Is Our Idea of Economic Success Completely Broken? (Your Radical Questions with Kate Raworth)

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1:38Amol Rajan:Hello and welcome to Your Radical Questions. This is where I put your magnificent questions to one of our magnificent guests. It's a chance to really engage very directly with the brilliant, radical, thought-provoking, brave people that we have on this podcast to ask them about their ideas for the future. And this week, as you may know by now, because you heard Thursday's fantastic episode, I'm so thrilled to be joined by Kate Raworth, who has fundamentally altered how we think about economics. She wrote a book in 2017 called Donut Economics, huge bestseller. It's one of those books that other economists use as a kind of starting point for their own philosophy and worldview.

2:15Amol Rajan:Kate thinks that we should, rather than have this relentless focus on growth, we need to... Meet the needs of all people within the means of the living planet. Fabulous. And her big radical idea is that we should have an economic model which puts ecological and social needs first. Things like human rights, instead of prioritising things like GDP per capita at all costs. Anyway, it's all in Thursday's episode. It was a good episode, wasn't it? It was great. I loved it. It was absolutely fantastic. And we've had lots of questions. Thank you, as ever, to all of you who have sent in questions. We had rather a lot because Kate is a very, very, very, very popular guest.

2:46Amol Rajan:As I mentioned on Thursday's episode, she is the most requested guest that we've had. Because of my sister. No, it's not. It's because of you. It's amazing. Oh, yeah, I forgot I asked about that. Anyway, here we go. Lots of questions. We're going to rattle through as many as we can. Okay. First question, and it's from Toby. GDP condenses all economic activity down into one metric that can assess a country's performance. Does GDP incentivize the right kind of economic development? And if not, do you propose an alternative economic metric, or do you believe that we should move away from metrics like GDP entirely?

3:18Amol Rajan:Oh, Toby, what a fantastic question. Thank you, Toby. Great question. So GDP doesn't add up the value of all economic activity. It doesn't do diddly squat for the unpaid caring work of parents, the cooking, washing, cleaning, sweeping, raising the kids and getting labour ready to go to work every day. That's massively missing. It doesn't count the value of everything that's in the commons or the community created. It doesn't count the value of Wikipedia, for example. It doesn't count the value of having a stable climate or fertile soils and everything the earth gives us to make economic activity feasible.

3:49So what it does do is reflect the financial value of the goods and services that bought and sold in an economy in a year. And that's a subset of everything that matters. So that's one issue. Simon Kuznets, who was one of the architects of GDP back in the 1930s, he was asked to come up with GDP as a measure for the US economy at a time when they didn't have that. They had tons of steel and tons of timber. And it was really handy to be able to add stuff up for the first time, especially when you've got a war going on in the 1940s. How much do we need to keep going for provisioning for the American population?

4:21How much can we take off for the war effort? Really handy to be able to do that. But even Cousinus himself said GDP can scarcely be taken as a measure of the welfare of society. He knew it didn't count the value of forest as opposed to timber. It didn't count the value of society. It measured income and not wealth. So I think he'd be turning in his grave if he knew that today, really, nearly 100 years later, we were still using this one number to rule them all. We live in the era of the data revolution. Almost many people on the planet have a mobile phone. So actually we can gather human data about do people have food and health and education?

4:59How's their well-being? We can gather much richer information about people. We can measure the planet with sensors. We can almost in real time sense the health of this planet. So, yes, I would replace that one metric with a dashboard. And actually, there's one I've already drawn. It looks like a bit like a donut. And we're now going to be reporting on this year on year together with my colleague, Andrew Fanning. We are going to be updating the data of the donut every year. And so we can see at the global scale, are things getting better? Are we meeting humanity's needs or not? Are we coming back within the means of the planet?

5:32But nations can do this too. So you can have a national donut. And I would love to see, and it could be happening now. nations or cities reporting year on year to their people, here's how we're going in terms of meeting the needs of our people here within the means of the planet. This is a very 21st century goal and we've got the metrics for it.

