We hear a lot about GDP and growth.
GDP is very useful because it provides us with a total figure from which to take percentages and ascertain the overall health of the country.
GDP / Defect
GDP / National debt
Proportional of GDP from banking / farming etc.
GDP / Working hours (Productivity)
The GDP figure on its own tells us nothing the level of public debt, private debt, how much it is dependent on consumption of finite resources, quality of life or rich poor divide. Yet increasing GDP is how most senior politicians measure growth and success?
Lets pretend that we found 2 billion barrels of crude just off the coast of Brighton.
A new industry is born in the area, much to the displeasure of many, but none can fail to see the prosperity it brings.
Extracting 1.1 million barrels a day for 5 years. Each year £200b of GDP is off the back of this finite resource. We have an immediate 9% increase in our GDP without taking on any financial debt to achieve it. The government, with what might equate to an over all £100b tax take on each of these years does reduce the deficit a bit but mostly spends the money on nice things and quango's.
The party in power are labeled a success.
Year 6. GDP down by 9%. A boom region full of young families who over paid for their homes on debt dies over night. The government spends two yeas getting used to not having its oil allowance and gets into more debt than it was before the boom.
How can we stop this happening?
We need another metric. Whenever we talk about GDP it must not include unsustainable consumption.
When we use a resource that does not regenerate the GDP that can be attributed to it should be calculated.
The same should be done with the use of reserve resources.
The same should be true of the use of resources beyond their regeneration rate, for example wood and fish stocks in our present day.
Using GDP as the master figure encourages the dog like instinct of eat quick or miss out and allows no insight to the sustainable economy which must one day be able to support our governance and provide a good quality of life on its own.
By encouraging a the use of a global economic model around sustainable GDP where debt and industry levels are related to that, we can begin to learn how to live within those constraints gradually so that in 10-20 years time we are able to do so.
This figure will allow us to allocate a monetary debt figure to consumption. And from this we can allow the market economy to fix the addiction.
An example would be year incremental yearly % of consumption on renewable and recycling technology or infrastructure. Year 1 5%. Year 2.10%
This seems pretty obvious but it ignores part of the big picture.We are not one nation. Either we all do it or the selfish leader has an advantage.
But I believe the advantage is over rated. With more investment in renewable, better working practices, better telecoms we have less people travelling long distances to do similar jobs, we can thrive without consuming resources. We must!
The market economy is a good way to encourage innovation. But a market economy needs rules that keep it working for the good of the public now and in the future. Not for the families of those who have authority over resources.
A macro model that grows sustainable GDP can do that.
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