8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 17

ldquoWe need a new economic paradigm that recognizes the parity between the

three pillars of sustainable development Social economic and environmental

well-being are indivisible Together they define gross global happinessrdquo said

the Secretary-General Ban Ki-moon in the high-level meeting ndash ldquoHappiness and

Well-being Defining a New Economic Paradigmrdquo at UN Headquarters in New

York on the 2sd

April 2012 These words remind us of the fact that not just

economic well-being but social well-being (as much as enviromental well-

being) is also an essential factor in rating a nation‟s happiness as well as that of

a man Therefore the important thing to do now is to find a way to measure

social well ndash being and should that be Gross Domestic Product (as some country

has done) However in actual fact there are people who believe that GDP is

inadequate and it should be replaced by the Human Development Index (HDI)

We find this opinion very convincingi

The United States Institue of Peace (USIP) defined ldquosocial well- beingrdquo as

ldquoan end state in which basic human needs are met and people are able to coexist

peacefully in communities with opportunities for advancementrdquoii

But what is anldquoend staterdquo And we can base on which factors to evaluate it To answer these

questions the USIP also pointed out the 4 neccesery conditions to achive this

ldquoend staterdquo which were Access To and Delivery of Basic Needs Services

Access To and Delivery of Education Return and Resettlement of Refugees and

Internally Displaced Persons and finally Social Reconstruction Therefore

whichever index we use to measure social well-being it has to represent theseconditions of a society

Gross Domestic Product ndash GDP is a very familiar definition to all of us

It‟s a concept which belongs to the economics category Generally GDP is the

market value of all final goods and services produced within a country in a

given period of timeiii

More specificly GDP measures two things at once the

total income of everyone in the economy and the total expenditure on the

economy‟s output of goods and servicesiv Born after World War II since then

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 27

GDP itself has appeared to be the best single measure of economic well-being in

a society It speaks to us how the economy in each country is working and from

there the government can bring out the right policies to adjust the economyv

Issues with GDP being a measure for societal well-being

Opinionstagecom ndash a website which oftens seeks for viewers‟s opinion

once did a small survey with the question is GDP growth a good measure for

living standards For the results the answer that received 84 vote was ldquoNOrdquo

Although it doesn‟t mention social well-being directly this kind of survey is

one of many proofs that say GDP is not an anaquate measure of social well-

being and major of people can see that But why exactlyvi

As we have said above there are four conditions needed to achive social

well- being and GDP doesn‟t r epresent any of those at least not directly In

1968 when Senator Robert Kennedy was running for president he delivered a

(now famous) speech in Kansas on the limitations of GDP It counts air

pollution and cigarette advertising and ambulances to clear our highways of

carnage It counts special locks for our doors and the jails for the people who break them It counts the destruction of the redwood and the loss of our natural

wonder in chaotic sprawlYet[it]does not allow for the health of our

children the quality of their education or the joy of their playIt does not include

the beauty of our poetry or the strength of our marriages hellip neither our

wisdom nor our learning neither our compassion nor our devotion to our

country It measures everything in short except that which makes lifeworthwhile

vii With the four components consumption (C) investment (I)

government purchases (G) and net exports (NX) it‟s a matter of fact that when

we look at GDP we can only see the perfomance of the overall economy but

there are no signs of the living standard life satisfaction or maybe the number

of students enrolling in school the homeless etc For example here is a hot

issue- the benefit of leisure time people work 5 days a week 8 hours a day but

if they keep working on their free time instead of relaxing more goods and

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 37

services will be produced the GDP might rise but we can not conclude that

they are better off the lost of relax time may lead to mental damanges On the

other hand social well- being is all of those things that GDP isn‟t concerned

with

More money-more chances

However there is an opinion we can not ignore countries with higher

GDP means a higher-developed economy actually have more opportunities to

access to social well- being Nevertheless this doesn‟t make GDP any more

adequate in measuring social well- being Let‟s have a look at this graph which

showed GDP per head and life satisfaction in UK - a developed country from

1973-2006 viii

Source Eurobarometer cited in Thomas and Evans 2010 p33

We can see from the graph that in this period life satisfaction in UK

remained highly meanwhile GDP increased gradually This was a proof of a

fact that the growth in GDP doesn‟t lead to the growth in life satisfaction or

more generally social well- being Now let‟s take a little time to look back atthe definition of GDP It‟s a ldquoGrossrdquo concept which means not only activities

