Forget about GDP, focus on wellbeing, says economist

Written by Leisl Peyper via fin24 on 11/7/17

Cape Town – South Africa could get by without economic growth if the country were to use its resources more responsibly, said Lorenzo Fioramonti, political economist at the University of Pretoria.

Speaking at an event co-hosted by the Network of Italian Researchers and the Italian Consulate in Cape Town recently, Fioramonti argued that the pursuit of economic growth worldwide often resulted in more losses than gains, exacerbating inequality in societies.

“As long as we pursue this model of growth we’ll remain off sync with the real issues – climate change, poverty and inequality,” he said. 

Fioramonti said in an environment where economic growth is declining a new “recipe” is required. “Rather than crying about low growth, we should rather have a conversation about how we can optimise the resources we already have.”

A proponent of the so-called wellbeing economy, Fioramonti said if countries start focusing on new indicators that track human wellbeing, health and education, this could herald in a new development paradigm.

“Our culture of consumption is self-destructive. We preach doing things in moderation, yet when it comes to economic policy we consume as much as possible and we celebrate countries that excel at this consumption,” he said. 

As an alternative he proposed “placing humans and nature” at the forefront of economic objectives. “We need an economy that empowers people; we need 'pro-sumers' rather than consumers – people that produce and consume in different ways.”

What I’d tell Zuma’

Fioramonti said if he were to meet President Jacob Zuma “tomorrow” he’d suggest that the government use GDP in a “different way” by distinguishing between transactions and deals that increase wellbeing, and those that diminish it.

Africa is rich in cooperative schemes of production and consumption as well as community-driven governance which, he argued, could be fertile ground for localised and decentralised forms of development. 

Eskom not the solution

Energy generation is a fine example of such a decentralised development, Fioramonti said. South Africa’s energy future lies in a decentralised electricity generation system, rather than relying on Eskom, he argued.  

“It seems as if we’re talking about Eskom all the time. First it was load-shedding, now it’s corruption, scandals and mismanagement. Trying to fix Eskom surely is positive, but it’s not the future.”

According to him, communities should be the owners of their own energy generation. The abundance of solar energy in SA should make it possible for entire communities to become energy independent.

“I’m not advocating another independent power producers (IPP) programme with large solar and wind that will cost billions and billions to activate. I’m talking about a decentralised energy system that focuses on renewables, such as solar panels on rooftops to empower households and factories and cities where people own these energy systems themselves.”

According to Fioramonti, 3% of electricity is lost just through transportation. “But if you produce locally you don’t have to transport it.

“A power failure in one of the central plants causes blackouts across the country. But if you have a decentralised energy system that doesn’t happen. And it’s good for the environment.”