close
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

August 15, 2020

Mere numbers

Opinion

August 15, 2020

A nation’s GDP has long been accepted as the definitive, standard index of it’s economic growth. The concept of GDP was developed by Simon Kuznets to quantify US national income after the Great Depression of the late 1920s and early 1930s. It was further refined by John Maynard Keynes and became a cornerstone of assessment in Keynesian economic theory and practice.

In reality, GDP merely measures the size of an economy; it gauges quantity rather than quality, and overlooks the fact that economic growth is not an end per se but a route to a better standard of life. However, even as a metric of growth GDP is already acquiring an anachronistic tinge in a changing world that is relocating it’s economic focus from goods to services.

Simply having more dishes on the table does not always equate to a good meal. For that, both the taste and the actual dining experience also matter. Economic growth becomes meaningless in the face of an inequitable system of income or wealth distribution. Rather than adding to well-being, such growth only promotes discontent and alienation.

Even in pure economic terms, this inequality shifts a larger share of income to rich households that save rather than spend and thus slows down further growth by suppressing consumption and aggregate demand. A lopsided distribution system means that the richest one percent of people own 46 percent of global wealth and more wealth than the bottom 90 percent of the population put together.

The concentration of wealth within a very limited elite also translates into greater political power in the hands of this exclusive group with its ensuing negative effects on social cohesion and national stability. There are also multiple studies that link the incidence of crime in a society to high levels of inequality of income and wealth. Simple economic growth without a just distribution system will also fail to reduce poverty. In Africa, there was an average economic growth of 4.7 percent per annum between 2000 and 2018; yet the number of poor people rose from 278 million to 413 million.

Economic growth must not only have a rate but also a direction. The Human Development Index was the brainchild of Pakistani economist Mahbub-ul-Haq and has been adopted by the United Nations as a yardstick for comparative assessment of different countries in the basic categories of life expectancy, education and per capita income. It is a better tool than economic growth numbers for assessing national welfare and is a more reliable prognosticator of its future. Though it’s HDI value has increased by almost 39 percent between 1990 and 2018, Pakistan still ranks at 152 out of 189 nations with a life expectancy of 67.1 years and a mean schooling period of only 5.2 years.

For economic growth to result in better quality of life we must divert substantially greater proportions of our national income to healthcare and education. The ongoing Covid-19 pandemic has brought home this message in a very stark way. It is perhaps the only silver lining in this global catastrophe. No investment in education can be enough as without high quality education we will get left behind in the fast shifting sands of this technological age. Similar emphasis needs to be placed on containing population growth, which threatens to nullify the benefits of economic expansion and also deplete the planet’s resources.

The Human Development Index is a start. It measures only a few basic human development indices and we need to look beyond it to other dimensions that impact the quality of life and human happiness. These are both tangible and intangible. An ecological critique of economic growth demands that we seriously look at the pernicious environmental effects of industrial development and develop eco-friendly modes of production. Access to clean water and good sanitation, adequate housing and security are all areas of human development that need our focus.

There is a cohort of intangibles that significantly influence our quality and enjoyment of life, that are palpable yet difficult to quantify or measure. Human freedoms of thought, expression and association are essential to a good life and institutions need to be developed to ensure and guard these freedoms. Tolerance is the cornerstone of social and political stability, while promotion of cultural activities and those relating to art, literature and enjoyment add to the richness of the human experience. Access to justice, availability of opportunity and employment, accountability and good governance all contribute to the well-being of a society and must be essential accompaniments of economic growth.

We are at the cusp of a new economic era. Rapid expansion and innovations in technology hold the promise of ushering in new levels of economic growth, but these must be coupled to sustainable improvements in infrastructure and a fairer system of distribution that reduces the disparity between the rich and the poor.

Very importantly, we must realize that economic growth alone is not a recipe for human happiness. To have relevance to the life of all our citizens, it must also be aligned to measures that address all aspects of human development; a holistic approach rather a narrow outlook that is based on economic figures alone.

The writer is a senior surgeon, poet and sports aficionado.