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New indicators for new public policies

Philippe Frémeaux, 12 October 2015

[English] [français]

While introducing the 2015 finance bill, the French government must present this year, for the very first time, a report assessing the past and upcoming public policies through other indicators than Gross Domestic Product (GDP) and its growth. In particular, it must assess their effects on the environment and inequalities. The release of the report follows the adoption by the French Parliament, in April this year, of the law proposal by Eva Sas, MP and member of the French Green Party, marking a first step towards a questioning of the supremacy of the GDP indicator.

What exactly do we hold against GDP?

Criticising GDP as the only indicator of a country’s good health is not new. It has been carried out by well-known researchers such as Jean Gadrey, Florence Jany-Catrice, Dominique Méda or Patrick Viveret. Even though the work of the Stiglitz Commission (2008 – 2009) gave to these critics an official recognition, it took six years for the shortfalls of the GDP indicator to be recognized by law.
What is wrong with GDP? The problem is it only acknowledges the flow of monetary wealth. It does not take into account volunteering nor house work, even though they essentially contribute to our quality of life. When people work endlessly more and don’t have any more spare time to take care of themselves or their children, GDP still grows while the quality of life sharply declines!

GDP doesn’t take inequalities into account either, even if their great influence on our collective well-being is known, as demonstrated by Richard Wilkinson and Kate Pickett in their book “Why Equality is Better for Everyone”, published in France in 2013 (Pourquoi l’égalité est meilleure pour tous, only in French, joint Edition Les petits matins/Veblen Institute in partnership with Etopia).

Finally, it doesn’t assess the consequences of economic activity on the environment. GDP still grows when greenhouse gas emissions increase, and in with it, climate change. In short, GDP is an obsolete tool for the challenges of today.

How to choose the right indicators, and by whom?

The answer to that question cannot obviously be left to experts alone. It must be at the centre of the democratic debate. Beyond the debate on the “correct” wealth indicators, the purpose of public policies and even the objectives set by our society are at stake. Releasing these complementary wealth indicators is not an end in itself, as reminded by the report from the Institut pour le développement de l’information économique et sociale (Institute for the development of economic and social information - Idies), Veblen Institute and the Fondation de l’Ecologie Politique (Political Ecology Foundation, Fep). They can only make sense if they influence the priorities set by public authorities in order to make economic activity more sustainable and society less unequal.

Leaving behind the hegemonic GDP: a collective challenge

As the news headlines report every day, enhancing GDP growth is the priority of those in charge of public affairs. But the media, the education system and the academics – first of which, the economists – bear an equal and heavy responsibility as they influence and shape the public opinion. They play a decisive role in withholding the centrality of GDP and its growth by emphasizing it as the only indicator of our society’s progress. A posture justified by mass unemployment, as growth remains synonymous with employment, and employment only linked to access to income. Nevertheless, since return to a strong and sustainable growth is neither desirable nor possible, we desperately need to shift our scope of understanding. It is not serious to rely on a hypothetical return to growth to lower unemployment and guarantee a decent earning to everyone.

Our challenge today is to ensure that economic activity, regardless of its performance level, really benefits everyone. It is high time to put back imagination into power. The new law will not get us there, but let us acknowledge that it is a first step in the right direction.

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