Opinion: We Should Stop Focusing on Economic Growth

I have previously explored why a prioritisation of GDP is contributing to the financial crisis. The article can be found here.

Most of today’s government’s, including the UK, focus on economic growth when reviewing the development of their country. Economic growth can be defined as an increase in the real GDP and is one of the macroeconomic objectives in the UK, alongside others such as high employment and low inflation. These objectives make up the key aims of government policy.

As of the 2017 World Happiness Report, the UK is 19th in the ranking of happiness from 2014-2016, despite it being 6th in the global rankings for GDP. This is because economic growth does not make countries happier, which many would argue is the main ideal in life. This can further be shown in a recent study showing a negative relationship between income growth and happiness, that got stronger with rising inequality in Latin America. Related to this idea is the Easterlin Paradox, a recent observation made by economist Richard Easterlin. The study concluded that happiness rises with income, but only up to a certain extent within a society. Rich people tend to be happier than poor, but rich societies do not tend to be happier than poor societies, and as countries get richer, they do not get happier. This is linked to relative income, an idea that our happiness relies on the contentment of our neighbours. Another explanation can be diseases of affluence; conditions associated with economic development. For example, working longer hours may contribute to economic growth, but can leave individuals feeling stressed from the workload and unhappy about their lack of family time.

A high rate of increasing GDP does not guarantee the financial improvement of everyone within a community, as economic inequality still thrives in today’s global society of monetary affluence. Economic growth often creates the best opportunities for the highly skilled and educated. In recent years the UK has seen faster wage growth for highly paid jobs than unskilled. Therefore, today we are increasingly seeing an unacceptable distribution of wealth. For example, currently 8.1% of the richest own 84.6% of global wealth. China is a smaller representation of this, with it having the most economic growth of any country, its real GDP currently at $11.2 trillion. Shanghai, the most prosperous city in China, is comparable economically to Italy, whilst rural Guizhou, a deprived Chinese province, is much like today’s Ghana.

Governments should be focusing on happiness, as it’s what gets them re-elected and more importantly for their subconscious moral compass. We cannot rely on the emergence of new technologies to replenish our natural resources as we continue to demolish them in our chase for growth. And lastly, infinite economic growth is futile if it can only be enjoyed the minority of the population, whilst everyone else is dehumanized to become a cog or factor of production in the endless growth machine.

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