Growth: At what cost?

'We are stealing the future, selling it in the present, and calling it GDP', says Paul Hawken, a Californian civil rights activist, environmentalist and author. This quote perfectly explains the flaws of our current economic models and the critical importance of sustainability as we approach to measuring the magnitudes of growth.
Economic growth is necessary but not sufficient condition of economic development. We want growth, but not at the cost of development. Growth focuses on some numerical measurements but development on human wellbeing. We are failing to invest adequately and wisely the existing and potential resources toward best uses in future.
Stealing the future of next generation and consuming at present is one type of crime which we are committing in the name of growth. Alternatively, we are consuming the future of the upcoming generation for our so-called economic growth. We have to pay a high price for this. Either we or our future generation has to pay this price.
Most often we ignore the cost of our future threats. Is it due to lack of understanding or methodological manipulation or myopia of our economic policymakers and ill-motivated guidance of our development partners? I would like to say that it is the outcome of intentional negligence of rulers to show the stakeholders their achievements by bypassing the crucial issue of sustainable development.
Measuring growth is a tricky game. But measuring development is a difficult task as it needs to consider more social and environmental aspects. Different schools of thoughts, leading institutions may apply different techniques to measure it. Adopting a particular technique by being biased to get positive score may mislead our long-term progress.
The belief that growth brings development with it is often criticized on the basis that some countries have had good growth but little poverty reduction. The relationship between economic growth and poverty is a debatable issue, over which people are much divided. Some people highlight the negative effects of growth on low-income groups in society, stressing the need for new approaches to economic development that will allow the poor to be benefited more from economic growth than they do at present. Others are more sanguine, believing that the benefits of current models for growth will eventually bring benefit to poorer groups in society, if they are not already doing so.     
The technical problem with GDP as a measure of development occurs when one compares per-capita GDP across countries. For example, one dollar will purchase significantly more in a developing country than it will in a developed one. To get the real feature we need to adopt alternative sophisticated methods.
To overcome this dilemma, economists often use purchasing power parity (PPP) dollars, when making cross-country comparisons of GDP. These are dollars that are adjusted to account for the differences in purchasing power between different countries.
The other weaknesses inherent in the use of GDP as development matrix have led to the creation of other measures ambiguous. The most well-known of these is the human development index (HDI) published on a regular basis by The United Nations Development Program (UNDP) in its Human Development Report.
The HDI is a composite index that rates countries according to their overall performance in relation to three components: life expectancy, education and per-capita GDP. It reveals the overall standard of living of people. But when we would like to get the accurate picture of development, we need to consider some other social and environmental aspects of life with economic factors, which states the living standard of the largest portion people of society.
GDP says nothing about how incomes are distributed or spent. Growth in GDP per capita could result from growth in the incomes of richer groups in society, with incomes of poorer groups remaining largely unchanged. It coincides with spending patterns that are skewed towards the rich and which exclude the needs of the poor. It doesn't necessarily follow that growth in per-capita GDP will lead to a reduction in poverty or to broader social and economic development.
Economic development is a normative concept i.e. it applies in the context of people's sense of morality, understanding right and wrong. Economic development focuses on increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice.
Development lifts people from low standards of living into proper employment with suitable shelter and nutrition. Economic growth does not take into account the depletion of natural resources which might lead to pollution, congestion and disease. Development, however, is concerned with sustainability which means meeting the needs of the present without compromising future needs. These environmental effects are becoming a more of a problem for governments now and the pressure has been increased on them due to global warming.
Conventional economic growth most often considers some quantitative measurements. These apparently seem to provide a state of economic position of a country but most often fail to give a comprehensive understanding of economy. We need not ignore all the conventional methods of growth but we should more focus on whether these growths induce development or not, and its sustainability. If growth can bring development to some extent, then only we can focus on sustainable development. That should be the ultimate goal of growth.
Sustainable growth can lead sustainable development if only some pragmatic steps can be taken for the marginal people. If the number of marginal people is the largest portion of an economy, then to achieve the growth for marginal part should be the central focus during our policy formulation.
Study shows that in the first decade after independence, Bangladesh's economy grew by 2% a year. Since 1990 its GDP has been rising at a more respectable rate - 5% a year - in real terms. That has helped to reduce the percentage of people below the poverty line from 49% in 2000 to 32% in 2010. The trend is still positive, though the progress is not same across the country and social classes.  