5:52Amol Rajan:So it's not about abandoning metrics altogether. No. When Toby says, or do you believe we should move away from metrics like GDP entirely? It's about a single metric to a dashboard. Yeah. It's a dashboard. Yeah, yeah. Think of driving a car. I mean, if I offer you, oh, well, here's a car. It's a great car. There's just one indicator. I've made it simple for you, mate. I've added everything together. So it's got the speed. It's got the engine temperature, fuel. It's got, you know, acceleration. It's all just in this one indicator. The donut dashboard. That's what we need. No, it's all in one indicator.

6:22You would refuse to drive that car.

6:24Amol Rajan:Yeah, yeah, yeah. Because you want to know, you know, think of a cockpit of an airplane. They've got a zillion little indicators. Because we want to know lots of different things about managing this delicately balanced system. So why on earth would we steer our economies with this one number? I often, you know, think of it like at a domestic scale. If my kids held a yard sale in front of my house and had a big sale and I went out and I come back and they go, mum, mum, we made 100 quid. I was like, wow, how'd you do that? Oh, we sold the dog. It's like, that's not okay. It matters what we're buying and selling, right?

6:57It matters what is the content. Is the GDP going up because there's been an oil spill and now we've got to clean the ocean or is it going up because we're hiring more primary school teachers? It matters. So we want to know how it's impacting on humanity and how it's impacting on the living world.

7:10Amol Rajan:Have your twins sold the dog? No. Wouldn't forgive them if they had. Toby, thank you very much indeed for that question. We've got loads and loads of questions about the politics around donor economics, including, this is a good example. In fact, it's an exemplar, an exemplar from Stuart. Hi, Amol. How great to have Kate Rayworth on Radical. I've got a question for her. How do you reconcile the need for change against the main political parties who are so attached to growth? Do you see the upsurge in support for the Greens as hope for donut economics? Or is it a step too far, even for them? Thank you so much for that, Stuart.

7:53Amol Rajan:I should say we've had loads and loads of questions, Kate, on a similar ilk, which is the sort of UK domestic politics implications of what you're saying. Another one, just to give you an example, is this from Julia. Julia, thank you for sending this in. Julia says, in the UK, we can't maintain a prime minister for more than 10 minutes as we always want more, want better. We strive and want by nature. How do we address this and then maintain it for more than one political campaign? How can you convince a global humanity that everything they have known and understood needs to change? Whoa. OK. Stuart says, Kate, how do you reconcile the need for change against the main political parties who are so attached to growth?

8:28Amol Rajan:And what do you make of the upsurge in support for the Greens? So for me, it's really important that the concepts of donor economics are recognised by political parties across the spectrum. And that has been the case both in the UK and the Netherlands. So in the UK, when my book first came out, the Green Party were the first to invite me to come and speak at one of their conferences. But then the Labour Party, John McDonnell, invited me to come and speak on a platform with him about creating a circle economy. The Women's Equality Party engaged with it. The Liberal Democrats have engaged with it.

8:59even conservative party ministers have referred to it told people to go and read donut economics this really matters to me because the goal of meeting the needs of all people within the means of the living planet surely crosses a political spectrum surely as humans we recognize that this matters people in different parties may come up with different policies to get there and that's the whole question of how do we get there but it really matters to me i often say you know donuts it's not left wing or right wing donuts don't have wings and and the more in a country that it's recognized as a common goal across the spectrum that really matters but the goal of being regenerative and distributive I think it is much more what I hear it's more home turf to labor party green party parties that value the rights of all and value the ecology and that the health of the planet so I think yes we're here in the and we're talking about the UK we hear in the rise of the green narrative, I think it is resonant with a lot of what donut economics talks about.

