An economist friend recently reminded me (not that I needed any reminding) that life’s about more than GDP — a measure economists use to determine how well the economy is doing.
If GDP was the only thing that mattered, Newfoundland and Labrador would be in a pretty sweet spot now.
But as my economist friend points out, the real question is not just how well the economy is doing as measured by GDP, but whether that economy is serving people or citizens. In other words, what about the wellbeing of Canadians, of Newfoundlanders and Labradorians? What about the environment? Democratic engagement? Living standards?
Relying on GDP as the sole measure of how our nation and its citizens are doing doesn’t give the full or even real picture. It doesn’t tell us, for example, how that GDP gets shared up, or divided. GDP doesn’t tell us whether income inequality is on the rise. There’s a lot GDP doesn’t do.
But it is extremely important to understand GDP, how it is divided and how it is shared or rather should be shared.
For a number of years now, our federation has been talking GDP — not just as a straight-up measure of how well our economy is doing, but how Newfoundland and Labrador’s GDP is carved up.
The numbers are staggering. A report commissioned by our federation, conducted by Prof. Travis Fast of the University of Laval, notes that in the last decade the share of our province’s GDP going to corporate profits, for example, was double the national average and the biggest share of all provinces. We also have the smallest share of GDP of any province going into the wages and salaries of Newfoundlanders and Labradorians.
Anyone measuring wellbeing needs to also be concerned with what this says about who is benefiting from our economy.
What’s happening with our GDP — and this lop-sided division of that GDP — is important to understand because it does in many ways also determine wellbeing or set the stage for a bigger conversation about how we might improve upon wellbeing.
Wellbeing has been the subject of much discussion and measuring (economists do like to measure things) by the Canadian Index of Wellbeing Network, an independent group based at the University of Waterloo. It recently released a report asking: “How are Canadians really doing?”
Given all the well-deserved attention to the issue of growing income inequality, you won’t be surprised to find that in the 15 years between 1994 and 2008, Canada’s GDP grew by a robust 31 per cent while our quality of life only grew by 11 per cent.
The report asks: where did all the benefits from the rest of Canada’s economic wealth go? How did the lion’s share go to the richest 20 per cent while the gap with everyone else got larger? A lot of wealth is being soaked up into corporate profits and a good deal of that profit is not being re-invested into the Canadian economy.
It is also true, as the report by the Canadian Index of Wellbeing points out, that GDP can grow because of spending on things like tobacco, war and natural or human-made disasters. None of these things improve wellbeing. In fact, they have a pretty clear adverse impact on the wellbeing of people.
The Wellbeing Index report examined eight broad-based areas to see how Canadians are doing: community vitality, democratic engagement, education, environment, healthy populations, leisure and culture, living standards and time use.
The report notes that the index is about telling a story that “GDP was never designed to tell.” There is little doubt that this story must be told.
But there are missing pieces.
Globalization and the growth of corporate power is unfortunately not part of the story being told by the index group.
But these things certainly impact on things like living standards, democratic engagement, community vitality, the environment, decision-making and indeed overall wellbeing.
While the impact of globalization and the rise of multinational firms and their impact on wellbeing may not be easy to measure, it is certainly worthy of examination in any discussion on wellbeing.
The size of multinationals and the power they wield with respect to controlling economic development and the influence they have with governments has a definite impact on wellbeing and it should not be ignored.
In this developing discussion on wellbeing, not to examine our economic system and its byproduct — globalization — is about as wrong as only relying on GDP to measure the health of a nation.
Indeed much of the democratic disengagement we see today is a reflection of and related to just how powerless citizens feel in this matchup against multinationals and the governments who cater to them.
So yes there is more to life than GDP. But there is also more to wellbeing than is currently being considering.
Lana Payne is president of the
Newfoundland and Labrador Federation of Labour. She can be reached by email at email@example.com.
Her column returns Nov.19.