Economic Growth & Poverty

Are we asking the wrong questions?

DSCN0159In February I wrote a blog about economic growth and poverty that talked about why a focus on creating jobs and GDP growth wouldn’t actually tackle poverty. This followed some excellent work from JRF on Cities, Growth and Poverty which concluded that there is no guarantee that economic growth reduces poverty. At the time I was particularly concerned with the role of Local Enterprise Partnerships (LEPs) and the Strategic Economic Plans (SEPs) they were developing. In discussions arising from my blog, I found many people ‘defending’ the position of LEPs on the basis that their remit is clearly to create jobs and grow GDP; they are not there to address social issues, apparently, that is for local authorities and others to deal with. Therefore, the SEPs being developed would of course be focused on jobs and GDP growth and not a lot else – they are after all merely plans to extract funds from government rather than real plans created to deliver what is actually needed in an area – they are dancing to the tune of central government! The questions this leaves us with are:

  • Should we be planning for economic growth that doesn’t address core issues, like poverty and inequalities of opportunity, in an area?
  • Are we addressing the wrong question to start with?

What I mean by the last point is, what if economic growth isn’t our best option, what if the question should be about something else entirely. To consider this, think about what makes a city a good place to be, what makes our neighbourhoods great and what do we enjoy about life – is it really just about having a job and earning money? What got me thinking about this issue again was two things; one was losing my job last year, which is pretty life changing and makes you think about what you really value in life and what motivates you; the other was some reading I was doing for an essay. The essay was on whether or not capitalism is compatible with an environmentally sustainable world? The reading around this subject sent me back to Jonathon Porritt’s book “Capitalism as if the world matters” something I read in 2007 when it was first published, and to books I hadn’t read before – Joel Kovel (The Enemy of Nature) and Tim Jackson (Prosperity without Growth), all brilliant books in their own way and all presenting different approaches to the same question with different responses and solutions.

What struck me most was firstly, trying to put together some compelling facts about the ecological crisis we face and what it looks like was not as easy as I thought it would be – I couldn’t find in one place the key facts around the issues I wanted to present and finding up to date statistics on key issues was pretty difficult. Secondly, there was something compelling about each of the different arguments presented, I could have accepted elements of all of them – I summarise (inadequately) the key points below:

  • if capitalism (neo-liberalism) is about continual growth then in a finite planet this can never be compatible with environmental sustainability, and capitalism is to blame for many of the ecological crises we face – true?
  • capitalism reforms and evolves to provide solutions to the problems it causes, so technological advances will help us to solve the ecological problems we face and growth can continue – possible?
  • within a capitalist world alternatives already exist in different places, traditional growth can be stopped and prosperity can be measured in a different way that doesn’t rely on increasing personal consumption – yes?

And so to my main point, and maybe I am coming at this a lot later and slower than many who have been pushing some of this agenda for a fair while (such as those involved with Happy City) but the point is – should we be focused on measuring prosperity as a city/city-region/area in terms of economic growth alone, or is there another way? And would that other way be more inclusive? That’s not to say that we all stop worrying about having a job, earning money, buying a bigger house, taking holidays, etc but that we stop seeing these as the key to personal status – a process we all seem to get trapped in to a greater or lesser extent. Maybe part of the answer is about introducing a range of other measures that cover things like, quality of life, governance, education, health, and environmental/ecological resilience rather than money, economic growth and consumerism.

We tried this, sort of, in 2010 when David Cameron launched the National Wellbeing Programme – a new way of measuring wellbeing and measuring our progress as a country in a different way! In his speech, however, Cameron made it very clear that this was not an alternative to focusing on economic growth and GDP growth rather it was just an add on – “growth is the essential foundation of all our aspirations” apparently and by that he meant economic growth. So we can measure wellbeing, but not at the expense of GDP or other economic measures, because they are more important! The quote below on the government’s own website sums it up perfectly:

“It’s important to say that this is about neither replacing GDP nor creating a ‘happiness index’. The objective is to complement the more traditional economic measures used by policymakers and to provide an additional way to think about what we value and the progress we’re making as a society” National Wellbeing Website.

So not really a particularly worthwhile Programme then and it certainly doesn’t seem to have changed anything for the better – we are living in a more unequal society now than we were a few years ago, there are more people in poverty with less access to even a basic quality of life, more people using food banks, more people excluded from a housing market that seems to cater for those with money and exclude those who really do need somewhere to live! The question remains – are we measuring the wrong things?

This seems a particularly pertinent question a the moment, with the recent publication by the Post Crash Economics Society (PCES) at Manchester University which talks about how economics is being taught in Universities and the type of economists this is producing, as well as why those same economists were incapable of predicting the Financial Crisis of 2007/08, issues discussed by Alex Marsh in his recent podcast ‘rethinking post-crash economics‘. It also comes at a time when Thomas Piketty’s book ‘Capital in the Twenty-First Century‘ is receiving much acclaim for its questioning of a system that leads to the “growing concentration of income in the hands of a small economic elite” – powerful stuff but what will be the response?

But what’s all this got to do with LEPs and SEPs – well probably nothing and that’s the point, they are addressing entirely the wrong issues, focused on economic growth and jobs, with little or no view about quality of life and equality of opportunity. So does it matter that these plans and partnerships are drawing up plans and bidding for funds that will make little or no difference to the majority of people in their area – no probably not? We are focusing on not only the wrong question but the wrong plans, we should perhaps be focused on plans for “prosperity without growth” on plans that focus on those most in need and address the very real issues they are facing. Plans that are about creating quality of life for everyone not just the select few and that show no tolerance or acceptance of poverty and inequality. Those are the kind of plans I would like to see developed and I hope they are already there or in progress, but I see little evidence of this in practice – I wait for others to tell me they exist!

Postscript – interesting article in The Guardian, published 29-4-14 about Bhutan and their pursuit and measurement of Gross National Happiness rather than GDP