By me, on @RSAMatthew and whether stagnation means we can challenge #growth narrative

One of the things that has surprised me about advocates of ecological footprinting (on which basis we have been ‘eating into capital rather than living off the interest’ of the biosphere since the 1980s) and of capitals metrics (where we measure wealth by adding up social, environmental, human, physical and financial capital, and then watch the trends) is that they have not in the past used the narrative that we have been in recession for a long time.

The evidence has been there to make the case for donkey’s years.

So, while I agree that there is an opportunity here, because the economic situation is so high profile and affecting most people personally, the big question is ‘where is the leadership going to come from to make these ideas mainstream?’. There’s even a populist case to be made that we’ve been tricked by always hearing about mean, rather than median, income: the top X% have been getting wealthier at the expense of the rest of us. You don’t even need to reference capitals models or wellbeing metrics to make this case. But even this sort of argument seems beyond those in the political mainstream.

Remember when you were given an injection at school? You were told to look away and then, before you had time to panic, the nurse was telling you it was all over. Maybe the best way to get people to accept something daunting is to tell them it’s happened already.

June 28, 2011 by Matthew Taylor

This thought occurred to me following a conversation yesterday and reading an article today. The conversation was with Jonathan Porritt, the Founder Director of Forum for the Future and perhaps our most influential and distinguished environmentalist (by the way I am very impressed by the ambition and rigor of Forum’s new strategy, based as it is on fundamental system reform).

As our conversation ranged far and wide,we agreed that in these times of economic difficulty and public spending austerity, the suggestion we should question traditional ideas of economic growth seems to most people at best irrelevant and at worst barmy.  We didn’t pursue the issue much further but the implication was that it is only when growth feels reasonably secure that we can begin again to ask ‘but what kind of growth?’

Then, this morning, I read a powerful article in the Financial Times headlined ‘spectre of stagnating incomes stalks globe’. Here is a quote from the piece:

‘Median male real US earnings have not risen since 1975. Average real Japanese household income after taxation fell in the decade to mid-2000. And those in German have been falling for 10 years’.

We know from research commissioned by the TUC and the excellent work of the Resolution Foundation that the same is broadly true for the UK. The future looks no better (indeed it looks much worse in the short term for many countries including the UK). The impact is not just on those in the ‘squeezed middle’ but, arguably, on the whole liberal market model.

A second FT article on the same topic concluded thus:

‘Dick Longworth of the Chicago Council on Global Affairs is more categorical ‘this is a consumer society and they’re the consumers…if they don’t buy, we don’t survive’

It is important to understand that what we are seeing is not the result of a downward blip but the collapse of the device – excessive household and national borrowing – which disguised the reality for the decade up to 2007. This is a profound crisis of global capitalism in the developed world.

But if you put the FT piece together with the Porritt conversation a surprising possibility emerges. Instead of talking about abandoning traditional growth as some kind of outlandish and unrealistic green vision, how about recognising that for most earners in the West no growth (in their living standards) has been the reality for over a generation.

In other words, the question is not how do we create a different model of growth but how do we adapt to the long drawn out end of the traditional model of growth? Or, to put it another way, how can the quality of our lives and our society improve even if for the majority of citizens disposable incomes (including the social wage of public investment) are not?

Read more at www.matthewtaylorsblog.com

Wondering if the new @Kaiser_Chiefs album is an EG of how to do Prosperity Without Growth #decoupling

Anyone who has read Tim Jackson’s brilliant Prosperity Without Growth will be aware that there is plenty of evidence of industries and economies becoming more carbon efficient (per £ in the economy), but no examples of absolute decoupling: economic growth with falling throughput of natural resources / emissions.

So there is a massive question mark over the concept of ‘sustainable growth’ – not that you’d know this from listening to most mainstream politicians.

And so I occasionally find myself in conversations where we try to imagine what a decoupled economy would look like; I know good people who believe that economic growth is possible without breaching environmental limits. This economy would be much more localised than at present, less focused on goods and more on (largely virtual) services.

This came to mind when I came across this morning the launch of the new album by Leeds band the Kaiser Chiefs. Have a look yourself <actually, you can’t anymore – March 2012 edit>. I like it as a potential example of the sort of non-local thing we’d buy and sell in a busy, high-GDP economy that can’t afford much use of natural resources. Innovative, engaging, co-creating (with such a sense of ownership that even a CD addict might give in and start downloading): what’s not to like?

