Reprogramming the economy for public and planetary health
By: Policy Leeds
Tags: Gdp, Gross Domestic Product, Doughnut Economics, Covid 19, Environmental Issues

Fear of the consequences of falling GDP has impeded our response to Covid-19, and made policy makers cautious in their response to the climate crisis. Beth Stratford discusses a new report she co-authored that outlines how to escape the straightjacket of our dependence on GDP growth, so that we can focus on the challenge of the 21st Century: meeting the needs of all within the means of the planet.

Crystal Palace Park in Greater London. Photo iStock.com/whitemay

Over the summer it became a running joke that Covid-19 is not contagious if a card reader is present. How else to explain the government’s position that eating in a busy restaurant was perfectly safe, while inviting family to your garden unacceptably risky? In reality, of course, these inconsistencies reflected a desperation among policy makers to bring a return to GDP growth. The prospect of a lengthy recession made government both slow to introduce, and eager to remove, restrictions in workplaces, in spite of clear warnings from public health experts.

A recent survey of the British public found that two thirds want government to prioritise health and well-being over GDP. And even among policymakers there is now broad recognition that GDP is a poor predictor of health, well-being, and other social outcomes. So why do policymakers remain so preoccupied with this one economic metric?

A big part of the answer is that our current economy depends on GDP growth for its stability. If our output flatlines or shrinks, the economy can quickly topple into crises of unemployment, debt and inequality. But this growth dependence is by no means a natural or inevitable state of affairs. In a policy brief co-authored with Dan O’Neill and released today by the University of Leeds, we outline four key factors that contribute to our growth dependence, and four critical strategies for alleviating that dependence as part of our Covid-19 recovery. The policies we propose would not only improve economic security for millions in our society, they would make our entire economy more resilient in the face of slowing consumption and economic shocks.

Kicking our growth addiction for the sake of the planet

Building this resilience is critical, not only to facilitate effective pandemic management, but also to give governments the confidence to tackle the environmental crisis. We urgently need government leadership to protect wildlife habitats, tackle climate change and reduce wasteful consumption. But the spectre of shrinking or stagnating GDP has repeatedly been invoked to block the policies that are needed.

Pursuing what might sound like a modest target of 2% GDP growth per year implies doubling the scale of our output and consumption every 35 years. A recent comprehensive review of the science, concludes that it would be virtually impossible to get back within planetary boundaries whilst growing our consumption at that kind of speed. Changes to our infrastructure and technology can weaken the relationship between growth in GDP and resource use / carbon emissions, but they cannot sever it completely.

This does not mean we should give up pursuing critical improvements in technology and efficiency. It just means that we should not expect such infrastructural change to do all the work for us. The argument here is not that we should try to somehow cap GDP, and thereby foreclose any possibility of green growth. It is rather that — to be sure that we in the UK pull our weight in the global effort to avert dangerous climate change and halt species loss — we will need to a) impose limits on our resource use, pollution, and habitat destruction and b) prepare for the strong possibility that these ecological protections will constrain GDP. This means adapting our economy so that we flourish without endlessly growing our consumption.

The disruptions of Covid-19 are an opportunity for change

Our policy brief, The path to a doughnut-shaped recovery, explains how we can use our recovery from the Covid-19 crisis as an opportunity make those adaptations. We propose policies that would 1) safeguard basic needs and 2) maintain employment in the face of economic contraction, 3) reduce our exposure to debt crises and 4) tackle the rent extraction that drives inequality, particularly in the absence of growth. The policies are elaborated in the accompanying full length report.

Pursuing these four strategies would open up room for manoeuvre. When certain forms of economic activity imperil our health and well-being, or the living systems upon which we depend, our governments must have the confidence to scale back those activities — without fear of triggering an economic crisis. That confidence will only be found if we escape our growth dependency. Planning for our Covid-19 recovery is an opportunity to start that process of transformation, and to prepare our economy to meet the foremost challenge of the 21st century: achieving a good life for all within planetary boundaries.