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For Wales, see Bhutan?

SIR Jonathon Porritt’s valedictory j’accuse against a government under which he has served with barely suppressed disdain may have been predictable, but that does not mean it should be dismissed. Among his many grievances was included an administration wedded to “consumption-driven economic growth, regardless of some of the costs that growth generates.”

Porritt’s complaint of an economic strategy insensitive to either human or environmental wellbeing is not new. For three quarters of a century social scientists, environmentalists and religious leaders have challenged the adequacy of Gross Domestic Product – GDP – as a measure of progress or of broader wellbeing. This includes Simon Kuznets, the Nobel Prize winning economist who helped standardise it in the first place. Likewise, the notion (discussed here last week) of a saturation point at which wellbeing fails to grow alongside wealth has a 35-year academic lineage, and is today supported by an increasing body of evidence. Nobody, meanwhile, suggests that the current sudden decline in GDP does anything other than increase misery. In either recession or boom, therefore, the overall wellbeing of people in Wales seems to have little prospect of increasing any time soon. And if that is so, what is the point in arguing about public services, or pretty much all else government does? What, indeed is government for if not to seek to improve the lot of its citizens?

The answer seems to be to increase our economic output, regardless of other consequences. Because of its robustness, governments everywhere are reluctant to depart from GDP (or GVA in the UK) as the basic measure of progress, even if they accept the thesis outlined above. On one level, this might just be dismissed as a frustrating inflexibility that merely leaves us in the dark about the true extent of the progress we are making as a society. But an undue emphasis on GDP is more malevolent than that; in a target-driven age the goal of increasing GDP (and specifically per capita GDP as a proportion of the UK average) is the gold medal. Inevitably, policy is geared toward this goal, and it suffuses the overall agenda. Economic development is skewed towards those areas where activity will increase most strongly. Infrastructure is developed to support increased economic activity. Everywhere, the first test is of the effect on output. And, even if the increasingly rigourous but nonetheless secondary tests of environmental impact are met, little direct heed is paid to the impact on people’s broad wellbeing.

But if the UK remains wedded to the notion that GDP growth equals progress, must Wales also? In 1998, the tiny Himalayan kingdom of Bhutan declared that it would make the task of increasing Gross National Happiness, rather than Gross Domestic Product, its primary objective. Despite remaining unique in such an ambition, the concept of measuring and indexing happiness is now being developed on several different fronts. The French President Nicolas Sarkozy has shown interest in exploring such methodology, with a view to replacing or augmenting GDP, and a number of such indices already exist. Economist Richard Layard insists that happiness can now be accurately quantified in such a way as to measure the impact of policy against it. Even if you dispute this, it is surely plausible to suppose we are able to measure the narrower idea of welfare, if only by examining changes in such things as rates of literacy, infant mortality, crime, mental illness and life expectancy? All the things, indeed that are already measured and have already been indexed.

There is nothing to prevent the Assembly from introducing its own index of Gross National Happiness (GNH) either independent of, or weighted by, GDP/GVA. What prominence it chooses to ascribe to this measure is entirely up for debate. A bold approach would be to declare this to be the primary measure of policy success, and dispense with simple GDP altogether. But this would be a politically difficult move in a period of negative GDP growth, and in an era in which Wales continues to get poorer relative to the UK as a whole. It would risk appearing as if the WAG wanted to do away with statistics that put its performance in a bad light.

Perhaps the way forward is therefore to introduce GNH alongside GDP, and begin to demonstrate the relationship, or lack of it, between the two. This would make it easier in the long run to develop policy approaches that opt for an increase in wellbeing over an increase in wealth, where those two ends conflict. If, as discussed last week, the main wellbeing driver is inequality (for which read income inequality), a robust measure of GNH will demonstrate the need for the Assembly to acquire the powers – either through redistributive taxation or through legislation to narrow the pay gap – to do something about it.

Postscript: This article over at the IWA’s blog appears to suggest some movement on the issue.