For decades more thoughtful economists have warned that GDP growth is a grossly inadequate measure of progress, and we’d be better off making wellbeing our priority instead. Alternative measures of progress are plentiful, though none of them have dethroned GDP as the one metric to rule them all.
However, the coronavirus crisis may have dealt GDP a significant blow – not just in reducing growth, but in putting GDP itself in its place.
When the government was trying to make up its mind about lockdown, there was an unusually clear political choice on offer. The virus was out of control. The cabinet knew that a lockdown would save lives, but it would come at the expense of the economy.
Or we could keep the schools and the shops open and perhaps avoid a recession, but at the risk of overwhelming the NHS and paying a heavy price in human suffering. Politicians argued both sides, but when push came to shove, they chose the health of the nation.
It’s very rare for politics to come down to such a binary choice. It’s always both – economy and health. But this year we’ve found ourselves in this unusual position of having to choose between them, and it has revealed the hierarchy. When we were forced to prioritise one or the other, health came out on top.
Has Covid 19 revealed our ‘hidden preference’?
That doesn’t mean for a moment that the economy is irrelevant – I’m talking here about a ranking of priorities. Choosing wellbeing over the economy doesn’t mean you discard the economy, just that you recognise wellbeing matters more.
I wonder if future economists will be able to look back at this point and identify a post-covid consensus that finally, after all these years, we can acknowledge that some things are more important than economic growth.
That’s a little excerpt of the material I’m presenting in a webinar for Bristol University Press at 4pm GMT today. What has the coronavirus taught us about a fair and sustainable economy? Is it easier now to imagine a grown-up economy that puts wellbeing first? I’ll be drawing lessons from The Economics of Arrival and applying them to our current situation.
Half an hour – 15 minutes presentation, 15 minutes Q+A, all welcome. You can register here.