Tuesday, 4 November 2014

We are in the midst of a statistical revolution

This blog, by Donato Speroni , looks at how two important conferences  sum up ten years of work in this area.  

“We have to find a new narrative that goes beyond the Beyond GDP research” 

This sentence by Enrico Giovannini, in his key note speech at theMoving beyond GDP in European economic governance” expert conference in Brussels on 10 October, summarises the state of the art. We have the well-being indicators, developed at national and international level in the last ten years; we are in the midst of a “statistical revolution” that will give us new instruments to measure progress and compare it between nations; but all this formidable data sets will be of limited use if it is not transferred into new political goals. Yes, but which goals?

In theory, we know what we want: that the economy continues to grow, but that growth should be inclusive (leaving no one behind) and sustainable (without compromising the ability of future generations to have a better future). But is this really possible?

Two visions clashed in the Brussels conference, captured in the strategic moment of the passing of the baton between the old and the new European Commission. The first view, more optimistic, believes in the effective possibility of promoting a sustainable and inclusive growth to ensure the well-being of citizens.

The second, more drastic view, thinks that in Europe the time for growth is over and supports a more rapid and dramatic change in lifestyle and investments. Through this discussion, the search for new statistical parameters has stimulated political debate on the vital issue of the European contribution to a better world.

Provided by the BRAINPOol project

It is clear that "to pursue a sustainable and inclusive growth" or "to change the development model" involve alternative policy priorities, different numerical targets and indicators. For example, if the goal of sustainable growth can be achieved with a gradual change (along with many other interventions) from fossil fuels to renewables, the alternative strategy requires a faster innovation in the pattern of development and results in accelerated efforts to change both the energy mix and the level of energy consumption. Very briefly, on the one hand we have a gradual reformism, on the other hand a revolution; it is clear that these processes cannot be measured with the same parameters, because it is not just a problem of quantity indicators, but also of different goals.

"Growth is structurally disappearing from the European Union?"

Even if we do not endorse Serge Latouche’s “Happy degrowth” theory, we need to know which results are realistically achievable in the situation we will have to face in the next few years. Tony Long of WWF presented at the Brussels conference an elaboration on the average growth in France over the past decades, which shows increasingly poor results. In his view, the new European Commission should initiate long-term macro-economic analysis, to answer the question: "Growth is structurally disappearing from the European Union?" The relationship between employment and technology is another important question to which we are unable to respond. Co-President of the Club of Rome Anders Wijkman pointed out that up to ten years ago productivity and employment grew in parallel, but now the productivity improvements have no longer a positive impact on jobs.

For many people, however, "growth is like a religion," said the Belgian Philippe Lamberts (Member of European Parliament, Green). "Many people are not willing to accept the facts (for instance about climate change) because they live in their own world". On the other hand, as pointed out the same Wijkman, even those who are convinced of the need for change are not in a position to express a narrative of transition: there is no comprehensive proposal on how to move from the existing mechanisms into a system actually more sustainable and inclusive: we have a collection of good intentions but few effective decisions and measurable effects.

The uncertain outcome of this process derives also from the fact that the European economic crisis puts us in uncharted territory, as it become evident in another conference -  the Strategic Forum 2014 on Intragenerational and Intergenerational Sustainability, organised by the International Economic Association (IEA) and the International Statistical Institute (ISI), together with the  “High-Level Expert Group on the Measurement of Economic Performance and Social Progress” (that is, the working group hosted by the OECD and commonly called "Stiglitz 2"), supported by the Bank of Italy, the Einaudi Institute for Economics and Finance (EIEF)  and SAS, that was held in Rome on September 23 and 24. 

Many of the documents, downloadable from the Forum programme, can help us to understand what is happening in Europe. In a series of very interesting slides, Martine Durand from OECD showed the long-term costs of the recession: even in countries that, on the basis of 2013 data, seemed to have passed the crisis, the conditions of households and the level of investment have not returned to pre-crisis levels. Not to mention the social effects of the lack of confidence in governments and the decrease in the level of satisfaction with life, especially noticeable in the country’s most in need such as Greece and Italy.

From the meeting emerged a stronger concern for sustainability. The social one first, which reflects a situation perhaps even more dangerous than environmental sustainability, for there are many signs that we are heading towards an explosive world (the "perfect storm"). Not only because of the conflicts that already afflict countries in Europe or those geographically close to us, but for the internal contradictions in our economic system: the lack of an adequate safeguard for human capital; the growth of unemployment induced by new technologies that cannot be underestimated and that shrinks the middle class; the frightening increase in inequality in our systems: all issues that go beyond the everlasting controversy about the limits of the public budgets.

It is not even enough to advocate greater investments in schools, because we must first understand what types of schools can prepare young people to find a satisfactory role in this new world, as pointed out by the governor of the Bank of Italy, Ignazio Visco with a short but effective intervention.

In conclusion, I think that the work done by statisticians and economists in these ten years gave us the tools to build a better world, with more inclusive and sustainable well-being for all. But now we need a vision: we have to decide which world we want, to realistically consider the limits of growth, and how we can build it.

Donato Speroni

1 comment:

  1. "there is no comprehensive proposal on how to move from the existing mechanisms into a system actually more sustainable and inclusive"

    This is the core issue. If we'd tackled this in 1972 with CoR and Stockholm then by 1973 we'd perhaps be setting up the comprehensive new mechanisms. Growth would never have become a decoy since the new system would provide for GDP growth, in contrast to the old mechanisms undermining potential for growth.

    However his never happened. It was easier to talk about growth, targets and new indicators than to look for new mechanisms. It remains so today, except the decoy issue of growth became a blocking filter for proposals on mechanisms. Any proposed mechanism that enables growth gets ignored (including mine!) http://blindspot.org.uk/seven-policy-switches/