In this episode, Tobi talks to David Pilling, Africa editor for the Financial Times. They discussed his book "The Growth Delusion", exploring the significance and limitations of economic growth, particularly in poor countries. David challenges the conventional reliance on GDP to measure economic success, proposing a more nuanced approach that considers wealth distribution, environmental impacts, and overall well-being. He argues for a balanced view that recognises the necessity of growth for development while advocating for policies that prioritise human and environmental health. The conversation also touches on broader development issues in Africa, including the misuse of resources and the political challenges hindering effective governance and equitable progress.

The transcript of the conversation is below, and many thanks to David for coming on the podcast.

Tobi;

This is Ideas Untrapped podcast, of course, and my guest today doesn't need much of an introduction, anybody who reads the Financial Times knows David Pilling. He is currently the Africa editor of the Financial Times newspaper, he used to be the former Asia editor of the newspaper, and he has written many fantastic columns and essays covering a wide range of subjects. And recently he's been writing a lot about Africa, especially stories on development and other related matters. It's a pleasure to welcome David Pilling today.

Welcome, David.

David;

Thank you so much. It's a pleasure to be here.

Tobi;

I want to talk about your book for a bit and one question that keeps popping into my mind as I kept reading, that was a couple of months back last year, the general tone of the book, which is called The Growth Illusion was, you know, one of skepticism, right?Also, the impression that jumps at me from reading your economics-focused stories about Africa is that growth is important. So has your work in Africa forced you a bit to reconsider some of the positions you take in the book?

David;

Yes and no. I mean, the book never said growth isn't important. It is called The Growth Delusion. It's true. And that is a, you know, deliberately, I suppose, provocative title to some extent modelled after The God Delusion by Richard Dawkins. So it was a kind of an echo of that. So, yes, you're right. It was a sceptical title and journalists ought to be sceptical. And what I was doing was I was prodding at the concept of growth, what it is that we measure, how we measure an economy's success.

What I was not saying is that growth is not important. And I think growth is particularly important for poor countries. You know, we can put richer countries aside for one second, but in a poor country where there are not enough resources for people to have what Amartya Sen, the Nobel winning economist, calls sort of what we now know as agency, really. You know, choices over their lives, where they live, what work they do. And those choices can be denied by very simple things. Lack of food, lack of a roof over your head, lack of work, lack of safety and security. Unless those things are satisfied, then I believe that people aren't able to live their full potential. And for that, you need an economy that's firing at a certain level. In other words, you need to go from an economy that isn't firing to one that is. Then, of course, many other things need to happen, including the wealth that is therefore generated to be, you know, relatively equitably shared, for people have to have access to economic opportunities.

But my book was never saying, you know, growth is bad. We need degrowth, which I know is a trend of thought out there. But my book, despite the title, was really looking at other things, which I'm happy to go into if you'd like more of a discussion. But just to make it clear, I was absolutely not saying that if you have an economy where people lack what I would consider the absolute sort of basic minimum to live a fulfilled life, you know, those economies absolutely need to grow and they need to grow fast as the experience of Asia shows with the rapid growth in places like China, which has transformed hundreds of millions of people's lives and opportunities.

Just occurs to me that what just happened, you know, the power going out is in a sense a tiny example of what I'm talking about. You know, there you are making a podcast that you want to be a world class podcast and it's interrupted. I mean, in the end, it's not such a big deal and we are able to carry on. But it's just a little window into, you know, if Nigeria had a decent power system. then you and millions, in fact, tens of millions of other people would have much easier lives, would have much higher productivity, would be able to worry about other stuff. I mean worry in a good way. And, you know, we could call a better power station growth or a better power system, if you want. The money, the resources, the expertise, the systems to produce a good power system for all Nigerians so that all Nigerians can just rely on it and forget about the lights ever going out will make an enormous difference to people's lives. We can call that growth. And so I'm not against growth. I'm for growth.

Tobi;

Especially for the benefit of listeners who haven't read the book that perhaps I didn't frame that first question very well. The book not in any way suggested that growth is bad. And, of course, I urge everyone to read. It's a fantastic book. So what I'm trying to get at is there seems to be a big debate, even in the subfield of development in economics, about the appropriate measure for growth. The measure that best captures what makes a difference in people's lives, what people value, and you do a little bit of that also in the book, particularly in your discussion around GDP. So please just walk me through the history of the GDP, your critique of it, where it falls short, and what are the things, what are the other dimensions of well-being that it doesn't capture, and why is the field or policy reluctant to expand what we mean by growth?

David;

Yes. Okay. That's this very big subject when I wrote 250 pages on it. But let me try to encapsulate a few things. So GDP was invented, if I remember right, invented is probably the right word, in the 1930s, 40s by a guy called Simon Kuznets. And the aim, in a sense, was trying to encapsulate what was happening to an economy. And as hard as it is to believe before the invention of GDP, which really sort of measures all the products and services that an economy produces in a given period, before that invention, a single number to encapsulate what an economy is doing, there was no such number. So you could say, well, things feel good, people have work, the stock market is going up, there seems to be a lot of delivery of coal or whatever.

But there was no single number that said, you know, GDP is this and it grew by this. So the first thing to acknowledge, I think, is that this is a very clever number and it's an important number. And if you only have one number, it maybe is even the best one. Although somebody said in Mozambique, a finance minister, that he used to watch the May Day Parade and he judged the quality of people's shoes. And if people were wearing decent shoes, then he thought things were getting better. And if they weren't, he thought things were getting worse. But clearly, that's a very crude measure. So GDP, I'm saying, is not a bad measure, but it misses an awful lot and it distorts an awful lot. Let me give you a few examples. So the first thing to know about what we call growth, what we call GDP, is that it's a measure of what you might call flow. It measures what an economy produces, let's say, every year. It doesn't tell you anything about the wealth, which is the assets of that economy.

So let's take Nigeria as you're in Nigeria. If you take oil, which is an asset, and you take it out of the ground, you can turn that into GDP, into a flow of wealth. But eventually that oil is going to run out. So if you keep just taking out oil, selling it, spending it, take it out, sell it, spend it, eventually you've got no oil and you've got no money. And you could argue that maybe that's in part what Nigeria has been doing. The best thing to do with wealth like natural capital as it's called, is you turn that into other forms of capital. So you turn it into productive capital, which means infrastructure. So you'd build with those billions of dollars that have come out of the ground in Nigeria, a world class health system, world class transport, world class airports, world class universities, and you'd build human capital. Some of the same things with healthy, well-educated people who can then go on when your oil has run out and do many other things.

Now, it doesn't take a genius to work out that Nigeria hasn't done particularly well in that. Of course, there are brilliantly educated Nigerians and there are some lucky Nigerians in the elites that have access to good healthcare and good education, but often outside the system, sometimes indeed outside Nigeria. But what I would argue that Nigeria and many other countries have failed to do is to move that wealth into different sorts of wealth that will produce GDP again going forward. Because otherwise what your GDP has measured is a kind of a one shot. We took oil, we sold it, it's gone. So that's the first important thing about GDP is it's a flow, it's not the wealth.

Let me give you another example, and this moves into the environment. If you have a forest from the perspective of GDP, the absolute best thing you can do with that forest is chop it down as quickly possible and turn it into something else like a table. Turn your wood into a table or burn it or do something to produce e...