Why Wellbeing is a Big Deal

I’ve held back from blogging on the moves to introduce an ‘official’ wellbeing or happiness measure, as I think of a new angle on the issue about twice a day, but it’s important stuff so I’ve decided to focus on one key point: that central government introducing a wellbeing/happiness measure is a great opportunity to embed localism.

Jo Swinson MP argues that the move is good for policy, good for democracy and of symbolic value. I’d like localists to go further: to ensure that the move is good for local policy, local democracy, and more than symbolic.

To do this, we need to start treating the new measures as paradigm changing. Instead, it feels to me as though the mainstream response has been a narrow one: that measuring wellbeing means that policy-makers will focus more on enhancing wellbeing, with the commentator’s view resting on whether or not they think that this is appropriate. So in what way is this stuff paradigm changing? As the Stiglitz Commission and others have ably demonstrated, relying on GDP as the main measure of a nation’s success is fatally flawed, for two main reasons. First, our success is about much more than economic success; second, GDP is flawed even as a measure of economic success. The PM’s adoption of much of this analysis in launching the initiative shows how mainstream this view has become and also, I hope, opens the door to a more radical interpretation of the move than I’ve described above. I’ve blogged about these ideas before for some time, so won’t repeat myself much here.

However, in respect of Stiglitz & co, we need to start by recognising the limitations of a wellbeing or happiness measure. The case for measuring wellbeing should not be simply that our current metrics are lacking a bit, but that our current metrics are fundamentally flawed, as they do not have a true understanding of our wealth. The Stiglitz Commission proposed measuring wealth in terms of a number of different capitals (natural, human, social and physical). Do this, and we can track our success much more effectively than we can by looking purely at the size of the economy.

This is not easy. There is much detail and many practicalities that are not yet clear, but it is the future, because we manage what we measure, and economic growth has now outstripped our planet’s ability to cope. But the cat is out of the bag; already, it is expected that wellbeing measures will be shot through the Treasury’s famous Green Book.

Jill Rutter, currently at the Institute for Government, suggests that the real test for wellbeing is whether explicitly incorporating it into policy making makes governments do different things, and adds that The Treasury looked at this a few years ago and concluded the answer was no. I think that this supports my argument; if it’s just seen as a clever piece of social research, or evidence to feed into some evidence-based policy, then we are limiting not only its scope, but its impact.

This sounds, though, like an argument about the national accounts; so why should localists argue this case?

First, a wealth measure such as that suggested by Stiglitz would gives us all the chance to understand how well our places are doing, which strikes at the heart of what local government is for. I’ve often said that the central duty of a local authority should be to secure the future viability of the place, and it seems to me that a capitals-based measure of wealth is a big part of measuring how well this is being done. Regeneration by shopping mall would make much less sense if decision-making were driven by a truer, more rounded definition of wealth.

Second, and linked, is the understanding – both unremarkable and unnoticed – that national wealth is the sum total of our local wealth. Given that these measures will be people-centred, is there really a case to be made that my wellbeing or happiness is different from a national or local (or sub-local) perspective? Surely not; I have different feelings about my neighbourhood, borough, city/county and nation but, as a citizen, I do not have a ‘national wellbeing’ and a separate ‘local wellbeing’.

If we work towards a capitals-based measure of wealth being both the core local and core national metric, then we will have solved the problem of top-down, centralised target setting for good. I don’t believe that this is pie in the sky. Look at Maryland, a US state which has introduced the GPI (genuine progress indicator), replacing GSP (gross state product) as the main measure of success.

 So, for this opportunity to be realised, there are two main arguments to be made by localists. First, that the new measure should provide both local and national metrics, with a clear understanding that national wellbeing is the sum total of wellbeing in all localities; second, that a course should be explicitly charted towards such measures being part of the national accounts. These are achievable goals, it seems to me. But the case is not being made, as yet, by the local government family.

It’s important to look at the challenges, as has LGIU’s Jonathan Carr-West, but I believe that we can aim higher than this. We can see this as the vital first step to measuring our success and wealth at local level in a way that will: give local government and residents a holistic way of understanding our places’ success; in the long-term, drive the primacy of local indicators over centrally-driven ones; and, progressively, reward rounded, sustainable decision-making.