For decades, political leaders and many economists have been telling people that economic growth is always good, should be fast and is best measured by gross domestic product, or GDP.
It is time to ask what we miss when we keep our attention on that one number to tell us how everything is going. When focusing on GDP growth, are we overlooking what it takes to achieve economic growth?
The European Commission, in its spring forecast, concluded that “Malta is projected to have the best-performing economy” but also that “Malta’s wage growth was the lowest in the EU”. The commission argues that Malta’s economy is robust thanks to increasing private consumption and exports from significantly higher immigration and tourism flows.
GDP growth measures the monetary value of goods and services produced in the country. But there is also a lot it leaves out, such as the general well-being of people and the quality of public services like health and education.
As US politician Robert Kennedy once said: “It measures everything, in short, except that which makes life worthwhile.”
Political leaders know that GDP often defines whether they get elected or re-elected and how the country fares compared to other nations. Still, it is indiscriminate and says nothing about the quality or dissemination of the output. It does not tell us whether the top 10 per cent earners are getting more than the remaining 90 per cent put together. It measures quite well the accumulation of wealth among the rich but tells us nothing about growing socioeconomic inequality.
The fact that Maltese workers’ wage growth is the lowest in the EU confirms that many must run faster just to remain in the same place. Equally important, focusing principally on GDP growth does not help us to understand the decline in the ecosystem services, the stress of people, the loneliness of people, the illness of people as the health services continue to deteriorate and the increasing strain on the country’s physical infrastructure.
Societal leaders should look at better metrics and indicators to gauge society’s present and future well-being. Every country has its own challenges and the solutions cannot be the same for every nation. In Malta’s case, most people would agree we should care about the greatest well-being of the greatest number within the biophysical limits of the country.
Our political leaders must be honest with the people and admit that we
simply cannot exponentially increase the economic pie any longer, especially if it means increasing the population to 800,000, as predicted by the finance minister, by importing low-paid workers who are being treated as economic commodities.
It must no longer be taboo for societal leaders to discuss whether it is time to go through a phase of ‘degrowth’. This does not mean ending development or progress. It means managing the risks associated with how economic growth is generated and finding ways to deal with the existential challenge of climate change and the rampant increase in socio-economic inequality.
No easy solutions exist to revert to a sustainable economic growth path that is not tracked simply by the GDP growth compass. Political slogans, sound bites and platitudes will not get the country on the right path.
Rather than focusing exclusively on GDP growth, political leaders must find the will to promote measurable, concrete action to encourage more safety in workplaces, more creativity, better investment in technology and education, tackling endemic corruption and creating more opportunities to do what we want to do beyond working hard.