that have possitive impact but ones that create negative effects on social‟s well-

being also end up being recorded as positive contributions to the GDP Take for

instance crime Rising criminal activities can increase a countrys GDP through

greater expenditures toward maintaining law and order (eg hiring of additional

police members purchase of guns prisons etc) ix Another example is theconsequence of having depleted forests because of logging activities GDP is

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 27

GDP itself has appeared to be the best single measure of economic well-being in

a society It speaks to us how the economy in each country is working and from

there the government can bring out the right policies to adjust the economyv

Issues with GDP being a measure for societal well-being

Opinionstagecom ndash a website which oftens seeks for viewers‟s opinion

once did a small survey with the question is GDP growth a good measure for

living standards For the results the answer that received 84 vote was ldquoNOrdquo

Although it doesn‟t mention social well-being directly this kind of survey is

one of many proofs that say GDP is not an anaquate measure of social well-

being and major of people can see that But why exactlyvi

As we have said above there are four conditions needed to achive social

well- being and GDP doesn‟t r epresent any of those at least not directly In

1968 when Senator Robert Kennedy was running for president he delivered a

(now famous) speech in Kansas on the limitations of GDP It counts air

pollution and cigarette advertising and ambulances to clear our highways of

carnage It counts special locks for our doors and the jails for the people who break them It counts the destruction of the redwood and the loss of our natural

wonder in chaotic sprawlYet[it]does not allow for the health of our

children the quality of their education or the joy of their playIt does not include

the beauty of our poetry or the strength of our marriages hellip neither our

wisdom nor our learning neither our compassion nor our devotion to our

country It measures everything in short except that which makes lifeworthwhile

vii With the four components consumption (C) investment (I)

government purchases (G) and net exports (NX) it‟s a matter of fact that when

we look at GDP we can only see the perfomance of the overall economy but

there are no signs of the living standard life satisfaction or maybe the number

of students enrolling in school the homeless etc For example here is a hot

issue- the benefit of leisure time people work 5 days a week 8 hours a day but

if they keep working on their free time instead of relaxing more goods and

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 37

services will be produced the GDP might rise but we can not conclude that

they are better off the lost of relax time may lead to mental damanges On the

other hand social well- being is all of those things that GDP isn‟t concerned

with

More money-more chances

However there is an opinion we can not ignore countries with higher

GDP means a higher-developed economy actually have more opportunities to

access to social well- being Nevertheless this doesn‟t make GDP any more

adequate in measuring social well- being Let‟s have a look at this graph which

showed GDP per head and life satisfaction in UK - a developed country from

1973-2006 viii

Source Eurobarometer cited in Thomas and Evans 2010 p33

We can see from the graph that in this period life satisfaction in UK

remained highly meanwhile GDP increased gradually This was a proof of a

fact that the growth in GDP doesn‟t lead to the growth in life satisfaction or

more generally social well- being Now let‟s take a little time to look back atthe definition of GDP It‟s a ldquoGrossrdquo concept which means not only activities

that have possitive impact but ones that create negative effects on social‟s well-

being also end up being recorded as positive contributions to the GDP Take for

instance crime Rising criminal activities can increase a countrys GDP through

greater expenditures toward maintaining law and order (eg hiring of additional

police members purchase of guns prisons etc) ix Another example is theconsequence of having depleted forests because of logging activities GDP is

