The Growth Delusion compels the reader to reflect on the futility of what is being pursued and how ill-informed public policies are.
“In short it is a great economy if you are a high-level corporate executive or someone who owns a lot of stocks. For most of the Americans, economic growth is a spectator sport,” said Paul Krugman pointing to the non- inclusive character of the American growth process which pushed large number of Americans to its periphery.
For the past 70 years economic growth or rising GDP has remained the raison d’etre for entire human existence. There has been growth, no doubt, but it has been accompanied by its much despised twin, inequality. And then growth has not made people happier either.
Do we expect rather too much from GDP? Is GDP a relic from the past in a world where mind-blowing technological and digital advancements have taken place? Are we chasing growth at the cost of future generations? Should we give it up or supplement it with other indicators which are more at synch with our lived experiences?
Such concerns form the core of the subject matter of this thought provoking book, The Growth Delusion by David Pilling, prize-winning reporter and editor of Financial Times for 25 years. It is an insightful account of how societies function and what makes life livable and meaningful. He makes a passionate plea to give up our growth fetish and use a dashboard of criteria, besides GDP, to measure what needs to be measured so as to capture the state of people’s wellbeing.
Set in two parts, 14 chapters and 305 pages this wonderfully written book is a delight to go through. Penned in a style which is brisk, fresh and unreservedly straightforward, Pilling, endowed with his massive experience as a journalist, infuses a fresh perspective as to how this cult of growth has destroyed our understanding of how societies work. Packed with inputs from growth experiences across the globe, Pilling’s book compels the reader to reflect on the futility of what is being pursued and how ill-informed public policies are.
The author has drawn useful insights from his interactions with national accounts personnel, policymakers and economists. With his well-founded, razor-sharp arguments and incisive analysis, he unapologetically argues that growth must be knocked down from its pedestal to have a better understanding of what people want from their lives.
Pilling launches a scathing attack on what he calls “the cult of growth”. A growing economy must be making things better for all the people but why it doesn’t feel that way, asks Pilling. And he ruefully answers, “It is because our economic mirror is broken” and reflects “an image which is grossly distorted and increasingly at odds with reality”. That GDP has “merit and serves as a useful policy tool”, is not something that is questioned by Pilling.
The problem is that it does not, and sometimes cannot, take into account everything that matters to people. GDP and growth show complete disregard for millions of work hours the housewives put in to make the lives of their husbands and children comfortable and organised, as Pilling in his inimitable style remarks, “taking care of Adam Smith so that he could write Wealth of Nations is not accounted for”.
In addition, good, bad and ugly, all is lumped together to arrive at this magical figure of GDP. It does not distinguish between medicinal use of marijuana and recreational use of it which leads to substance abuse. Money spent on low cost housing for labour has the same impact on GDP as money spent on paid sex. By that logic countries where drugs and prostitution are legalised will have an edge, over others which still treat these as sins. It is difficult to think of another concept which is ethically, more neutral.
The challenges that national accounts face in underdeveloped countries are formidable. Pilling cites examples of countries in Africa, some of which are still in “hunter and gatherer state” with large non-monetised segments of the economy. Prices cannot always be imputed because there is no market equivalent for most of the things that add value to people’s lives. For example, in Kenya, how the value of drought power of oxen working on the fields or the value of livestock to Maasais whose entire existence depends solely on their herd, is to be imputed? Conventional methodologies fail to register much of these segments because “if you cannot put a dollar sign against it, it doesn’t exist”.
Likewise, Pilling deals at great length, with the challenges that an emerging digital economy throws at GDP. The digital economy is reducing, sometimes eliminating, transport and transaction costs and rendering the consumer immense satisfaction and high quality experience sometimes at zero cost. Sadly it doesn’t reflect in GDP. Instead GDP goes down!
GDP shows scant respect for health and public safety, laments Pilling. It will capture massive funds spent by pharma and gun lobbies in the US but not patients’ sufferings due to overprescribing of drugs and also not the trauma of those who lose their loved ones due to rampant gun violence.
Peppered with David Pilling’s sparkling wit and amusing anecdotes, The Growth Delusion is an engaging read which will leave a connoisseur or an ordinary reader suitably impressed.
Dr Sadhana Singh is Principal and Associate Professor (Economics), Dayanand Girls Postgraduate College, Kanpur, Uttar Pradesh.