Why we should ALL support Renewable Energy 2 – SOL, QOL, and GDP

As I discuss why we need to rethink not just renewable energy, but how we live and consider moving into a sustainable world, there are some basic factors of how we measure the Country’s success that we truly need to understand. 

In the last post I said that we all confuse Quality of Life (QOL) and Standard of Living (SOL) when we think about the things we need in our lives.  SOL is the degree of monetary wealth that makes available material comforts to a person or community.  It is measured by Gross Domestic Product (GDP) per capita.  In other words, how much money is moving through a country’s economy in a given year relative to the population. It does not take into account the negative or positive aspects of how the money is used. GDP was conceived of in the mid-1600, but in 1934, FDR wanted some measure to know if the USA was doing better economically as it struggled out of the Great Depression era.  GDP up to that point was used as the measure simply because it could be measured.  BUT it was only a minor metric in a whole economic slew of other minor and ineffectual measures that really didn’t work in the big scheme of everyday life.  It simply measures the movement of money – it has no good or bad component to it – a new community center hires a lot of people and money moves.  Likewise, a terrible disaster creates a lot of aid help and rebuilding and money moves.  A million people dying in a terrible disaster also increases GDP even more so if they have to be nicely buried. War is particularly good at increasing GDP. Yet, since 1944 from the infamous Bretton Woods we have used it as the international measure of choice about comparisons on lifestyle and SOL.  How do you compare SOL when one country is dirt poor and another has people with lots of ‘stuff’ but are mired in debt in which most will remain for the remainder of their lives.   

QOL on the other hand is about the general well-being of individuals and societies, taking into account the negative and positive aspects of life.   It is less about the economy and more about life satisfaction, including everything from happiness, physical health, family, education, employment, wealth, safety, security to freedom, religious beliefs, and the quality of the environment.  A good SOL is good, but a better QOL is preferable!  If a QOL includes a good SOL, so much the better, as long as the SOL has all the attributes that create a good QOL. Having sat in many ridiculous traffic jams and read about the debilitating debt so many people live with, I see that the QOL in the U.S. is not as high as everyone thinks it is. If the amount of money were truly equal to QOL then people with more money should have the highest QOL.  Alas, this is not true.  People with more money feel more secure from financial threats, but other than that, they do not score any higher on any measure of QOL – indeed, in many cases they score lower because their whole world is tied up with financial worries and loss of community support.     

So, can we measure QOL?  Yes, we can, but it is a lot more finicky than simply measuring money moving.  Yet, QOL gives a much clearer picture of how well a country and its people are doing.  In 2019, the U.S. economy is supposedly doing well, but the majority of people in the country are struggling more than ever because this conclusion is based on a rising GDP.  Money is moving but it is siphoning up from a local economy we all live within to an elite economy.  Consider what happens when a Big Box store moves into town (especially in smaller rural towns) with localized incentives and promises of jobs.  Then economies of scale happen when low priced goods, that people didn’t know they wanted, flood the local economy.  The Box store forces local businesses out of business with that cannot compete with the low prices or the lower paying jobs.  Then with little competition the big box stores raise their prices and often move their store to just outside the community’s tax jurisdiction to avoid paying back to the local community.  The money made by the store then whistles back to a head office elsewhere that shelters its profits in overseas banks so the country gets no tax base either.  The rich investors/owners then engage in the ‘elite economy siphon’ to pump money from the local economy up to the elite economy where it gets invested in stocks and shares and other lucrative investments that do nothing for local economies.  

In 1981, the Reagan administration promoted the concept of ‘Trickle-Down’ to argue that allowing this elite siphon economy would benefit everyone as the ultra-wealthy invested their profits back into the U.S. economy.  The truth is that never happened and has never happened.  During the Golden Era of the Robber Barons (late 1800s) these Captains of Industry actually did invest some their massive profits back in to the U.S. business infrastructure.  The problem was that they ruthlessly ran monopolies that drove out smaller competition and formed ‘Trusts’ that were a collection of the largest Robber Barons within a similar industry that maintained such monopolies.  They were even more ruthless in how they treated employees.  One only has to read about the typical Robber Baron behavior of John D. Rockefeller at his coal mine in Ludlow, Colorado, to understand the brutality and working conditions of the masses of people at that time.  Obviously in the last century many laws have been passed to prevent monopolies from reforming and to enhance the working conditions of people.  Unfortunately, the elite economy has not been regulated as well, and the great gains that created the economic boom of post-WWII, allowing a large middle class, have since 1981, been eroding swiftly.  Yes, GDP has risen steadily since 1934, but while the country’s QOL rose as well for a while, it maxed out in 1957, and has been stagnant and has even decreasing in the last 30 years.                   

One country in the world decided to opt out of the simple international of using GDP/GNP and instead instituted metrics of Gross National Happiness (GNH) that focusses on QOL as measures of the country’s success.  Critics of Bhutan’s GNH measures cite the country’s political problems as evidence that GNH doesn’t work, as if our current economic measures (i.e. GDP) do work and somehow are evidence that we have harmonic political situations??  It’s like comparing Apples to Tomatoes and complaining that tomatoes do not grow in orchards.  The critics are thinking from the current system and cannot break out of the box of their rigid economic paradigms.  Are the Bhutanese rolling around in money because of the GNH?  No!  but, are they as depressed as many in the developed world?   Many sociologists and Anthropologists refer to the community aspects of these cultures as evidence that they are much more connected and hence ‘happier’ than we in the western world seem to be because of the cohesive kinds of community’s in which they live.  One common critique of the developed nations is something often referred to as ‘The disease of Isolation.’  This is referring to the individualistic nature of how we live – isolated from each other even with neighborhoods.  What most critics of Bhutan’s GNH so often keep missing is what the rest of the GNH metrics show.  We have no such metrics in our economy to compare, and so we don’t, merely using the GDP that equates to one of Bhutan’s eighth metric in the GNH.  (The nine GNH metrics are Psychological well-being; Time use; Community Vitality; Cultural Vitality, diversity and resilience; Human Health; Educations; Ecological diversity and resilience; Living Standard (the economic measures); and last, Good Governance.)      

To Be Continued……….