What is the purpose of a government? Popular consensus within society would tell you that it is to ensure its nation is financially prosperous. Hence, wealth has become the barometer by which we measure the competence of a government. This attitude is now so normalised that we have become accustomed to hearing politicians speaking of GDP growth as if it is a panacea to society’s ills. But is it?


Growth for the sake of growth

Is a growth in GDP going to deal with the issues of today; such as climate change, rising inequality and a global pandemic, to name a few? Current evidence would suggest no. Nowhere in the world embodies the notion that economic growth will be society’s silver bullet more than in America. Tweets detailing the strength of the US stock market are never far away, even in times of crisis. And yet, the country is the greatest per capita emitter of greenhouse gases globally and ranks 10th in the world for deaths per million from Covid-19. To compound this, Thomas Piketty wrote in his book, Capital in the 21st Century: ‘[inequality in the USA is] probably higher than in any other society at any time in the past’. Clearly, growth for the sake of growth is not the solution, so it should not be the objective.

In 2018, the Scottish government, alongside New Zealand and Iceland, set up the Wellbeing Economy Governments Group to champion an alternative approach. Instead of focusing policy upon maximising GDP growth, emphasis is placed upon a broad range of metrics which encompass all that is important to the wellbeing of society. The Scots have 81 different national indicators that they use to measure national progress. These include: growth in the cultural economy, their carbon footprint, levels of loneliness, national income inequality, average educational attainment, and amounts of physical activity.

Conventional GDP is also a category — it is still important; but not paramount. This shifts the goalposts of governmental progress away from solely being on the economy and towards a more comprehensive evaluation of society. In doing this, the way in which governments are judged will change as they are now adjudicated on a breadth of indicators. This is important because the way in which we judge governments is what drives policy, and, fundamentally, all governments want to get re-elected. The Wellbeing Economy Governments Group have predetermined the criteria for judgement to allow them to focus policy upon making broad improvements to the welfare of society. The purpose is not to change the current capitalist system; rather, it aims to harness its power to help solve the challenges society is now facing. The greatest one currently is the Covid-19 pandemic. However, the reaction of the Wellbeing economies has vindicated their approach to health over wealth.

Scotland’s response to the pandemic

New Zealand has not had any community transition of Covid-19 since May after one of the world’s strictest lockdowns. Iceland’s death rate is incredibly low, with only 29 cases per one million people (10 deaths in total). Analysing Scotland is slightly more complex due to the intricate nature of devolved power. When compared with the rest of Western Europe, Scotland appears to have coordinated a bog-standard response. However, this is not a fair comparison to make. Whilst devolution does give Scotland borrowing powers to the annual tune of £1.05billion (£600m on resources and £450m on capital), it does not allow for the level required to fund a furlough scheme. The Institute for Fiscal Studies describe it as ‘constrained borrowing powers’. Consequently, the Scottish government has had no power to implement their own furlough programme, without which lockdown is completely implausible.

Resultantly, Scotland was hamstrung by the UK government as it could not decide when to enact lockdown. Instead, it had to wait for Boris Johnson to do so on March 23 — a decision that is now widely considered to have been belated and the cause of thousands of deaths. This is why the only fair analysis of Nicola Sturgeon’s response to coronavirus can be made when put in comparison to England — rather than other European nations with governmental powers far beyond hers. In this framework, the impressive divergence of Scotland from England in recent months has been all too evident.

Boris Johnson announced that lockdown measures could begin to ease in the U.K. on May 11, despite having 3,923 confirmed cases on the previous day. This decision was motivated by the need to get the economy running again, yet the hastiness of this decision has had the opposite result. As lockdown was lifted whilst case numbers were still high, consumer confidence has remained low and many businesses are not seeing the footfall that is needed to be economically viable. This has been exacerbated by the ONS announcing that England has the highest level of excess deaths of any country across Europe.

This haphazard response from Boris Johnson and the incessant desire to get the economy running again, which is undoubtedly important, has made people in England weary and mistrustful. Many simply do not feel safe enough to resume their lives. Until they do, the economy will not properly restart.

In contrast, Nicola Sturgeon opted for a far more cautious approach as the wellbeing of her citizens was considered more important than the economy. She persevered with a total lockdown until May 29. At that time, there were only 39 confirmed cases on the 28th. Dividends of this are all too clear when making a contemporary comparison. Scotland have 3,430 cases per one million people (18,717 in total) whereas England have 4,720 cases per one million people (264,000 in total). Furthermore, with the exception of the recent lockdown in Aberdeen, Scottish society has a similar level of freedom as the English. Yet, they have far more confidence in their government’s response. A poll in May (since which Scotland’s comparative response has been widely lauded), gave the Scottish government an approval rating of +67. The UK government had a rating of -17.

Inevitably, in the long term this will allow the Scottish economy to return to a much higher level of normality than England. The Economist has termed the post-lockdown situation as the ‘90% economy’. This is where the virus is aimed to be kept under control whilst keeping the economy running, as is the case in South Korea. However, public confidence is so low in England that the 90 per cent economy model is a long way off, even though the government has removed the legal restrictions.

Better than the 90 per cent economy, you have the elimination approach of New Zealand. Now that Covid-19 is not present within the community there are no impositions upon daily life, so the economy can function as normal. The tourism sector is inevitably taking a hit, but this sector is in the doldrums internationally, so there is nothing to be done about this until the pandemic is under control. It is difficult to imagine Scotland achieving elimination, purely due to the fact that they share a border with England. Nonetheless, they will certainly be able to get closer to the 90 per cent economy than the English. Ironically, this highlights how the wellbeing economy approach has come full circle. By choosing to focus upon the broader health of the nation as opposed to just GDP, Nicola Sturgeon has laid the groundwork for a stronger recovery in Scottish GDP than Boris Johnson has done in England — with its sick and timid economy.

Population size and density

One can point to very low population densities of Scotland, Iceland, and New Zealand as the reason for their better responses to Covid-19. However, a study by Shima Hamidid, Sadegh Sabouri, and Reid Ewing, along with a study by John Hopkins University, has dismissed population density as a factor in Covid-19 infection rates. In fact, densely populated areas are linked to lower mortality rates due to the prevalence of good healthcare facilities within these areas. If one is seeking more evidence of this, you merely have to look at South Korea. They have a population density of 516.72 (people per every kilometre squared), whereas England has a density of 432. Despite this, South Korea’s response has been unequivocally better than England’s.

One could say that it is just a coincidence that the three nations in the Wellbeing Economy Governments Group have handled coronavirus well. But it is not. They have shown an open commitment to the health of their nations, as opposed to just focusing on the economy. They have also shown evidence of this. It is no longer just rhetoric. But equally, a government’s rhetoric matters. By committing to Wellbeing, these governments will be judged upon fostering Wellbeing. There is clear logic and morality in this approach. However, an idea is only good once it has been proven to work. Covid-19 has been the first great challenge the Wellbeing Economy approach has faced. As a methodology, it has arguably not only survived but risen to the challenge and thrived.

 

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