Even as Australia’s economy continues to grow strongly there are deep currents of unease disturbing our enjoyment of the bounty. With the gleaming prize of prosperity comes also the insecurity of large mortgages and a flexible labour market. Long working hours intrude on home and family life. Symptoms of affluenza such as depression, obesity and the use of drugs, both sanctioned and illicit, continue to increase, most alarmingly amongst our children. Self preservation increasingly trumps community involvement and social concern. Behind these everyday concerns lurks the threat of global warming. Our wealth has supposedly doubled since the 1970s but we report feeling not much happier nor more satisfied with life.
A substantial number of Australians have acted on their unease by stepping back from their work commitments. According to the Australia Institute twenty five percent of working Australians have downshifted over the past decade – in other words they have taken a voluntary cut in income in order to improve their quality of life. In doing so the downshifters have gone against the organising principle that has dominated our society for a quarter of a century or more. This principle is that growth of the Gross Domestic Product through the operation of unfettered market forces is the best way, even the only way to improve our lives.
While many Australians may share a sense of unease with the status quo, few seem to see much alternative. Either they don’t see how the system can be challenged or they have accepted the dominant economic mantra and do their best to live with its consequences. However the paradigm of ever-increasing GDP, unregulated market forces, consumerism and materialism can be challenged quite fundamentally in every respect. As more of us come to understand this, the political feasibility of change will emerge.
GDP and GPI per capita, Australia 1950 to 2000; source The Australia Institute
To start with, the GDP is not really a measure of our material wealth, and its use as such seriously distorts our economy and society. GDP is a measure of what economists call economic activity, and it is calculated essentially by adding up what we spend collectively. However in this calculation no account is taken of whether our activity is useful, useless, harmful or fixing harm caused by past activity. A car crash increases the GDP, because another one has to be built. The Canberra firestorm increased the GDP, because homes had to be rebuilt. The Exxon Valdez oil spill noticeably increased the US GDP because the mess on the Alaskan coast had to be cleaned up.
The GDP may measure how busy we are, but it doesn’t measure how well off we are. To do that, you would have to subtract the bad things from the good things and calculate a net balance. The GDP calculation amounts to entering all transactions in the credit column of the ledger and adding them up. No shopkeeper would survive long with such a bizarre form of book keeping.
A more sensible approach is used in the calculation of an alternative measure called the Genuine Progress Indicator. The GPI uses a proper balance sheet, crediting the good, debiting the bad and calculating the total. The GPI also includes environmental costs such as the loss of soil and forests, oil depletion and climate change. The result of this more sensible accounting is salutary — for many Western countries the GPI increased steadily through the 1950s and 1960s but has been pretty stagnant since the 1970s. In other words we have been busier and have spent more, but the net benefit is hardly any greater than it was thirty years ago. This gives us a pretty clear message that we’re not using our time well.
Another problem with the GDP is that activities that don’t involve money aren’t counted. It turns out there’s a great deal of productive and beneficial time spent by volunteers and within households, estimated in 2000 to be worth around a third of the GDP and more than half of the GPI. Much of this useful work is done by women.
Most governments around the world are now obsessed with growing the economy. What this means in practice is growing the GDP, which is not at all the same thing as increasing our wealth, let alone improving the quality of our lives. Because GDP is such an indiscriminate and incomplete measure, our priorities have become seriously distorted. Anything that increases paid activity is seen as good, and anything that doesn’t involve money is neglected. Quick profits from clear-felling forests are good, whereas long-term management of ecosystems is neglected. Exploitative employers who force people to work longer are seen as good. Mothers caring for their infants are ignored, but mothers paying for baby sitting are seen as good. Volunteer work is neglected.
Australia’s supposed economic efficiency is substantially illusory, since it is based on borrowing from the future, longer working hours and the luck of a resources boom. The widespread sense that life is more frenetic and stressful is correct — reduced job security limits peoples’ employment choice and flexibility. The emphasis on quantity over quality, on ever more stuff in our lives, but with less time to enjoy it, is the logical outcome of measuring our material economy by how busy we are.
There is active discussion of alternative approaches to measuring wellbeing, both single-index measures like the GPI and multi-faceted measures like triple bottom line (economic, social, environmental). A broad discussion of the various approaches can be found in Measuring Progress (Richard Eckersley, Ed., CSIRO Publishing 1998). There are also some moves to improve and expand official measures of progress. The Australian Bureau of Statistics now releases Measures of Australia’s Progress that presents assessments under the broad headings individual, economic, environmental and social. Even the OECD and The Economist are starting to pay some attention to the inadequacies of the GDP. However recognition of the problem is still limited and serious improvements are slow in coming.
A more fundamental problem is the control exercised by governments over the flow of information that by right belongs to all citizens. Release of this ‘public information’ is routinely massaged or suppressed for political advantage. Politicians’ self-aggrandizement is a significant force perpetuating the extremely patchy and misleading information that makes it into mainstream media. We urgently need new institutions with greater independence from the government of the day whose role is to develop and release more accurate and comprehensive measures of our national state of wellbeing, and to educate media and the public on their merits. Some useful suggestions along these lines can be found in A Just and Sustainable Australia, produced by The Australian Collaboration.
There are other factors than the misuse of GDP which explain why life is felt to be more frenetic and less satisfying than it used to be. They involve fundamental distortions of markets and the way our money is issued. The next article in this series will look at several kinds of market distortion, and especially the gyrations of financial markets.