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 37

services will be produced the GDP might rise but we can not conclude that

they are better off the lost of relax time may lead to mental damanges On the

other hand social well- being is all of those things that GDP isn‟t concerned

with

More money-more chances

However there is an opinion we can not ignore countries with higher

GDP means a higher-developed economy actually have more opportunities to

access to social well- being Nevertheless this doesn‟t make GDP any more

adequate in measuring social well- being Let‟s have a look at this graph which

showed GDP per head and life satisfaction in UK - a developed country from

1973-2006 viii

Source Eurobarometer cited in Thomas and Evans 2010 p33

We can see from the graph that in this period life satisfaction in UK

remained highly meanwhile GDP increased gradually This was a proof of a

fact that the growth in GDP doesn‟t lead to the growth in life satisfaction or

more generally social well- being Now let‟s take a little time to look back atthe definition of GDP It‟s a ldquoGrossrdquo concept which means not only activities

that have possitive impact but ones that create negative effects on social‟s well-

being also end up being recorded as positive contributions to the GDP Take for

instance crime Rising criminal activities can increase a countrys GDP through

greater expenditures toward maintaining law and order (eg hiring of additional

police members purchase of guns prisons etc) ix Another example is theconsequence of having depleted forests because of logging activities GDP is

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 47

increased when trees are cut down for lumber and other uses In conclusion

both committing certain types of crime and buying petrol can have the impact of

a surge in GDP but will not increase welfare (Stiglitz Sen and Fitoussi 2009)

Human Development Index ndash HDI appeared later than GDP in about 1975

The United Nations has been using it to measur e a country‟s growth and

achievements in human development The caculation of HDI is based on three

dimensions and four indicators health (life expectancy at birth) education

(mean of years of schooling for adults aged 25 years and expected years of

schooling for children of school entering age) and living standard (gross

national income per capita)x Achievement in each area is measured by how far

a country has gone in attaining the following goal life expectancy of 85 years

adult literacy and enrollments of 100 percent and real GDP per capita of

$40000 in purchasing power parity termsxi

Although highly desirable these

goals have not yet been fully attained by any country so the actual indicators

are expressed as decimal shares of the ideal

First of all we need to point out that in many respects the HDI has been

remarkably successful The New York Times once took this comment ldquoonly

one measure has succeeded in challenging the hegemony of growth-centric

thinkinghellip the Human Development Indexrdquo

xii

Not just that but its annual publication has attracted significant attention from the media and national

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 57

policymakers from a diversity of countries Thus though during its time of

being used HDI has been criticized for different reasons but it‟s still highly

appreciated and one of the reasons for that is HDI continuously reminds the

government organizations firms to focus on other aspects of life beside

economy such as education living standard health etc

Secondly acording to the definition of HDI we can see that it does reflect

some aspects of social well-being in a very direct way In fact one of the great

advantages of the index is that it allows countries to be ranked in order of their

achievements in human development This already makes it a better measure

than GDP

On the other side reality has demonstrated the relationship between HDI

and social well-being Normally countries with higher HDI actually has higher

access to social well-being Take for instance Norway Australia Netherland

United States and New Zealand were the five countries that ranked in the top in

the Human Development Report 2011 In the Better Life Index rate (between

OECD countries) these countries may not take the 1st

place in individual ranks but if we compare their performances with other‟s based on some dimensions of

well-being (as a whole) like housing community education health and life

satisfaction they again stays among the top onesxiii If you still have doubts

let‟s move our attention to the lower places in the HDR 2011 here we have

China (ranked 101187) and India (134187) For very high developed-

economy and great population these two nations nevertheless have the literacyrate in turns are 922(2007)

xiv and 7404 (2011 census)

