So, in the middle of an oxymoronic ‘jobless recovery’ why do we continue to confuse economic growth with economic health?
If GDP is projected to grow by 3% in 2009, but unemployment is up, our stacks of unpaid bills continue to rise, and we feel less secure about our retirement or ability to pay for kids’ college, then should we feel ‘the economy is back on track’?
This is the common sense message of the latest, and to my knowledge most mainstream, report urging policymakers to adopt new measures of national economic health and update or drop outdated metrics like GDP, which count illness, pollution, and natural disasters in the ‘good column.’ The UK-based, New Economics Foundation has for years offered alternate measures of National Accounts of Well-Being. Sorry to spoil the surprise, but like in global rankings on education, the US doesn’t stack up so well.
The report confirms our own experience that a period of high economic growth has not resulted in greater prosperity or security for all of us. And, importantly, that the way by which growth is achieved (i.e. depleting sources of cheap oil) will impact our children’s ability to enjoy even our current quality of life.
In the next chapter of this story, we’ll see that what’s true for countries, is true for companies.