Following Part 1 of the enquiry this part questioned witnesses on how environmental sustainability could be incorporated better into the economic measurements that guide Government policy.
The full inquiry of over an hour can be viewed on parliamentlive.tv however we have separated out the following clips covering the discussions around the use of GDP and how it does, or doesn’t, represent a valid measure of prosperity and how other measures should now be regarded as more fit for purpose in the 21st century. The witnesses in this session were as follows:
- Professor Kate Raworth (KR) – Co-founder and Conceptual Lead, and author of Doughnut Economics at Doughnut Economics Action Lab.
- Professor Henrietta Moore (HM) – Founder and Director at Institute for Global Prosperity, and Chair in Culture, Philosophy and Design at University College London (UCL).
- Matthew Lesh (ML) – Head of Public Policy at Institute of Economic Affairs.
Clip 1 (15 mins) How useful is GDP as the primary methodology and can it cope with the increasing demands of how we view prosperity in our economies?
ML: who, as a traditional economist, accepts that GDP as a measure is flawed but believes it’s still the least worst option as a measure of prosperity. He extols the virtues of GDP and also mentions the UK’s track record in decoupling economic growth from its carbon emissions (see clip 2).
KR: who isn’t a traditional economist, puts the case for a dashboard of measures, in addition to GDP, and also introduces an element of Modern Money Theory surrounding the ability of governments, like the UK, to pay for essentials without worrying about tax revenues.
HM: GDP is not a good proxy for prosperity, it’s a 20th century metric not fit for the 21st century as it tells us nothing about distribution (of income), sustainability, inequality and environmental degradation. She talks about speaking to people in regions over what’s important to them for their prosperity.
Clip 2 (17 mins) Are policy makers trying to have their cake & eat it, when they argue that it’s possible to tackle the climate & nature crisis whilst continuing with economic growth?
KR: Yes they are. She dismisses stories of “Green Growth” and points out that there’s little evidence that we can decouple carbon emissions and our material footprint from economic growth at anything like the speed or scale needed. She goes on to dispute ML’s earlier opinion on the UK’s record on decoupling and how our structural dependency on GDP growth will hamper our ability to deal with the climate & nature crisis.
ML: continues his support for economic growth as a solution to environmental and social problems, (as predicted by the Kuznets Curve*) but that we need to price carbon, and find ways to price other damage to the natural world, in order to bring them into the economic (GDP) equation.
HM: we need to recouple social and economic prosperity and embed it into environmental prosperity and that market solutions alone can not achieve this. We also need to reshape and create new markets dependent on regions.
KR: As a follow on to HM, the Doughnut Economics model is being used in cities, regions and local governments around the world, in the way that HM describes.
Clip 3 (5 mins) A question to KR – how could policy makers reduce the dependencies on growth built into our economic systems?
*The environmental Kuznets curve suggests that economic development initially leads to a deterioration in the environment (and an increase in inequality) but, after a certain level of economic growth, a society begins to improve its relationship with the environment and reduce levels of environmental degradation (and inequality).