A plea to politicians: ask the economists to tell the truth

A plea to politicians: ask the economists to tell the truth (qui la versione in ITALIANO)

TO
the President of the EU Commission (Click HERE to see Ms von der Leyen’s ANSWER)
the President of the EU Parliament
the Prime Ministers of the EU countries
the President of the USA
the President of Russian Federation
the Prime Ministers of the other OECD Countries

Economists, governments, and media focus on GDP to measure the economic consequences of the COVID-19 pandemic. Recovery policies largely aim at sustaining demand and supporting the existing production structure. At the same time, at least for 100 years, economic theory has shown that unregulated markets produce too much of some goods and not enough of others, as compared with what we would like to have. The reasons are the competitive society that normalises shifting of costs on to others to make profits (the so-called negative “externalities”).

As is well known by economists, there are many good reasons for criticizing the use of GDP beyond its technical economic domain. However, the present plea wants to remind economists and policy makers that, even from a standard and mainstream economics approach, looking at GDP can hide serious misallocations of jobs and other production factors. The same level of GDP can be associated with very different levels of well-being.

For example, automobiles cause road accidents, urban air pollution, and greenhouse gases but rather than addressing the root causes of these problems through alternative transport modes or new working arrangements, resources are targeted at  fixing problems afterwards. It would be cheaper to treat the causes of car accidents so they can be avoided, instead of allocating money to treat people involved in the accidents and to repair cars. The lock-down taught us that remote working is possible, implying less time and money spent on commuting, less car accidents, and lower pollution. This is one of the many examples that reveal we are living in a “broken window” economy where smashing windows makes economic sense because it leads to more window repairs. GDP nourishes itself from the misallocation of resources, social cost shifting, and resulting harm.

The potential for restructuring following the COVID-19 pandemic gives every country a unique opportunity to promote job reallocation from useless and harmful economic activities toward valuable ones. Each person can now envision many examples of how such restructuring can occur and each community has the chance of reflecting upon the transformation that suits it best. We can move to an economy that generates less waste and uses less toxics, employs more people in meaningful jobs promoting local sustainability, has shorter workweeks, is more resilient, and has more space for ethics, justice, and equity.

The general guiding principle for any economic policy, as emphasised by Ecological Economics and Industrial Ecology, should be to minimize the economy’s materials flows (including energy). Increasing the speed at which extracted materials become waste increases GDP but degrades our environment, negatively affecting our well-being and happiness, and forcing us to work much more than necessary to get the same level of services.

We ask governments and institutions to reorient our economies to move them away from a model based on producing goods that quickly become garbage.

We urgently need a less hazardous and low-carbon economy that efficiently and effectively sustains human needs and well-being. 

Economists should follow their own logic and ask for transforming the economy to improve wellbeing and make progress towards sustainability.

SIGNATORIES

1. 1. Tommaso Luzzati, Università di Pisa, Italy
   2. Simone D’Alessandro, Università di Pisa, Italy
   3. Tiziano Distefano, Università di Pisa, Italy

1. 1. Elisa Giuliani, Università di Pisa
   2. Nicholas Ashford, MIT Sloan School of Management, Cambridge MA, USA
   3. Federico Demaria, Federico Demaria, Universitat de Barcelona, Spain
   4. Joshua Farley, University of Vermont, USA
   5. Ralph P. Hall, Virginia Tech, USA
   6. Tim Jackson, University of Surrey and CUSP, UK
   7. Giorgos Kallis, Universitat Autònoma de Barcelona, Spain
   8. Peter May, Federal Rural University of Rio de Janeiro, Brazil
   9. Massimiliano Mazzanti, Università di Ferrara, Italy
   10. Dan O’Neill, University of Leeds, UK
   11. Begüm Özkaynak, Boğaziçi University, Turkey
   12. Amy Showalter, Virginia Tech, USA
   13. Clive Spash, WU Vienna University of Economics and Business, Austria

