“We’re throwing away Gross Domestic Product. A toxic indicator”

Stop seeing Gross Domestic Product as a measure of a country’s economy. To be precise, “trash” as it is a “toxic indicator”. Affirmation is not the epitome of a student slogan, but the call made by a parliamentarian from the European People’s Party (EPP) during a well-attended conference devoted to the search for alternative economic models to guide the transition to Europe.

Growth based on the capitalist model has been showing its limits for years. As the environmental crisis unfolded, its unsustainability became more evident: economic inequality, climate catastrophes, global health erosion, and the mental health of workers under extreme pressure. University professors, activists, economists, lawmakers met in Brussels to discuss these issues during a three-day debate called Beyond Growth. The panelists agreed that a change was necessary in economic policy decisions, determined by oversimplified parameters that affect society as a whole and do not take into account the complexity of human needs.

In the first place, the Gross Domestic Product came to the dock. Sirpa Pietikäinen, Finnish parliamentarian of the European Parliament (EPP) and co-organizer of the conference, strongly attacked GDP. “Gross domestic product needs to be thrown away. This is a toxic indicator,” said the MEP. “GDP is a symbolic indicator. There are others. We have five years to act and we need to change our lifestyle.” .

miscalculations

Various interventions by in-line experts highlighting the need to acknowledge the complexity of indicators in order to avoid the illusions created by open data that leads to the oversummarization of key elements. And they warned against actual estimation and evaluation “errors”. “The US central bank created billions of dollars that were supposed to contribute to inflation, but there was actually no inflation. Another model is needed to calculate the effect of money creation,” said Gaël Giraud, French economist and director of research at the National. Scientific Research Center (Cnrs).

The expert emphasized how the effect of global warming was also miscalculated. “Some economists say that a rise in temperatures by more than three degrees would cause damage equivalent to a loss of ‘only’ 10% of global GDP. Politicians believe these are based on these estimates and believe there will be no economic collapse, but other calculations in GDP under the same conditions. 19% reduction”.

In addition to calculation errors, it is a matter of understanding which elements, in addition to economic ones, should be integrated into a more complex indicator. “We depend on these indicators. To get rid of them, our society needs real therapy, and we need a shared vision to do it,” said Robert Costanza, professor and systems ecology expert at University College London. I would like to quote the statement ‘all models are wrong, but some models are useful’ to underline that the better we understand how real dynamics work, the more we can build a model that allows us to achieve sustainable well-being.”

Source: Today IT

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