Because they are taking more than their fair share of natural resources, that’s clearly saying that countries around the world that don’t have enough to meet the needs of their citizens will stay there,” Trebeck said.

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“I’m saying how do we live fairly in this finite world?”

‘GDP is not a measure of wealth’

The push to focus on economic growth comes at a time when people are increasingly calling for an end to global oil production.

“Basically, with the commitment to growth, you commit to using more energy and using more resources that cause environmental damage – and make the atmosphere difficult,” Julia Steinberger, an economist at the University of Lausanne, told CNBC by phone.

“What you have to do to reduce carbon is you have to stop using all fossil fuels and replace the energy demand with renewable or low-carbon or zero-carbon and it’s hard to do. [and] It’s going to take time to do it if we’re going to increase energy efficiency,” Steinberger said.

The South Pacific island nation of Tuvalu last month became the first country to use the UN’s annual meeting to push for an agreement to curb oil spills. The European Parliament, the Vatican and the WHO have all agreed to the proposal.

But only a small number of countries have accepted this so far, and the fossil fuel industry has often tried to emphasize the importance of energy security in the planned transition to renewables.

The burning of fossil fuels – such as coal, oil and natural gas – is the main driver of climate change.

The Secretary-General of the United Nations, Antonio Guterres, recently said that “a large-scale social network is collecting billions to protect the oil industry from being investigated.”

Sean Gallup | Getty Images | Getty Images

UN Secretary General Antonio Guterres has also recently joined the group of voices calling for GDP to be replaced as the global indicator of economic growth, and pressure policymakers to change the economy around the world.

This means an economic system based on reuse and recycling to extend the life of products as long as possible and move away from the world model of “take, make, throw away”.

“We must change – now – and end our senseless and suicidal war on the environment,” Guterres said at a major global environmental conference in early June.

“We need to put the environment at the top of our list and go beyond Gross Domestic Product as a way to improve people’s health,” Guterres said. “Let’s not forget that when we destroy forests, we create GDP. When we catch more fish, we create GDP. GDP is not a way to measure the weight of the state of the world.”

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