Industrialization in the Modern World
Ever since industrialization occurred in Europe, America and parts of Asia, economic growth has been the major focus point of most governments. This quest arose because of the desire for higher economic status and political power. However, during this pursuit the subject of personal wellbeing and happiness came about. According to the PEW global survey (as cited in Stokes 2007), it has been noted that, an increase in personal well being has a direct relationship with an increase in economic growth.
In other words, people in countries that are economically developed tend to be happier than those in countries with little or no economic growth. As this statement may be true, it cannot be applied to all countries as most of the people in developed countries do not show any signs of getting happier even as their economy is advancing. The controversy here is whether economic growth makes people happier or if happiness is the cost of economic growth. This argument subsequently leads to the question of how economic growth and happiness is measured.
This essay will discuss if the government should focus on well being or concentrate on economic growth by focusing more on GDP. The paper has been divided into 5 parts. The first and second part will examine the disadvantages and substitutes of GDP. The third and fourth part will focus on the limit of GDP and effects of income inequality respectively. The fifth section will discuss the outcome of replacing GDP and then a conclusion will be given. Shortcoming of GDP GDP can be defined as the value of goods and services we produce every year and it is the means by which economic growth is measured (Norberg 2010).
Though, this means of measurement puts more emphasis on maximizing production without taking into account the ways our environment is harmed. Since GDP focuses entirely on utilizing the available resources, more factories are established and this increases the amount of C02 and other perilous chemicals that are released into our environment. As a result of this, most government bodies and economic planning committees see this method as disparaging and are looking for a way of replacing GDP with another means of measurement.
To be exact, a method that takes into account personal well being and happiness. (Amelia 2010) Substitutes for GDP Some attempts have been made to create indexes that guide the measurement of happiness. Norberg (2010) reports that, the Himalayan Kingdom of Bhutan established an official policy that measures happiness and promotes modernism without hampering traditional Buddhist culture. This policy measures happiness in 9 dimensions with 72 variables and it is known as Gross National Happiness.
Moreover, stokes (2007) states that, PEW survey created a measurement of satisfaction from which they could appraise the happiness of people. Individuals were shown a ladder with ten steps and were asked to envisage that the pinnacle of the ladder signifies the preeminent form of life for them and the pedestal of the ladder as the worst life form of life they could ever attain. They were then asked to position themselves on the step of the ladder that best reflects their present situation.
Furthermore, Norberg (2010) stated that, a Happy Planet Index which measures personal wellbeing and environmental sustainability was developed in 2006 by the New Economics Foundation. Although these actions are praiseworthy, a major setback of these indexes is that they are subjective and difficult to measure compared to GDP. As stated by Norberg (2010), these indexes are designed in such a way that, those in charge of administration are given an opportunity to dictate the type of lifestyle we are to follow. Limit of GDP
Conversely, focusing entirely on GDP will not solve the problem of happiness. Richard Layard (as cited in Norberg 2010) claims that we achieve happiness only when wealth takes us out of the worst form of poverty. Stevenson & Wolfers (2008) also agree to this claim as they show that, satisfaction moderately increases once the basic needs of a person are met. According to PEW’s measure, the level of happiness in rich countries did not improve much over the last five years. The same proportion of Americans, Germans and French that were happy five years ago are only moderately happier now.
This seems to confirm what Carol Graham, senior fellow at the Brookings institution in Washington (as cited in stokes 2007), said about the relationship between happiness and wealth in rich countries. She states that affluent countries overall are happier than poor countries as a whole but, happiness rises with income up to a particular level but does not go ahead of it. By examining the graph composed by Speth (2008), one will notice that, even as the level of per capita income increases over the years, life satisfaction remains the same.
Differences in income Variation in personal happiness can also be linked with income inequality and this can overshadow the benefits associated with improvements in economic growth and national income (Stokes 2007). This is most evident in Nigeria where a 26% rise in per capita income was achieved, but the concern regarding the gap between the rich and the poor outweighed the benefits of this improvement. This clarifies why most Nigerians where moderately happy even after the overall development in the economy (Stokes 2007).
This is a reminder that while focusing on economic growth; the government should bear in mind income inequality. Cost of substituting GDP There have been various attempts to replace GDP because it is aimed at maximizing production without taking into account the way our ecological unit diminishes. Constructing wellbeing indexes seem to be the best solution most government have in mind, since it takes into the account the exhaustion of our environment and individual happiness. Still, it is worth noting that the construction of these indexes depends on how a person views the definition of well-being (Norberg 2010).
It could be argued that these indexes cannot give a precise solution to the problem regarding happiness because the definition of well-being varies from one person to another. Furthermore Norberg (2010), states that, the substitution of GDP with another means of measurement not only limits our knowledge, it will hinder us from knowing what we are capable of producing and the number of problems we can solve as a society. Conclusion The items we desire in life has a strong relationship with GDP. Improved education, better health, longer lives and less poverty all depends on how high the GDP of a country is (Norberg 2010).
If the attainment these desires would make an individual or a country as a whole happy, then focusing on GDP will be a very good idea. According to Gallup’s world poll, the outcome of an increase in growth by 1% results in an increase in personal well-being by 0. 2%. As such, the first step to improving happiness in developing countries is focusing on GDP. In conclusion, GDP is pluralistic. That is, it enables the government to make a decision that is in favor of everyone’s interest and it also gives people an opportunity to choose what makes them happy.