10:01And I'm always listening to hear when political leaders talk about thriving instead of growing, or when they say we need to live well within the limits of the planet. The word within sounds like a little joiner word. It's actually a radical word, right? When we say we want to live well within the limits, this is a very different paradigm from saying we've got to grow, grow, grow. So I'm always listening for that. and I think the way the Green Party are talking about it in the UK at the moment taps into what a lot of people feel around this.

10:32Amol Rajan:Julia's question says, I think she's alert to the fact that we've had quite a few prime ministers in recent years and we always want more, want better. We strive and want by nature, Julia says. How do we address this and then maintain it for more than one political campaign and then how can you convince a global humanity that everything they've known and understood needs to change? OK, so how do you reconcile this feverish, short-term British politics with long-term ecological thriving? And then also, how do you convince people beyond our borders? So I think the feverish, short-term media cycle is really problematic.

11:07It's gaming our attention and turning politics into a shock scandal. Let's shame them with headlines. I really empathise with politicians. I think that is not an easy job at all to be judged, you know, multiple times a day. Again, the short termism that that creates and the personality and the kind of attacks. How hard must it be to make good, common good, long term, sensible thinking policy beyond the immediacy? I mean, just everything is set against you. So I just want to empathise with politicians on that. The city of Grenoble in France, they said in 2022, we're adopting the donut. and a child born today, by the time they're 18, it'll be 2040.

11:50We commit to this city being well on the way to living in the donut. The City of Amsterdam have done something quite similar, taking a long vision, like 18 years, way beyond anybody's electoral cycle, let alone political career. So we've got to have ways, and the donut is one of them, to get beyond the immediacy of not even just the daily cycle, but the four-yearly kind of re-election cycle. How do we get out of that?

12:14Amol Rajan:Julia, thank you so much. The next question, I love it when different episodes of this podcast are kind of in conversation with each other. And by implication, our different guests are in conversation with each other. And we've got a question here from Matt Clifford. Matt Clifford wrote the AI Opportunities Action Plan, which had a whole number of dozens of recommendations, which Keir Starmer said he would implement. And he's quite a big fan of economic growth. And he cast himself in this very charming voice note as being in a different place to you on that question. He thinks this country needs to supercharge growth, especially using AI to make Britain wealthy again and fix the problems of the nation.

12:50Amol Rajan:And Matt Clifford has very kindly sent in this voice note. Hi, Kate. I suspect we probably disagree about the role of economic growth. And so my question for you is this. Seems clear to me that over the last 300 years or so, growth has been the single most important force lifting people out of poverty and improving living standards. If you're living in 1700s, say, it would have been very hard, I think, to argue that people had enough prosperity. So my question is, how should we know when growth has stopped being the solution and started being the problem, in your view? Is there a level of income, welfare or material comfort at which society should deliberately stop prioritising growth?

13:32Amol Rajan:And if so, how would we tell? Yeah, great question, Matt. Thank you. There's two ways I think I'd say that. One, when the data show that the vast majority of the returns to increases in wealth are going into the hands of the pockets of people who are already very wealthy, it's not being a very efficient means of actually tackling poverty anymore. And secondly, we need to look at the connection between trying to supercharge growth, as you might say, and our carbon emissions and the impact on the planet. Because we have to recognize very differently from hundreds of years ago, we now know that we are having the impact on the stability of the climate, which fundamentally determines life for everybody on this planet.

14:21So when the data show that our economy grows, we are not decarbonizing at anything like the speed or scale that's required. We are not on track for what would be green enough growth. So I would put the question back to you. If you want to supercharge growth and using AI, I would say you need to prove that you can do this while decarbonizing five times faster and also dematerializing our economy. Because when we look at our relationship to planetary boundaries, we're way over. on our use of, on our carbon emissions. And we're way over on our material impact. So how, how would that plan bring us back within our share of planetary boundaries?

15:01I think only then can we say we could actually engage with AI and stimulate the economy. I don't want to say grow the economy because that's not the point. The point is to create an economy that thrives and meets people's needs. So I put the challenge back to you.

