Noreena rethinks Economics in Der Spiegel
March 24th, 2010
Spiegel Online: ‘Even war is good for economic growth’
Economist and globalization guru Noreena Hertz was already warning about overpowerful banks, unfettered greed and unregulated markets way back in 2001. Speaking to SPIEGEL ONLINE, she explains the limits of focusing on GDP and why capitalism is at a turning point.
SPIEGEL ONLINE: Dr. Hertz, one is constantly reading about how much a country’s economy has grown or shrunk. Why is gross domestic product (GDP) taken so seriously?
Noreena Hertz: It’s easy to measure and shows how one nation performs in comparison to another. Every country, therefore, measures its economic success by its GDP. Only Bhutan is an exception.
SPIEGEL ONLINE: According to the constitution of Bhutan, the people should not become richer every year, but happier. The little Asian kingdom wants to achieve this with a socially equitable society and better protection of the environment. Is this a better approach?
Hertz: Definitely. GDP only measures a small part of economic success. Some really important aspects are ignored. Take sustainability, for example. It’s absurd that a country can have high growth rates because it has a lot of polluting industry. The quality of the air, health, progress made by women, child care and social cohesion — these are all important economic factors. GDP does not show how innovative an economy is. Nor does it show if the products being produced will be successful in the long run or will be out of fashion tomorrow. But, up to now, there has not been a substitute for GDP…
Read the rest of this interview on the Spiegel Online website