HOW DO WE MEASURE GROWTH?

I loved the contribution by Caroline Lucas, our only Green MP, on “The Week in Westminster” (BBC Radio 4) yesterday (13.11) morning. I am not a supporter of her party, nor am I that well informed on the green agenda, but every time I hear her speak I am impressed. She talks a lot of sense; moreover in a courteous way, even when confronted with the leading questions beloved of interviewers, such as this one: “ … are you not coming to the conclusion that you alone can make no difference …?”

The Commons had been discussing economic growth; Ms Lucas wanted the debate to be wider but felt she was the only MP who believed we should look at the quality of growth. She went on to say: “How useful is GDP as a real measure of that growth? Are we better off?”

I agree totally. To take solely the relationship between GDP and jobs, I wrote in a blog post on 27 October, when a higher-than-predicted monthly GDP growth was in the news: “However … a growth in GDP does not necessarily – and quickly – improve the lot of the majority of people in this country, particularly those who are already in debt or who face losing their jobs as a result of the recently-announced spending cuts. Our economy is still rather dependent on relatively non-labour-intensive sectors, e.g. financial services, so today’s good news is “necessary but not sufficient”.

Can you measure happiness?

So Caroline Lucas asks, “are we better off?” Back in “the good old days”, i.e. before the credit crunch and the recession, there were several studies (including those quoted in Oliver James’ famous book “Britain on the Couch”) showing that British citizens’ self-perceived levels of happiness (or contentment or well-being, call it what you will) had not increased over the previous 50 years even though, by every financial measure, we were indeed all greatly “better off”.

OK, let’s leave aside this hard-to-measure or even impossible-to-measure quality of happiness, or maybe the spiritual wealth of the nation if you like. Are there other measures than GDP with which we could assess the economic wealth of the nation? I don’t know the answer but I’d love to hear your views.

UK plc as a company: turnover? profit? What else?

For example: years ago, when I was in the chemical industry, I remember an Irish customer of mine saying, as his annual financial results were published: “Turnover is vanity; profit is sanity.”

Isn’t the GDP of a country somewhat analogous to the turnover of a company, being the sum of its outputs? So what might be the equivalent of profit for “UK plc”? What measures of “added value” could we track?

Obviously our government is supposed to do more than deliver profit to shareholders, so how best can it – and we – measure how good a job it is doing? As Ms Lucas’s question implies, GDP is not the only measure.

“Answers on a postcard”. As they used to say, back in the day.

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For a link to Caroline Lucas’s interview on “The Week in Westminster”, go to: www.bbc.co.uk/programmes/b00vv0dv#p00c4mrs
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For information on “Back to the Black: how to become debt-free and stay that way”, go to www.back-to-the-black.com

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