15:15Amol Rajan:Because Matt's question says, is there a level of income, welfare, and material comfort in which societies should deliberately stop prioritising growth. And you'd say it's not about the level of income, welfare or material comfort. It's about who's getting the returns of capital and what's happening in terms of carbon release. So first of all, it's about ensuring that everybody reaches the minimum level, right? So we want to make sure nobody's falling short. And then rather than specifying a maximum, I'm not interested in saying, oh, you shouldn't have a house bigger than that or an income bigger than that.

15:40The point is we've collectively got to do this within the means of the planet. So we are way over the means of the planet right now. And so that's the metric that matters. We need to come back within.

15:52Amol Rajan:You and Matt would get on, you know. I love it. You know, I really love respectfully disagreeing with you. Yeah, of course. It's called democracy. And, you know, you're two very, very bright, very, very nice people. Matt, thank you very much indeed. It's always, always really nice to get a voice note from a previous guest as well. I hope you are well. This is a final question. Let's make it a final question because you've been so generous with your time, Kate. It's a final question from Nicola. I'd be very keen to know your thoughts about the feasibility and potential of having a universal basic income in the UK.

16:22Many thanks and absolutely love the show. Keep it up. Bye.

16:26Amol Rajan:Oh, Nicola, thank you so much. That's so kind of you. Universal basic income. This is something that actually has a lot of adherence in Silicon Valley, where people think that AI is going to come for many a job. What do you make of the case for universal basic income? Universal basic income is not going to enable you to have everything you need. And there's a danger that, let's say, if you've got a society where a lot of housing, for example, is owned by landlords, then landlords are like, oh, I now know you've got some money in your bank house, so I'm sticking the rent up. It's not redistributing.

16:55If that becomes the policy, then it pushes us into, you've all got your basic income, go buy everything you need. And then we start privatising equally as important. And actually, if I had to choose between, I'm going to go for universal basic services. and this is about public health care, state-led education, water, really affordable transport. What would you choose? Everybody has their basic income. You go buy everything you need. Good luck and hope that the income keeps up with the prices of stuff that you need. Or you could live in a society, and there are places like this, where you've got really good state-provided education schools.

17:30Of course you want your kids to go there. You've got good health care. You've got clean water in the rivers. You've got really affordable public transport. and it's really equalizing. This is like pre-distributive design. It means that the fundamentals are provided publicly and that we can all afford them. Now, personally, if I have to choose between those two realities, I want to go to the place that really invests in universal public services.

17:52Amol Rajan:Of universal banking. I think in your book you say universal basic income, why on earth not? But you've just said some reasons as to why not. Because there's caveats, there's caveats. Yeah, and I'm not against it at all. I just want to be careful. You want to help people think it through? Well, there are often things that we think, that sounds like a solution. You know what? Solutions can be gamed and they can also be under provided. And so let's not get idealistic about any one thing. I don't think any one thing is the solution. I think it's really important that there are trials going on in the world.

18:23And let's learn by experiment what happens when. But also let's not get obsessed with one solution because who knows how it fits with all the other solutions. It's systemic change and thinking about thinking differently.

18:33Amol Rajan:Yes. Kate, you've been so generous with your time. I feel slightly guilty about it. No, I really enjoyed it. The website for Deal, which is the Donut Economics Action Lab, is going to be collapsing under the weight of radical subscribers. No, it's going to be thrumming. It's going to be thriving. It's going to be thriving and thrumming. DonutEconomics.org. Check it out. Anyone can use all of our tools. We put everything in the Commons. I hope your website could deal with the traffic that's about to come your way. We're ready. Thank you so much for all of your questions, lovely listeners. Thank you for answering them, Kate.

19:01Amol Rajan:I'll be back with another episode of Radical on Thursday. But until then, thank you so much for your time and from me and from Kate. Goodbye. Bye-bye.

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