In an era of rapid technological advancement and increasing economic complexity, a paradox has emerged at the heart of our economic system.
On one side, technology promises an age of abundance, driving down the cost of goods and services and making them more accessible than ever before. On the other, governments and economic systems are caught in a cycle of seeking inflation to manage growing debts, and raising taxation, a strategy that, while traditionally fueling economic activity, also risks long-term economic stability and public well-being.
This paradox underscores the need for a shift in how we understand and measure economic success. Traditional metrics like GDP, while useful, offer a limited view of a nation’s health, failing to account for the nuances of well-being, environmental sustainability, and the equitable distribution of resources. As we stand on the brink of a post-scarcity economy, it’s clear that clinging to outdated economic theories such as Modern Monetary Theory alone is insufficient. Instead, we must embrace a more comprehensive approach that values human flourishing as much as economic output.
We have to move away from GDP, which incentivises people to consume and work harder and longer but damages our abilities and life experience, leading us to live close together in cities. How much personal wealth and abilities people have is far more important, and how abundant and happy people feel has to be taken into consideration.
One thing it does is it moves less from GDP as a measure and incentive for political parties to make people happy so they vote for you which increases debt and is also bad for the economy long term and causes long term problems, to balancing a more comprehensive overview
A New Model for Economic Measurement
The proposed model suggests a balance between traditional economic indicators and measures that reflect the broader aspects of human and societal well-being. This includes not only GDP but also factors like birth rates, longevity, and the Health Span Index, which together offer a clearer picture of societal health and sustainability.
Central to this model is the Personal Potential Fulfillment Ratio (PPFR), which seeks to measure the extent to which individuals feel they are realizing their full potential across various life domains. Coupled with the Eudaimonic Progress Indicator (EPI), this approach emphasizes the importance of happiness, well-being, and personal growth as key indicators of a society’s prosperity.
Moreover, the Global Competency Benchmark, assessing hard skills and core abilities, enables a comparison across countries, fostering a competitive yet collaborative environment for improving global well-being. This measure acknowledges the importance of intellectual and practical skills in driving economic progress and individual fulfillment.
We do all these things while realising that it’s not perfect – far from it. For example life expectancy as a goal can result in incentives to keep people alive in vegetative states for longer. It’s easy to keep less intelligent people happy than it is more intelligent, so it could incentivise making people less intelligent. That’s why we need a balance, and we need to start.
Beyond Economic Output: A Holistic View of Growth
This comprehensive model challenges the traditional focus on GDP as the primary measure of economic success. Instead, it proposes a multifaceted approach that recognizes the value of making people happy, healthy, and capable of reaching their full potential as a primary driver of economic growth. By broadening the scope of what we consider as indicators of success, political and economic policies can be realigned to support not just economic growth but also the enhancement of human well-being and environmental sustainability.
The shift away from GDP-centric models towards a more holistic understanding of economic and social progress has profound implications. It encourages policies that focus on long-term sustainability and the equitable distribution of the benefits of economic growth. Investing in education, healthcare, and environmental protection becomes not just a moral imperative but a strategic economic policy that enhances national competitiveness and quality of life.
Implementing the New Model: The Role of AI and Big Data
To effectively implement this comprehensive model, leveraging technology, especially AI and big data, is crucial. AI can analyze vast amounts of data from diverse sources to track and understand complex indicators of well-being, from health outcomes and educational attainment to economic inequality and environmental sustainability. This technology enables policymakers to make informed decisions that prioritize human flourishing alongside economic growth.
Conclusion
As we navigate the challenges and opportunities of the 21st century, it’s clear that a new approach to measuring and achieving economic success is needed—one that values the well-being of individuals and societies as much as it does economic output. By adopting a comprehensive model that includes a broader set of indicators, we can move towards a future where economic policies are not just about boosting GDP but about enhancing the quality of life for all. This shift not only promises to resolve the paradoxes of our current economic system but also to usher in an era of sustainable and inclusive growth.
