Saturday, October 11, 2014

Is GDP Enough? - Il-GDP Biżżejjed?


Is GDP Enough?

Last Friday, Sydney saw a meeting of the Ministers for Finance and the Central Bank Governors of the twenty largest countries in economic terms (known as the G20). During this meeting, the Australian Treasury Minister, Joe Hockey, proposed and obtained agreement that these countries work towards an annual rise of 2% in the economic measure known as the Gross Domestic Product (GDP)1.

What is this measure about? Why is it so important and why is it cited so much in government deliberations? Is it a good thing to be so singled out?

To answer, I'll quote the OECD, the Organisation for Economic Cooperation and Development, which joins 34 for the more advanced economies, including Australia, the United States and the large European countries (but not China, India and Brazil).

The OECD states2: 'Gross Domestic Product is the standard measure of the value of final goods and services produced by a country during a period. GDP is the most common used indicator to compare economic performance across countries or relatively to other data. It combines in a single figure all the production (also called output) carried out by all the firms, the non-profit institutions, government bodies and households in a given country during a given period, regardless the type of goods and services produced, provided that the production takes place in the country's economic territory.'

This convenience is the reason GDP is used so extensively in discourse about a country's development and the domestic politics of any country. One however needs to note that the OECD continues: 'Though it is a good indicator to capture these economic activities, it is not a good measure of societies' well-being.'

That is the point I want to make.

Naturally, some readers might object that there are other measures that are used in specific contexts, such as the unemployment rate, the comparison of income of the wealthiest and the poorest, biodiversity, quality of water and so on. This is true, however the fact remains that when the big economic decisions are made, the economic success is only, or primarily, measured in terms of the GDP.

Whether what is being produced is of good quality; whether the workforce has enough free time and how hard is their work; how much pollution is generated, how much is the earth, rivers or ocean degraded; how many trees have been cut down and forests lost etc. etc., these are not considered of relevance in this discussion.

For this reason, there have been proposals for alternative measures for how wealthy a country really is. A study published earlier this year with funding from the European Union3 found that there are four types of alternative measures to the GDP.

  1. corrections to the GDP itself, consisting of additions or subtractions of calculated sums of money that represent missing services or the negative consequences, respectively, of the economic activity. An example is the Index of Sustainable Economic Welfare (ISEW);
  2. indicators which focus on 'green' aspects, where income is measured according to how much it is deemed to be sustainable and takes care of the use of natural resources, pollution, soil erosion etc. An example if the Sustainable National Income (SNI) in Holland;
  3. there are other indicators such as the Genuine Savings (GS) adopted by the World Bank, which from what you and I understand to be the income, are subtracted the estimated cost of pollution, use of natural resources and foreign debt, and are added the costs of education as this is considered to be an investment;
  4. The indicators of the above types have a monetary value. There are other indices that are not assigned a monetary value, even when consisting of a composite of other indicators like the GDP itself. An example is the Human Development Index (HDI) of the United Nations, which to the GDP adds measures such as life expectancy, literacy and other measures.

The report concluded that all these alternatives have their defects, and there is no universal agreement which one, or ones, should be considered central to the deliberations and economic decision making of countries around the world. Nevertheless, it also concluded we should not wait until a perfect indicator is developed, before starting to use alternatives to the GDP. Even imperfect indicators such as the ISEW can lead to the public and policy decision making better than is the case today.

The fact that such studies are being undertaken is an encouragement. For too long have we been noting an increase of social inequality, that the environment is sidelined, and that humanity is consuming resources 50% higher than the rate with which the world replenishes them4. We need the governments that lead us, to lead us for the better, not for the worse. To do this, good will, competence and the lack of corruption are not enough; they also need representative indicators.

4http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/, retrieved 7/10/2014


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Il-GDP Biżżejjed?

Fi Frar li għadda, f'Sydney kien hemm laqgħa tal-ministri tal-finanzi u l-gvernaturi tal-banek ċentrali tal-ikbar għoxrin pajjiż f'termini ekonomiċi (magħrufin bħala l-G20). Matul din il-laqgħa, il-Ministru tat-Teżor Awstraljan, Joe Hockey, ippropona u ġab qbil li dawn il-pajjiżi għandhom jaħdmu lejn żieda annwali ta' 2% fil-kejl ekonomiku msejjaħ il-Prodott Gross Domestiku1 (Gross Domestic Product - GDP).

Din il-kejl x'inhu? Għalfejn huwa importanti u jissemma daqshekk fil-kunsiderazzjonijiet tal-gvern? U tajjeb li jissemma hu biss?

Biex inwieġeb, se nikkwota lill-OECD, l-Organizzazzjoni għall-Kooperazzjoni Ekonomika u l-Iżvilupp, li tgħaqqad 34 pajjiż mill-iktar avvanzati ekonomikament inklużi l-Awstralja, l-Istati Uniti u l-pajjiżi l-kbar tal-Ewropa (iżda mhux pajjiżi bħaċ-Ċina, l-Indja u l-Brażil).

L-OECD tgħid2: 'Il-GDP huwa kejl standard tal-valur tal-prodotti u s-servizzi magħmula minn pajjiż f'perjodu. Huwa l-iktar indikatur użat sabiex jiġu mqabblin pajjiżi kif sejrin ekonomikament, jew imqabbla ma' data oħra. Tgħaqqad, ġewwa figura waħda, l-produzzjoni tal-intrapriżi, istituzzjonijiet mhux ta' profitt, entitajiet governattivi u d-djar ta' pajjiż f'ċertu perjodu, ikunu x'ikunu l-prodotti u s-servizzi, sakemm il-produzzjoni ssir fit-territorju ekonomiku tal-pajjiż'.

