Governments are chasing the wrong rainbows

Author, an FT contributing editor, chief executive of the Royal Society of Arts and former Chief Economist of the Bank of England

For many governments, growth is the new god. Even in the Equanicals, the growth scripts their political khutbas. For Jilliot, which includes the UK government, growth is a single important mission in their lives. It puts them in the permanent purification state, the reason for the celebration of each GDP (if good) or the confessional (if bad).

Religious devotion to an abstraction, and basically irrelevant, statistical concept is barely a century old, daily citizen, bizarre. However, the initiative reflects a new global economic reality: the growth has been materially downed. Among the G7 countries, when you compare the first 25 years of the 21st Century to the 20th final 25, the growth rate becomes more than half.

This downsift has significantly adversely knocked-on social consequences to weaken social consequences, swelling of the public and straining government services. In combination, it has expressed the displeasure of the public and eventually the political fragility. The recovery of growth will reverses these powerful headwinds, economic and social and give political liberation.

But isn’t it? In this century, GDP growth, especially in the lower-income families, had no guarantee of the growing standard of living. In the United States, the real income of the middle of the 1980s has rarely increased. In the United Kingdom, Midian Real Salary is less than the duration of the global financial crisis. No Let-Up is in sight: The revenue below is expected to be less than the end of this Parliament, as the previous event was.

During the Brexit referendum debate, an audience member reprimanded a panelist: “This is your bloody GDP, not us.” This was the statistical truth in Quiip. In the UK recently, the United States and beyond the growth were something other than both geographically and economically included. And as Brexit depicts, non-inclusive growth focuses on the well-off and the southeast simply adds to public dissatisfaction.

The link between income and public satisfaction is a complex. Each person is about $ 75,000, the link completely disappears-the so-called Eastern Paradox was invented by the US Economy Professor Richard Easterlin in 1974. On top of these layers, money can’t buy (or happiness) you really like. However, below this margin, the relationship between income and well -being is short.

Based on citizens’ surveys, academic Carol Graham’s research has suggested that Ward -oriented mobility is more important for public satisfaction than income. For example, poor communities and countries, where possibilities have been significantly developed than the previous generation, are more happy than rich places where the possibilities of generations have decreased or fallen. In short, generation trips are more important than GDP destinations.

When it comes to wellness, social mobility trumps national income. Permanent social success depends more on the chance of unlocking output maximum. The idea of ​​our self, growth and satisfaction is the key to the idea of ​​our self, growth and satisfaction – the “American dream” in the first discussion of the first -discussed generation in the 5th.

American dreams have died to many. Surveys suggest that only a quarter of Americans now believe that “American dreams are true”. As recently as 2010, it was more than half of it. Economist Raj Chetti “Opportunity Atlas” properly reflects a new reality where social mobility is suspended, or in retreat across many parts of the United States in the last half century.

The UK suggests social dynamism suggests similar stalling or retreat. After accounting for inflation, they are earning less than their parents today in the twenty years and early thirties. Many are less likely to own homes than their grandparents and their grandparents. For them, the opportunities are suspended or contradictory.

For many it begins in life early. In the UK, 1.5 million children grow up in poverty. Poor children are more than twice the exclusion from school and the third one fails to create their grades at the age of 16. About 1mn does not learn or earn at the age of 16-24. Being losing the risk of a generation. And today’s lost generation is tomorrow’s lost growth.

In the 19th and 20th century, the progress of the generation became a social ideal for the first time in human history. In this century, the loss of social dynamics has increased the increasing increase in the aspiration and reduction expectations, individuals, communities and nations.

Michael Young’s Merit Draw a distopian image of social stratification by academic achievement. About 70 years later, that fictional world is the reality today. The rise of the melody has broken the fate of those who are less or any academic qualifying. Low growth is not the reason for this, but its effect. If the opportunity is not restarting the escalator, the pursuit of growth is a fool.

GDP is worthwhile that measures everything except. These words from Robert F. Kennedy in 1968 are more true now than now. The suspended social mobility has blocked the only reliable road for sustainable well -being and growth. In order to prioritize national growth compared to local opportunities, governments are praying on the wrong altar and chasing the wrong rainbow. Next week I will discuss how to follow the correct one.