At the end of September, thousands of people joined a march in Bangor calling for an independent Wales. The organisers, YesCymru and All Under One Banner (AUOB) Cymru, claimed more than 10,000 people attended the march, much higher than the 8,000 expected and what had been seen at previous rallies. The turnout showed the demand for independence is growing.
A country’s quest for independence is often an emotional matter. But for many voters the decision to support independence depends on if it would make them better-off or not. That is, would being an independent country improve the economy? There are bitter arguments in the run-up to any sovereignty-related vote on the economic benefits of going it alone, and such arguments tend to focus on the impact of independence on the country’s GDP.
GDP (or Gross Domestic Production) is the monetary measure of the goods and services produced within a country. Of the different economic measures, it is the one figure that has trumped all others when it comes to measuring a country’s success. It is the key indicator used by politicians and policymakers to measure the size and strength of an economy, and rising GDP is traditionally associated with rising prosperity: a goal prized by decisionmakers the world over.
GDP has been used to measure the size and health of a nation’s economy since the 1940s. Since then, decisionmakers have often tried to use GDP as a proxy for living standards and economic well-being even though it was never designed to be used this way. Simon Kuznets, one of the pioneers of calculating GDP, was aware of its limitations. He said that a rise in GDP doesn’t always mean that the people in that country are better off as a result. Bobby Kennedy said in 1968 that GDP measures everything “except that which makes life worthwhile.”
The limits of GDP are now clear. It measures mainly market transactions and ignores important aspects of life, such as health, education, equality of opportunities, social justice, security and the environment. Increased crime rates do not raise living standards, but they can lift GDP by raising expenditures on security systems.
What we measure matters because it guides what we do. Researchers have become much better at measuring what actually makes life worthwhile. The environmental and social effects of GDP growth can be estimated, as can the effects of income inequality. It is possible to survey and quantitatively measure the psychology of human well-being. The UN Sustainable Development Goals (SDGs), announced in 2015, provides an opportunity to define what sustainable well-being means, how to measure it, and how to achieve it.
It is often said that what you measure is what you get. To build the future we want requires that we measure what is important, remembering that it is better to be approximately right than precisely wrong. Regardless of Wales being an independent country or not, it needs to have a clear vision – growing GDP should not be part of this aspiration.
We need to move beyond the goal of growing GDP.
This article by Dr Edward Thomas Jones, Lecturer in Economics first appeared in the Daily Post's business section on Wednesday, 18 October 2023.