How do we create a better economy?
What does it mean for a country
to have a healthy economy?
What does a healthy economy
even look like?
Does it look like this?
What about like this?
Economist Kate Raworth shared a
pretty interesting answer to this question
on the TED Interview podcast.
And it challenges an idea that most
economists take for granted.
We live— particularly in the West,
particularly in the last 150 years—
in a society that has a very strong belief
that growth
is the sign of progress.
And to a certain extent, it’s true.
We love to see our kids grow.
We love to see nature growing in spring.
Growth is a wonderful,
healthy phase of life.
But in our economies, it’s like we’ve
turned to Peter Pan economics—
the economy that never wanted to grow up.
It wanted to grow and grow and grow
forever.
And it becomes this permanent phase.
But we already know, in our own bodies,
in our own lives,
that there’s another side to this metaphor
of growth that we love so much.
If I told you, my friend
had gone to the doctor,
and the doctor told her she had a growth,
that already feels completely different.
Because in the space of our own bodies,
we know that when something
tries to grow endlessly
within this healthy, dynamic living whole,
it is a threat to the health of the whole,
and we do everything we can to stop it.
But when we step into our economies,
for some reason,
we think that endless growth is progress.
And we are now running
into severe problems
because we are addicted to endless growth.
Simon Kuznets, he was asked in the 1930s
by US Congress to come up,
for the first time, with a single number
to measure the output of the economy.
America could say we produced so many tons
of steel and so many bags of grain—
but can we add it all together?
So they commissioned him
to do this and he said,
“Yes, I can. I can add it all together
in one number.”
National income, what we now know as GDP—
but he gave it with a caveat.
He said the welfare of a nation can
scarcely be known from this number,
don’t mix it up with welfare, right?
Because it tells us nothing about
the unpaid caring work of parents,
tells us nothing about the value
that’s created in communities,
because that’s not priced,
and it’s a measure of the flow
of economic value.
It tells us nothing about the
living world, the forests, the mines
that get run down in order
to create this value.
But the convenience, the temptation,
of this single number was so great
that politicians sort of tucked it
in their armpit and carried right on.
And we ended up in a horse race
of pursuing GDP growth.
The dream is that GDP can
keep on increasing,
we can have increasing financial returns,
but that we can decouple
from using Earth’s resources.
We can use less carbon and less metals,
and minerals and plastics,
and we can use less
of the Earth’s land surface,
and separate these two:
ever rising GDP and falling resource use.
It’s a fabulous dream;
would that it would be true.
We are at a time of climate emergency,
of ecosystem collapse.
We need to radically reduce
our use of Earth’s resources,
and we're nowhere close to that.
So I offer it as a compass for 21st
century prosperity.
And this compass, silly though it sounds,
it looks like a doughnut
with the hole in the middle.
So imagine from the center of it,
humanity’s use of Earth’s resources
radiating out from the middle
of that picture.
So in the hole,
in the middle of the doughnut,
that is the place where people
don’t have enough resources
to meet the essentials of life.
It’s where people don’t have enough
food or health care,
or education or housing or gender equality
or political voice or access to energy.
And we want to leave nobody in that hole.
We want to get everybody over a social
foundation of well-being,
so all people on this planet can
lead lives of dignity
and opportunity and community.
And in low income countries,
it absolutely makes sense,
yes, let’s see the economy grow in ways
that invest in health and education
and transport for all.
That was a very 20th century project.
We're in the 21st century.
We have Earth system scientists
who started looking at the impact
we were having on the climate,
and the loss of soils and acid rain,
and the hole in the ozone layer,
and the collapse of species.
And they said, hang on.
We’ve been ignoring our planet.
In the growing to meet human needs,
we have ignored the fact
that we are deeply dependent
on this delicately balanced living planet.
It’s the only one we know of out there.
And when we use Earth’s resources
in such a way
that we begin to push ourselves beyond
the living capacities of this planet,
we are literally undermining the life
supporting systems on which we depend.
So, hang on, just as there’s
an inner limit of resource use,
and we call out poverty and deprivation,
there’s an outer limit of humanity’s
resource use.
That’s ecological degradation.
And we are breaking down
this planet on which we depend.
So there you get the doughnut,
you get the inside,
which is leave nobody behind in the hole.
But don’t overshoot the outer ring either.
And so the shape of progress
is fundamentally changed.
It’s no longer this ever rising line
exponential growth,
that we hear about in the financial news
all the time.
It’s balance.
To me, a source of real hope is
that we deeply understand this
at the level of our body.
You go to the doctor, the doctor will say,
have enough food, but not too much,
enough water, oxygen, exercise, sleep,
anything you like—
have enough, but not too much.
Our health lies in balance.
And if we can take that metaphor
from the human body to the planetary body,
we give ourselves a cracking
chance of understanding
the deep interdependence of our world.