xv Also the Global

Peace Index 2012 has ranked China and India 89th and 142

sd place over 158

countries meanwhile the above-mentioned countries (except for the Unied

States) has all remained in high positions Another thing we want to point out

here is China and India are in the top ten coutries with highest GDP (China

2184 and India 10184 listed by the International Monetary Fund-2011)xvi

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 67

However nothing is perfect HDI itself has some disadvantages either

For example it does not allow us to understand why a countrys index changes

over time- is it the result of a change in life expectancy or maybe a change in

GNI per capita We can not khow for sure Take another instance the

aspects of well-being included in the HDI obviously excludes other social

dimensions such as equity political freedoms human rights or

sustainabilityetc Despite all of these (and some proplems that we don‟t

mention here) from what we know compare to GDP and other indexs HDI is

still the most adequate way to measure social well-being

In conclusion GDP with its ldquosloganrdquo money can buy it all is already an

old index that doesn‟t keep up with nowadays social development where

happiness is created by many different composites But no worry we already

have a very good replacement - HDI

i United Nation New economic paradigm needed including social and enviromental

progress viewed 28th Septemper 2012

lthttpwwwunorgappsnewsstoryaspNewsID=41685UGppdiLsFdg] gt

ii United States Institute of Peace Social Well-Being viewed 23rd Octorber 2012

lthttpwwwusiporgguiding-principles-stabilization-and-reconstruction-the-web-

versionsocial-well-beinggt

iii Mankiw NG 2011 Principles of economics 6thedn Cengage Learning Cambrige

iv Mankiw NG 2008 bdquoMeasuring a Nation‟s Income‟ Principles of Macroeconomics 5th

edn Cengage Learning Cambrige

v InterActiveCorp 1996 Human Development Index viewed 17th October 2012

lthttpmiddleeastaboutcomodhghuman-development-index-definitionhtm gt

vi Is GDP growth a good measure for living standard viewed 28th Septemper 2012

lthttpwwwopinionstagecomdebatesis_gdp_growth_a_good_measure_for_living_standar

dsgt

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 57

policymakers from a diversity of countries Thus though during its time of

being used HDI has been criticized for different reasons but it‟s still highly

appreciated and one of the reasons for that is HDI continuously reminds the

government organizations firms to focus on other aspects of life beside

economy such as education living standard health etc

Secondly acording to the definition of HDI we can see that it does reflect

some aspects of social well-being in a very direct way In fact one of the great

advantages of the index is that it allows countries to be ranked in order of their

achievements in human development This already makes it a better measure

than GDP

On the other side reality has demonstrated the relationship between HDI

and social well-being Normally countries with higher HDI actually has higher

access to social well-being Take for instance Norway Australia Netherland

United States and New Zealand were the five countries that ranked in the top in

the Human Development Report 2011 In the Better Life Index rate (between

OECD countries) these countries may not take the 1st

place in individual ranks but if we compare their performances with other‟s based on some dimensions of

well-being (as a whole) like housing community education health and life

satisfaction they again stays among the top onesxiii If you still have doubts

let‟s move our attention to the lower places in the HDR 2011 here we have

China (ranked 101187) and India (134187) For very high developed-

economy and great population these two nations nevertheless have the literacyrate in turns are 922(2007)

xiv and 7404 (2011 census)

xv Also the Global

Peace Index 2012 has ranked China and India 89th and 142

sd place over 158

countries meanwhile the above-mentioned countries (except for the Unied

States) has all remained in high positions Another thing we want to point out

here is China and India are in the top ten coutries with highest GDP (China

2184 and India 10184 listed by the International Monetary Fund-2011)xvi

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 67

However nothing is perfect HDI itself has some disadvantages either

For example it does not allow us to understand why a countrys index changes

over time- is it the result of a change in life expectancy or maybe a change in

GNI per capita We can not khow for sure Take another instance the

aspects of well-being included in the HDI obviously excludes other social

dimensions such as equity political freedoms human rights or

sustainabilityetc Despite all of these (and some proplems that we don‟t

mention here) from what we know compare to GDP and other indexs HDI is

still the most adequate way to measure social well-being

In conclusion GDP with its ldquosloganrdquo money can buy it all is already an

old index that doesn‟t keep up with nowadays social development where

happiness is created by many different composites But no worry we already

have a very good replacement - HDI

i United Nation New economic paradigm needed including social and enviromental

progress viewed 28th Septemper 2012

lthttpwwwunorgappsnewsstoryaspNewsID=41685UGppdiLsFdg] gt

ii United States Institute of Peace Social Well-Being viewed 23rd Octorber 2012

lthttpwwwusiporgguiding-principles-stabilization-and-reconstruction-the-web-

versionsocial-well-beinggt

iii Mankiw NG 2011 Principles of economics 6thedn Cengage Learning Cambrige

iv Mankiw NG 2008 bdquoMeasuring a Nation‟s Income‟ Principles of Macroeconomics 5th

