…and you thought that the post-2008 changes in legislation would prevent happening of banking crisis again in the future?
If there is one single lesson to be learned from the economic crisis culminating in 2008-2009, then it is – unsustainable economy is not viable and socially justifiable.The problem though is that as long as GDP (gross domestic product) will continue to be used as the dominant, key indicator to characterize success, growth, recovery, improvement of economy, we will not escape the good old in-sustainability circle. As long as political leaders will use GDP to measure success of their policies and wellbeing of their people, we will continue missing the point, and it is: it is not the size of the economy, but its content and distribution of resources which matters and affects people’s wellbeing and quality of life.
Back in 1968 it was perfectly clear to Robert F. Kennedy that GDP “measures everything, in short, except that which makes life worthwhile.” He understood the danger of GDP as the political/ economic goal which is useless in measuring things which politicians AND economists should be really worrying about, like human wellbeing, employment, decent living conditions, infrastructure, shelter, self-realization, human security, education, good health services and social relations.
I wish every single politician in every single country could watch this Kennedy’s speech and if even just 1% of all of them would understand the true essence (or actually lack of it) of GDP, it will be a huge achievement. Actually, you should watch this too. Everyone should.
This short film by Al Jazeera was made back in 2011, but is still relevant today thinking about economic crisis in Latvia, austerity, sustainable recovery and development in long term.
This film demonstrates a typical case of misuse/ overuse of natural resources in desperation for foreign currency and keeping economy going. But everyone with common sense will agree that the long term impact can be disastrous. Forest harvesting may keep economy going, keep the GDP up, keep the export increasing, but at what cost and for how long. And then what…???
In the midst of this economic turmoil banks and Governments, apart from handful of global companies, have been made the main scapegoats. But, Stiglitz in his brief video commentary is turning now blame to economists by saying: “too many economists wanted to believe that markets work well” and most likely because they have been too politically motivated and self-interested. Stiglitz notes that economists have been ignoring 200 years of capitalism and thus unable to draw well-informed conclusion that markets do indeed do all sorts of nice things, but they are not self-regulating.
This statement challenges objectivity and professionalism of economists as well as ideological impartiality of their research and analysis. If the outcomes of their research and analysis depends on who they work for or what political or financial interests they have then it would be the same situation when patient attending the doctor would be prescribed medicine which brings more profit to the doctor rather than which is the best addressing the specific illness of the patient.
This is a great 6.5 min long lesson on inequality. Nothing new, but good visual presentation of data. A little warning: it may cause a bit of anger or depression..
“There are two superpowers in the modern world: USA and Moody’s. USA can destroy you by dropping bombs, Moody’s by downgrading your bonds.”