Din il-konvenjenza hija r-raġuni il-GDP huwa tant użat fid-diskors fuq l-iżvilupp ta' pajjiż u fil-politika domestika ta' kwalunkwe pajjiż. Wieħed madankollu jrid jirrimarka li l-OECD tkompli tgħid: 'Għalkemm (il-GDP) huwa indikatur tajjeb li jaqbad dawn l-attivitajiet ekonomiċi, mhuwiex kejl tajjeb tal-benesseri tas-soċjetajiet'.

Dak hu l-punt li rrid nagħmel.

Naturalment, uħud mill-qarrejja jistgħu joġġezzjonaw li hemm kejlijiet oħra li jintużaw f'kuntest iktar dejjaq, bħar-rata tal-qgħad, tqabbil tad-dħul tal-iktar nies għonja ma' dawk l-iktar fqar, il-biodiversità, il-kwalità tal-ilma u l-bqija. Dan huwa minnu, iżda jibqa' l-fatt li meta jittieħdu d-deċiżjonijiet il-kbar ekonomiċi, is-suċċess ekonomiku jitkejjel biss, jew primarjament, fuq livell tal-GDP.

Kemm dak li jkun prodott hu ta' kwalità tajba; kemm il-ħaddiema għandhom ħin liberu jew kemm hu iebes ix-xogħol tagħhom; kemm isir tniġġis tal-arja, x'degradazzjoni ssir tal-art, xmajjar jew il-baħar; kemm inqatgħu siġar u intilfu foresti eċċ eċċ, dawn kollha mhumiex meqjusa ta' rilevanza f'din id-diskussjoni.

Għalhekk, hemm proposti għal kejlijiet alternattivi għal kemm pajjiż verament huwa għani. Studju li ġie ppubblikat iktar kmieni din is-sena u ffinanzjat mill-Unjoni Ewropea3 sabet li hemm erba' tipi ta' alternattivi għall-GDP.

  1. korrezzjonijiet għall-GDP innifsu, billi jiżdiedu jew jitnaqqsu ammonti kkalkulati ta' flus li jirrappreżentaw servizzi nieqsa jew il-konsegwenzi negattivi, rispettivament, tal-attività ekonomika. Eżempju huwa l-Indiċi tal-Ġid Ekonomiku Sostenibbli (Index of Sustainable Economic Welfare - ISEW);
  2. indikaturi li jiffukaw fuq aspetti 'ħodor', fejn id-dħul jitkejjel skont kemm huwa sostenibbli u għalhekk jieħu ħsieb l-użu tar-riżorsi naturali, it-tniġġiż, l-erożjoni tal-ħamrija eċċ. Eżempju huwa id-Dħul Nazzjonali Sostenibbli (Sustainable National Income - SNI) tal-Olanda;
  3. hemm ukoll indikaturi li jikkonċentraw bħal dik addottat mill-Bank Dinji fuq it-tfaddil ġenwin (Genuine Savings - GS), fejn minn dak li jien u int nifhmu li hu tfaddil, jitnaqqsu l-valur tat-tniġġiż, l-użu tar-riżorsi naturali, is-self minn barra l-pajjiż, u jiżdiedu bħala investiment l-ispejjeż tal-edukazzjoni;
  4. Fit-tipi ta' qabel, l-indikaturi għandhom valur monetarju. Hemm indiċi oħra li mhumiex mogħtija valur monetarju, anke meta komposti minn numru ta' indikaturi oħra li jistgħu jinkludu l-GDP innifsu. Eżempju hu l-Indiċi tal-Iżvilupp Uman (Human Development Index - HDI) tal-Ġnus Magħquda, li mall-GDP iżżid it-tul tal-ħajja, il-litteriżmu u oħrajn.

Ir-rapport ikkonkluda li dawn l-alternattivi kollha għandhom id-difetti tagħhom, u għad mhemmx qbil universali fuq liem għandu jkun, jew għandhom ikunu, miżmum/a bħala ċentrali fid-deliberazzjonijiet u d-deċiżjonijiet ekonomiċi tal-pajjiżi tad-dinja. Madankollu, ikkonkluda wkoll li m'għandniex nistennew sakemm ikun żvilippat xi indikatur perfett, qabel ma nibdew nużaw alternattivi għall-GDP. Anke indikaturi imperfetti bħall-ISEW jistgħu jwasslu biex jittieħdu deċiżjonijiet pubbliċi u politiċi aħjar milli jittieħdu llum.

Il-fatt li qed isiru studji ta' dan it-tip, huwa ta' inkoraġġiment. Ilna wisq ninnotaw li l-inugwaljanza soċjali qed tiżdied, li l-ambjent spiss jingħata l-ġenb, u li l-bniedem jikkonsma riżorsi b'rata 50% iktar għolja mir-rata li biha d-dinja tista' tirrisuplixxihom4. Hemm bżonn li l-gvernijiet li jmexxuna, imexxuna għall-aħjar, u mhux għall-agħar. U biex jagħmlu dan, apparti rieda tajba, kompetenza u nuqqas ta' korruzzjoni, għandhom bżonn indikaturi rappreżentattivi.


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