Governments urged to consider sustainable return on investment as the push for economic growth, without understanding the social and environmental impact on people, is finally being seen as poor policy-making.
The RSA whose mission is to enrich society through ideas and action, is currently making some timely points about sustainable value which offers hope for those who think the hidden cost of social failure has been hidden for too long.
In her article Growing Together the Chair of the RSA’s Inclusive Growth Commission Stephanie Flanders explains that increasing dissatisfaction with the way governments have underserved significant sections of the country is a function of the disconnection between social and economic policy.
Flanders explains that policies that try to promote both a high growth economy and offer a secure welfare system function reasonably well in conditions of full employment and growth. However, reverse this and then throw in an aging population, unfounded blame on immigrants (who ironically add younger people to the population), a low wage economy and the post-truth effects of social media and it is easy to understand current social volatility.
The Inclusive Growth Commission is working under the assumption that social infrastructure should be as important as physical infrastructure for all investments.
RealWorth made this point when replying to the Chancellors 2016 autumn statement in relation to investment in housing. Within this context the Commission raises some important issues. Because the feeling of belonging, actively contributing and having a degree of control over one’s life are so important, the issue of governance (and devolution in particular) is singled out for consideration.
This has the potential to shape the forthcoming city-regional mayoral contests in a way that moves sustainable value into some very practical issues.
Many cities no longer have the resources to keep libraries open and to maintain parks and gardens. But off-loading them quickly onto an already disaffected public who feel like the State has abandoned them can’t be the answer. A city-region that can incentivise communities and invest in their capacity to raise additional funds while working together in common cause could have multiple social and environmental gains in troubled times.
Another theme that the commission is considering is the way we measure economic success through gross value added or GVA. RealWorth commented on this in an opening address to the Urban Innovation Lab in Sweden last year.
In her article Stephanie Flanders comments that ‘the government urgently needs to develop a basket of measures that…pick up changes in wealth inequality and in the spread of economic prosperity’. Her point is that the failure to understand the damaging effect of poor economic policies undermines the potential for sustainable growth. The economic impact of unhappiness and discontent is every bit as important as the productivity numbers.
It must be perplexing to the Treasury to be criticised and not congratulated when the Office for National Statistics reports that the ‘employment rate (the proportion of people aged from 16 to 64 who were in work) at the end of 2016 was 74.5%, the joint highest since comparable records began in 1971’. But people working two jobs on low pay and still only ‘just about managing’ leads to inevitable and unsustainable social turbulence.
The Treasury recruits some of the cleverest people in the land, but one wonders how much closer we would be to achieving inclusive growth if they hired for emotional intelligence.