Sunday, May 17, 2020

Wellbeing economies

Opinion by: Catalina Tamayo Posada, Economist and Analyst of the Observatory of Trade, Investment and Development

“A wellbeing economy means allowing humanity to determine economics, rather than the other way around” (WEAll, 2019)
Last week, I came across a TEDTalk by Nicola Sturgeon, Scotland’s Prime Minister in which she challenges the traditional, and narrow, as she calls, measurement of GDP and urges other countries to focus their economic policy on collective wellbeing, meaning how happy and healthy the population is. (TED, 2019). Scotland, Iceland and New Zealand are leading the change in this matter: they created de Well-Being Economy Governments to pursue people’s happiness and therefore drive economic growth (people first). New Zealand, for instance, unveiled the first wellbeing budget with a special focus on mental health as suicide rates grow year on year. Combating family violence, child wellbeing among other issues, also conform the agenda for this country that aims to make New Zealand a place where you can make a great life (WEF, 2019).

In today’s world, there are less people living in extreme poverty, but inequality is raising: “what we are seeing today is the crest of a wave of inequality. The wave of demonstrations sweeping across countries is a clear sign that, for all our progress, something in our globalized society is not working. Different triggers are bringing people onto the streets: the cost of a train ticket, the price of petrol, political demands for independence. A connecting thread, though, is deep and rising frustration with inequalities.” (UNDP, 2019).

These inequalities are what wellbeing economies try to address by standing for better ways to measure countries’ economies, rather than just focusing in the actual GDP. The outcome of this approach would be better life quality,“reducing inequality, generating meaningful jobs and restoring our natural environment” (WEAII, 2019). 

Angel Gurría, Secretary-General of the Organization for Economic Co-operation and Development (OECD), defines the Wellbeing Economy “as the capacity to create a virtuous circle in which citizens’ well-being drives economic prosperity, stability and resilience, and vice-versa, that those good macroeconomic outcomes allow to sustain well-being investments over time” (OECD, 2019).

Although, this is no new idea. Back in 1781, Jeremy Bentham intended to create a calculus of happiness that could account for how much utility an action generates in an individual. Later on, while some economists where trying to actually find a way of measuring economic welfare, the national accounting system was about to be created. In the 40’s, the Gross National Product (GNP) was adopted as the main economic indicator and since then, it has shown the “success” of nations. But, as Kennedy stated in 1968, “the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play.” (HBR, 2012) 

For many years, it has been believed that pursuing economic growth brings development for all. The world we have today show as that we are far from that point and the approach needs to be revaluated (WEAII, 2019). Eva Illouz, an Israeli sociologist and writer, said in an interview few days ago that crisis as the one we are living today reflect the weakness of societies; she makes special emphasis on what is happening in the US, the country with the highest GDP in the world but with an insufficient health system. Moreover, “the sanitary crisis in many countries has demonstrated how much the health systems have been eroded by neoliberal policies” (El Tiempo, 2020).

Furthermore, the actual pandemic of COVID-19, has put in evidence tremendous lack of consciousness about the importance of improving health systems and its funding. For instance, in 2018 the Trump Administration shut down a federal agency dedicated to fight pandemics and epidemics, because there was not a fast return over such investment (El Tiempo, 2020), although the cost of pandemics are quite above accounting for “thousands of lives, billions of dollars and years of economic recovery for countries already torn by decades of war” (TWP, 2020). “Health was ignored, but the irony is that we now realize that it should had been the ground to build the economy”. (El Tiempo, 2020).

In addition, there is a growing push for this approach given the huge challenge we have with the Sustainable Development Goals (SDGs), which aim to reduce poverty, improve health and education systems, reduce inequality among other issues, while driving economic growth. These goals should be addressed by 2030 and urge countries to take actions in order to accomplish them. However, as the focus has been for years GDP, countries are not yet ready to measure improvements in SDGs, “it is shocking that we can’t measure about 40% of the 169 SDG targets for OECD countries – meaning we can’t tell whether we are on track to meet them by 2030 or not” (OECD, 2019). Making a shift in the agenda in order to address people’s issues first rather than just economic growth, is what will help us all achieve the SDGs and really improve the lives of our people and our planet.

Whether wellbeing economies are the way or not, it is clear that the actual system that only pursues economic growth is outdated. Countries’ need to reevaluate how they measure progress so that people’s needs can be met. It is time to put people and the planet in the center of the economic policy so that the progress that the world has achieved so far can be protected and shared (WEAII, 2019).

“We need to build a more intelligent economic system, a new economy focused on human health and happiness” (OECD, 2019).

References




Posted by at
Labels: , , , , , , , ,