edn Cengage Learning Cambrige

v InterActiveCorp 1996 Human Development Index viewed 17th October 2012

lthttpmiddleeastaboutcomodhghuman-development-index-definitionhtm gt

vi Is GDP growth a good measure for living standard viewed 28th Septemper 2012

lthttpwwwopinionstagecomdebatesis_gdp_growth_a_good_measure_for_living_standar

dsgt

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 67

However nothing is perfect HDI itself has some disadvantages either

For example it does not allow us to understand why a countrys index changes

over time- is it the result of a change in life expectancy or maybe a change in

GNI per capita We can not khow for sure Take another instance the

aspects of well-being included in the HDI obviously excludes other social

dimensions such as equity political freedoms human rights or

sustainabilityetc Despite all of these (and some proplems that we don‟t

mention here) from what we know compare to GDP and other indexs HDI is

still the most adequate way to measure social well-being

In conclusion GDP with its ldquosloganrdquo money can buy it all is already an

old index that doesn‟t keep up with nowadays social development where

happiness is created by many different composites But no worry we already

have a very good replacement - HDI

i United Nation New economic paradigm needed including social and enviromental

progress viewed 28th Septemper 2012

lthttpwwwunorgappsnewsstoryaspNewsID=41685UGppdiLsFdg] gt

ii United States Institute of Peace Social Well-Being viewed 23rd Octorber 2012

lthttpwwwusiporgguiding-principles-stabilization-and-reconstruction-the-web-

versionsocial-well-beinggt

iii Mankiw NG 2011 Principles of economics 6thedn Cengage Learning Cambrige

iv Mankiw NG 2008 bdquoMeasuring a Nation‟s Income‟ Principles of Macroeconomics 5th

edn Cengage Learning Cambrige

v InterActiveCorp 1996 Human Development Index viewed 17th October 2012

lthttpmiddleeastaboutcomodhghuman-development-index-definitionhtm gt

vi Is GDP growth a good measure for living standard viewed 28th Septemper 2012

lthttpwwwopinionstagecomdebatesis_gdp_growth_a_good_measure_for_living_standar

dsgt

8122019 We Need a New Economic Paradigm That Recognizes the Parity Between the Three Pillars of Sustainable Development

httpslidepdfcomreaderfullwe-need-a-new-economic-paradigm-that-recognizes-the-parity-between-the-three 77

vii Qatar Media Corporation 1996 GDP growth is no measure of societal progress 27 May

2011 viewed 6th Octorber 2011

lthttpwwwaljazeeracomindepthopinion2011052011526135338692723html gt

viii Sebastian K 2012 Is GDP a good measure of economics activity and well-being ebook

viewed 28th Septemper lthttpwwwgrincomene-book192532is-gdp-a-good-measure-of-

economic-activity-and-well-beinggt

ix Rapid Intelligence Gross Domestic Product vs Human Development Index viewed 7th

Octorber 2012 lthttpwwwnationmastercomarticleGross-Domestic-Product-vs-Human-

Development-Indexgt

x United Nation Development Programme 2011 Human Development Index viewed 23rd

Septemper 2012 lt httphdrundporgenstatisticshdigtxi World Bank Composite Indicators of Development viewed 20th Octorber 2012

lthttpwwwworldbankorgdepwebbeyondglobalchapter15html gt

xii Jeni Klugman Francisco Rodriacuteguez Hyung-Jin Choi 2011 The HDI 2010 New

Controversies Old Critiques 201101 United Nations Development Programme

xiii The Organisation for Economic Co-operation and Development 1961 OECD Better life

index viewed 6th October 2012

lthttpwwwoecdbetterlifeindexorg55555555555 gtxiv List of countries by literacy viewed 18th October 2012 lt

httpenwikipediaorgwikiList_of_countries_by_literacy_rate gt

xv Literacy rate in India viewed 17th October 2012 lt

httpwwwmapsofindiacomcensus2011literacy-ratehtml gt

xvi List of countries by GDP (nominal) viewed 6th October 2012

lthttpenwikipediaorgwikiList_of_countries_by_GDP_28nominal29 gt

Word count _ No references 1715

_With references 1946