Posts
Record-breaking plunges in national income do not reflect the full damage to wellbeing by The editorial board.
 |
| Public parks and other green spaces have become much more important but their contribution to the economy will not be registered as part of GDP Photo: © Ben Stansall/AFP/Getty |
The coronavirus pandemic means that 2020 will go down in history as the year with one of the deepest plunges in national income on record. In the UK, which has one of the longest continuous logs of economic output, gross domestic product looks likely to have fallen around a tenth this year, making for the biggest recession in three centuries. Yet even these figures, however eye-watering, do not capture the true collapse in wellbeing, which must be the ultimate goal of economic policy.
In theory, gross domestic product adds up everything that a country produces in one year. The fall in national income during 2020 is easy to explain: interruptions to normal economic activity have meant that far less has been produced. In this regard the drop in gross domestic product will capture some of the missed outings and trips to the cinema, the cancelled holidays and all the meals and drinks with friends that had to be postponed.
There is, however, plenty that the figures miss. To aggregate the value of very different activities that take place in an economy statisticians use market prices — allowing them to compare the production of both apples and oranges on a common scale...
This will remain true when the pandemic has passed. A healthy and well-educated workforce is one of the most important prerequisites to growth and secure, well-paid, high quality jobs are among the best foundations to protect mental wellbeing. Unemployment and poor-quality work can easily destroy people’s sense of self-worth while a robust private sector is essential to provide the tax revenues for health and education. The goal should be to create the kind of society where economic growth and wellbeing go hand in hand.
Source: Financial Times
