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Our economic model needs a redraft


Our economic model needs a redraft

GDP needs to be replaced with an economic index that includes health and wellbeing, says Peter Kelly


Our economic model is broken. Such models always run their course and need a rethink and a redraft.

An economy can function smoothly with a small percentage of the population feeling excluded, hopeless and in despair but there is a tipping point. If the percentage who feel disenfranchised gets too high, frustration will grow to the point of civil unrest.

I believe we are on the precipice of that unrest. We are looking at 12-18 months of strikes and disruption. I am just back from the Edinburgh Festival where the bin workers are on strike and the streets are awash with litter. It looked pretty apocalyptic and might just be a taste of things to come.

Every crisis creates opportunities. The opportunity here is to redraft the economic model. Hopefully the new version will move away from American, laissez-faire, libertarian, free market, late-stage capitalism (or whatever you want to call it) and move towards a new form of capitalism that embodies the importance of health, wellbeing and environmental protection.

GDP as the main compass of a country’s direction has got to go. It is an outdated measurement. A country can have a rising GDP coupled with increasing clinical depression, obesity, diabetes and ecological collapse. We have to stop deluding ourselves: that is not winning.

A much better measure of a country’s success is an economic measure that takes into account health and wellbeing. I would nearly go as far as to completely replace GDP with a health and wellbeing measure, as I believe a healthy population to be a more productive population. Look after your health and wellbeing, and the economic fruits will fall into place.

Paul O’Neill’s tenure as the CEO of Alcoa is the stuff of legend. Alcoa is a massive American company that produces aluminium. When O’Neill took over and had his first share holder address, all he talked about was health and safety.

The Wall Street guys panicked. They thought a hippie had taken over the company and was going to drive it into the ground. They were not accustomed to CEOs talking the way O’Neill talked or setting out such a vision.

O’Neill knew that, for most people, if you look after them and their wellbeing, they will look after you and give of their best. If you had bought a million dollars’ worth of shares in Alcoa when O’Neill took over, you would have received a million dollars’ worth of dividends over the course of his reign, and your million dollars’ worth of shares was worth five million when he resigned.

To get out of the economic dark days we have ahead of us, we need our leaders, business people and politicians to park their cynicism and become visionaries like O’Neill. The NHS has a recruitment problem: is the NHS a healthy environment to work in? Does it consider the safety and wellbeing of its staff as paramount?

O’Neill realised that every time a worker gets injured, that worker has to take time off work. Time off work means lower productivity and poorer moral for the other staff. If you want to get the best out of people, pushing people to the point where their life/work balance becomes unhealthy leads to lower productivity, more sick days, and possibly earlier retirement due to illness. It is counterproductive.

A new economic system has to consider worker health and wellbeing. It has to take into account that the planet can only take so much damage before it starts to react. Doughnut Economics by Kate Raworth is the best book to read to get idea of how a new economic model should be constructed.

Like most great ideas , it is very simple. A doughnut is made up of two circles, one big, one small. The small circle is the amount of resources we need to use to give everybody a life of some dignity. The larger circles are the limit of resource usage that leads to ecological detriment. We need to build an economy that sits between the two circles, thus the name doughnut economics.

Now it is easy to be defeatist about the climate crisis, but we have to make changes and try fight it. We could well be beyond the point of no return, where ecological collapse and extreme weather lead to the breakdown of civilisation and a return to the dark ages.

Crises are the best times to make things happen. We have two choices now: redesign our economies to incorporate health and wellbeing and environmental protection, or take the fascist authoritarian route to control the civil unrest. For me there is only one option.

Peter Kelly is a community pharmacist based in London and a stand-up comedian.


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