1. Hannes Vetter, University Heidelberg, Germany
2. François Briens, IIRCCESF, France
3. Claudio Cattaneo, Masaryk University, Brno, Czech Republic
4. Pablo Dominguez, CNRS, France
5. Jordi Roca, Universitat de Barcelona, Spain
6. Plumecocq Gael, INRAE, France
7. Tiago Teixeira da Silva Siqueira, INRAE, France
8. Junior Garcia, Federal University of Paraná, Brazil
9. Adrián Saldarriaga Isaza, Universidad Nacional de Colombia – Sede Medellín, Colombia
10. Lucas Ferreira Lima, University professor at FMU (Laureate International Universities), Brazil
11. Bleys Brent, Ghent University, Belgium
12. Gabriel Porcile, UFPR and ECLAC, Chile
13. Katia Romero, Universidad Veracruzana, Mexico
14. Ernest Aigner, WU Vienna University of Economics and Business, Austria
15. Thais Diniz Oliveira, CIRED, France
16. Juan David González Ruiz, Universidad Nacional de Colombia, Colombia
17. Charlotte Guillard, University College London, United Kingdom
18. Jose Carlos  Silva Macher, Pontificia Universidad Católica del Perú, Departamento de Economía , Perú
19. Lukas Hardt, University of Leeds, United Kingdom
20. Stef Kuypers, Happonomy, Belgium
21. Markus Krecik, Freie Universität Berlin, Germany
22. Sylvie FERRARI, University of Bordeaux, France
23. Ana Casquete, Universidad de Burgos, Spain
24. Joseph S. Weiss, ISEE, BRAZIL
25. Ademar Romeiro, Institute of Economics – University of Campinas, Brasil
26. Hartmann Hans J., La Rochelle University, France
27. Peter Graham, Concordia University, Montreal, Canada
28. Pedro Alarcon, FLACSO, Ecuador
29. Robert Richardson, Michigan State University, United States
30. Madhavi Venkatesan, Northeastern University, USA
31. Jan Vávra, University of South Bohemia, Czechia
32. Anitra Nelson, Melbourne Sustainable Society Institute, University of Melbourne, Australia
33. David Robinson, Laurentian University, Sudbury Ontario, Canada
34. Oliver Braunschweig, The New School, USA
35. Judith McNeill, University of New England, Armidale, , Australia
36. Giovanni Marin, Università di Urbino Carlo Bo, Italy
37. Boyd Blackwell, ANU, Australia
38. Kanchan Chopra, Formerly Institute of Economic Growth, University of Delhi, Delhi, India
39. Mario Morroni, Università di Pisa, Italy
40. Ingmar Schumacher, IPAG Business School , France
41. Jim Crosthwaite Crosthwaite, Independent, Australia
42. Roxana Juliá, New York University, United States
43. Mladen Domazet, Institute for Political Ecology, Zagreb , Croatia
44. Stefano Menegat, McGill University, Canada
45. Lekha Mukhopadhyay, Jogamaya Devi College, Calcutta University, India
46. Alpina Begossi, Fisheries and Food Institute, Brazil
47. Oscar Gonzalo Manrique Diaz, Universidad Nacional de Colombia, Colombia
48. Michele Filippo Fontefrancesco, UNISG, Italy
49. Nick Martin, Universitat Autònoma de Barcelona, Spain
50. Thomas Hahn, Stockholm University, Sweden
51. Lino Sau, Università di Torino, Italy
52. Paolo Coccorese, University of Salerno, Italy
53. Christopher DeGeer,  University of Waterloo, Canada
54. Davide Fiaschi, University of Pisa, Italy
55. Matthew Evangelista, Cornell University, USA
56. Neri Salvadori, University of Pisa, Italy
57. Rachel, Graefin von Keyserlingk, Universität zu Köln, Germany
58. Marta Marson, Università di Torino, Italy
59. Jonas Van der Slycken, Ghent University, Belgium
60. Domazet Mladen, IPE, Croatia
61. Hofferberth Elena, University of Leeds, UK
62. Ines Oman, Austrian Foundation for Development Research, Austria
63. Pompeo Della Posta, University of Pisa, Italy
64. Laurie Elizabeth Adkin, University of Alberta, Canada
65. Alessio Moneta, Scuola Sant’anna Pisa,  Italy
66. Michele Carducci, Università del Salento, Italy
67. Mauro Gallegati, UNIVPM, Italy
68. Patricia Ellie Perkins, Canada
69. Barbara, Armani, Università di Pisa, Italy
70. Nicola, Meccheri, University of Pisa, Italy
71. Rodolfo Metulini, University of Salerno, Italy
72. Elena Vallino, Politecnico di Torino, Italy
73. Alida Sangrigoli, Politecnico di Torino, Italy
74. Gianni Vaggi, University of Pavia, Italy
75. Simone Borghesi, University of Siena and EUI, Italy
76. Lorenzo Pellegrini, Erasmus University, The Netherlands
77. Miklós Antal, Eötvös Loránd University, Hungary

17th September 2020