A remarkable economic and social progress, as shown in the recent studies and reports, compared to other South Asian countries, makes us optimistic. But, at the same time, it needs a comprehensive study to cross-check all the considering factors so that we can get the real features of our state of economy. If we are happy with our growth then we need to focus on our overall economic development.
Much of the debate in this area revolves around the values and ideals of those engaged in it, as well as the different theories on the subject. It also hinges upon interpretations of the empirical evidence. Poverty and income distribution are hard to measure, especially in developing countries where gathering and analyzing data is often very challenging.
Consequently, the strength of the statistical relationship between growth and poverty remains the subject of debate. There is also controversy about the mechanisms by which economic growth may reduce poverty, the timing of these and the policy implications.
Productivity or growth of an economy largely depends on few factors. These are quantity and quality of labour forces of a country, effective use of capital flow into the capital market, capacity of private and public institutions and infrastructure for smooth and continuous operation. Industrially developed countries use technology multifold than the countries like ours. Most of growth has been achieved by several private corporations rather than by government-owned companies. Economic growth at the cost of social and human cost and by degrading environment and ecosystem is totally unexpected.
So, in our development process, if only smaller portion can participate and largest portion are excluded, then discrimination will grow and social unrest escalate, and the final consequence is the failure of development. When in a development process all the stakeholders can participate equally, then only growth sustains. So we should focus more on inclusive growth that can contribute to reducing discrimination.
During last couple of decades, we have seen some serious financial and economic debacles at global and domestic levels. As a result, our growth, most often, got affected. In these issues we have seen a massive failure of our regulatory bodies, especially those that are considered guardian of financial sector. They sometimes engage in usual blame game. Because of that, small investors lost their capital as well as their faith towards regulators.
It is the common tendencies of political parties, especially the ruling party, to show some immediate achievements and their economic outcomes. For bringing immediate results, they don't bother about the negative impacts of their policies in the long run. To make this acceptable even they manipulate the economic data and sometimes try to persuade the institutions to reveal the distorted information by applying faulty methods.
Yet we are not ready to address the upcoming social and economic challenges. Sometimes we can't predict the potential threats or the magnitude of the problems and the consequences. Farmers' access to credits, seeds, and land ownership is declining. Everyday cultivable land is squeezing. Unplanned industrialization and housing can diminish the total arable land.
In the near future, in spite of high-yielding verity, we have to face acute food crisis. Shortage of food-storage capacity and improper distribution channel, farmers often don't get proper price. Study reveals that about 20% of produced food grains are wasted because of our inefficient food management.
Not only lack of food security but also unavailability of safe food is making our public heath situation perilous. As a consequence, our upcoming generation will face unbearable distress.
Since recent past, we have been experiencing a massive emergence of middle class and their consumption habit. Their purchasing power has increased remarkably over the last decade. Because of increasing consumption pattern, our market is expanding. It is the outcome of their increasing purchasing power.
Now the question arises how long their purchasing power will sustain? Such skepticism arises because it has got chain effects. The core challenge of macroeconomics is to allocate society's resources to their best use. Individually we can earn money but we can't develop institutions and, at the same time, we can't sustain our growth. As a result, in spite of some gross achievement, we don't get satisfactory level of development.
Jean Tirole, a Nobel-laureate economist, also expressed his view as to how only few largest companies are taking all benefits from market and smaller companies have the possibility of extinction from market for cut-throat competition. In this competitive market economy small company and a mass marginal individual has the chance to be wiped out from the market. In this scenario government should play important role in making a very smooth competitive market where all the people would have the access. Government must have to ensure the inclusive growth where most of the people will get equal opportunity to participate in development process.
In conclusion, we can quote from Paul Hawken, "You can print money to bail out a bank but you can't print life to bail out a planet". We have to focus on life not only through few numerical expressions. We should invest to improve future wellbeing. We need to adopt those policies which lead to the creation of more opportunities in different sectors, like education, healthcare, employment and the conservation of the environment.
Institutional failure, poor quality of manpower, lack of management efficiency and policy failure by politicians have made most of our situations vulnerable. We have to increase the capacity in individual as well as institutional levels. That's why strategic policy formulation and implementation is imperatives.
Myopia of political leaders and lack of insights induces economic failure. This is the outcome of contiguous failure of regulatory institutions. Some gimmick policies which are more for political rather economical wellbeing are not suitable for our economic progress. All the endeavors taken for several decades to eradicate poverty now should be channeled into comprehensive steps on humanitarian considerations.
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Washim Palash is a Faculty Member of State University of Bangladesh
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