[Vantage Point] The dangerous religion of growth

Many of us have suffered, one way or another, from the agonizing traffic on EDSA. As thousands of us look at an endless sea of brake lights, inching toward locations we would reach later than anticipated, we would have already wasted what should have been productive work hours and burned liters of expensive fuel.

Everyone — motorists and commuters alike — pays for the hidden cost of traffic jams. Paradoxically, this gridlock boosts our Gross Domestic Product (GDP). Wasted fuel, rising toll fees, and the myriad transactions that happen in daily commute are factored in the country’s GDP as an additional income to the economy. 

Growth is reflected in the metrics while we suffer from traffic exhaustion, but no richer.

Through the years, GDP growth has been consistently presented as the best indicator of economic success. Politicians exult in it, economists project it, investors scrutinize it, and governments construct whole narratives around it. GDP statistics cited in headline after headline, quarter after quarter, either sing praises about robust growth figures or sound alarm bells about slowing expansion.

Somewhere along the way, we have stopped referring to GDP as a useful measurement tool and have begun treating it as the destination itself. A recent essay published in The Guardian by Olivier De Schutter, a former United Nations expert on poverty, together with several economists and development thinkers, argues that the world’s obsession with endless economic growth is becoming increasingly difficult to justify.

Their article stirred up controversies. It was derided by critics as unrealistic and anti-business, while advocates applauded it as an essential challenge to prevailing economic wisdom.

Trouble with growth

But in my view, both sides are lacking something more relevant. The trouble is not growth itself. The issue is we tend to believe that growth will magically and spontaneously result in a better life.

For most of modern history, that assumption was correct. Expanding economies constructed roads, ports, airports, schools, hospitals, factories, and power plants. Companies grew, jobs were created, incomes increased, and governments collected more revenues to fund public services. 

In many developing countries, including the Philippines, growth remains key. We still need better infrastructure, stronger health care, better education, and higher-paying jobs. None of these would be realized if the economy remained stagnant.

Growth on its own does not tell us if people are thriving. In many of the world’s wealthiest cities, economies have surged in the past 20 years, but homeownership has only become more elusive for the average family. This is the downside of overdependence on GDP. While it measures economic activity or how money is produced, spent, or invested, it fails to indicate the actual quality of life of the general public.

We experience this every day. While news headlines hype up about the country experiencing “unprecedented economic growth,” a lot of us are still struggling to pay our bills.  The electricity rates Filipinos pay are among the highest in Southeast Asia, making it more expensive to keep the lights on at home or in business establishments.

Metro Manila remains one of the most congested urban areas in the world.  Traffic congestion steals countless hours of valuable labor, and logistical bottlenecks drive the cost of moving goods across our archipelago more expensive. 

These burdens seldom show up in the highlighted figures of GDP but continue to drain household budgets, impair our country’s ability to compete on the international stage, and lower the population’s quality of life.

Better opportunities abroad

Case in point is the swelling number of Overseas Filipino Workers. On paper, our economy has been one of the fastest growing in the region. Yet, millions of Filipinos are still leaving their families behind to seek better opportunities elsewhere.

These are the realities that shape daily living and national competitiveness, and they are usually cloaked in the rhetoric of a good GDP. This falsely tells us that a country can expand while becoming more expensive, more congested, and less efficient.

What we should ask, from my vantage point, is the kind of growth we are creating, and not the speed our economy is growing. Development based on productive investment is very different from growth based on speculation. We must prioritize building factories and infrastructure, instead of focusing on artificial and speculative bubbles. Not all financial expansion adds real value to society.

That does not mean, however, that growth has to stop. It just needs to be purposeful. 

The aim of national policy must not be to merely increase GDP. The objective should be to improve people’s lives through affordable housing, reliable transportation, competitive electricity prices, quality education, accessible healthcare, public safety, and strong government institutions. 

A country that invests in these essential foundations creates a thriving society. 

A GDP-obsessed country wonders just how fast the economy expanded this quarter. A country focused on its people inquires if families can afford homes; whether workers spend hours trapped in traffic every day; whether children receive a quality education; whether businesses can compete and create opportunities.

One approach measures activity. The other one measures progress.

GDP remains an important indicator to track the overall economy. But we ought to stop worshipping it. It does not capture true prosperity, long-term sustainability, or actual human flourishing. It is only one among many tools for market analysis. 

The danger starts when we confuse the scoreboard for the game itself.

I welcome your views on these and other issues where decisions made in power shape the country’s economic future.

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