When reading the economy section of any news portal, we often run into monthly, quarterly and yearly figures on ‘economic growth’. More often than not, these figures refer to measurements of GDP (Gross Domestic Product). Such standards in the calculation method of ‘wealth’ (nominal values) and ‘growth’ (real changes) allow international comparisons and aggregations. GDP, a measurement of the value of a country’s production of goods and services, combines in a single figure what the news report as ‘growth’, ‘expansion’, ‘development’, ‘improvement’, ‘increase’, ‘progress’, ‘boost’, ‘success’, ‘rise’, ‘swell’, ‘advance’, among many others. In other words, GDP is the measure of a country’s economic prosperity, which is often used as an indicator of human development and well-being. And that is why GDP and the news that fill one’s heart with joy are in default.
In the website beyond-gdp.eu, an initiative of the European Commission, DG Environment and DG Eurostat, we find the following paragraph:
The limits of GDP are that it does not include a number of factors that determine the well-being of people, such as the value of non-market goods and services (e.g. natural resources), informal and unpaid activities and leisure. Also, GDP emphasises average income and in fact puts weight on the expenditures of the wealthy rather than focusing on similar income development of the poor. Finally, GDP focuses on short-term economic activities or flows, rather than the developments in the assets of natural, economic and social capital, which are important from a long-term sustainable development perspective.
While there are various methods for calculating GDP, all of them end up with the same cliché: They focus on quantity, not quality!
GDP reflects high levels of production while disconsidering the negative consequences it brings to society and environment. (Does it measure well-being?)
GDP includes financial products that increase household debts. (Does it measure wealth?)
GDP considers the rising expenditures on healthcare. (Does it measure welfare?)
GDP includes spending on items such as burglar alarms, safety-cameras and pollution-control equipment (Does it measure prosperity?)
GDP completely ignores the effects of distribution of income. (Does it measure common progress?)
GDP is a quarterly and annual measure. (Does it measure long-term sustainability?)
The topic raised on this post is not new. On the contrary, this is something very well known – since long. Along the years, a series of alternative indices have been created to approach the issue. Most of them tackle one of GDP’s default areas (while still ignoring others). Other approaches, like the HDI (Human Development Index – created by the UN in 1991(!!)) weigh a series of indicators (including GDP) and combine them in a single index. Economists still have not found a common ground from the variety of propositions. Even some supposed ‘Green GDP’ indices have been proposed! No matter what has been done, whether GDP should be improved or replaced is still topic for discussion. The fact is: at the end of the day, when the news report ‘growth’, we are being misled!
That politicians and officials want to look good, this is no revelation. The reason that motivated me to write this topic is the same that motivates me to keep hungrily seeking information: awareness, and the possibility to look at more than one of the many sides of a story. This post is far from being an in-depth look on the topic – it is only a personal call for attention and an introduction on ‘beyond GDP matters’. I do hope that the next time we read/hear/see the news reporting the latest ‘growth’ figures, we will be more critical and consider that these ’embelished’ figures are the basis for much of the monetary, trade and fiscal policies that will ultimately make a difference on our daily lives. After all, for those who follow my “brazilian mind”, ORDER comes first, then comes PROGRESS.*
*This refers to the caption ‘Order and Progress’ (Ordem e Progresso) written in on the brazilian flag.
While I juggle readings from Austria, India and Brazil on my daily schedule, the cross-country analysis is inevitable. In this post, I share three pieces of articles from three different sources (and nationalities), which shall serve the reader as a composite insight on co-related topics, which differ most and above all, by its reporting point of view.
On March 8th, 2011, the Austrian newspaper “Der Standard” published an article about the Austrian plant construction firm ANDRITZ AG, technology provider for the construction of the mega dam in Belo Monte, Northern Brazil (more precisely in the state of Pará, where I lived for 18 years). In this article, ANDRITZ replies to the critics of the Viennese Archdiocese on ANDRITZ’s participation in this project, which puts at stake the livelihood of 50,000 local people (estimates count that 250,000 other shall be indirectly affected as well), which altogether represent an unprecedented environmental impact. ANDRITZ justifies its participation stating that it is part of a consortium and it delivers only a ‘small part’ of the turbines and generators for the project.
On April 6th, 2011, the Brazilian website xinguvivo.com.br published an article on the official statement by the Inter-American Commission on Human Rights (IACHR), in which it makes a demand to the Brazilian government to (immediately) suspend the alreay in ‘advanced-stage’ process of licensing for the construction of the dam.
These two pieces of news caused me remember a ‘Newsweek’ article by Jeremy Kahn published on March 13th, 2011. Named ‘Why India might save the planet’, the article focuses on the Indian environmental minister Jairam Ramesh and his battle on India’s economic growth without the devastation of the environment.
The article talks about the $12-billion steel plant proposed by the South Korean steel conglomerate POSCO to be built in India, which after having been approved by the minister, caused mass protests by local tribal groups, who alleged the plant endangered their livelihoods due to its massive environmental impact. Following the protests, Ramesh suspended the project for further analysis, which led to a new green light as long as POSCO could manage to fall in line with 60 new conditions. These included that POSCO would be limited to just half of the original plant area, 2% of the project’s profits would be invested back on the local community and a quarter of the plant’s premisses would be preserved as green spaces.
In the interview given by Ramesh to ‘Newsweek’, he says: “The way to resolve the conflict between environment and development is to make the tradeoffs explicit”. He added: “The paradox of economic growth is that ecological devastation benefits one section of society only”. On the other hand, he continues: “On the environment, the track record of the Indian industry is not much to write home about”.
Besides the aforementioned review of the POSCO project, Ramesh also blocked Vedanta, a British conglomerate, from building a $1.7-billion bauxite mine, claiming it violated forest-protection laws. On this issue, he says:
If bauxite mining is going to destroy livelihoods, if bauxite mining is going to pollute water sources, if bauxite mining is going to lead to large-scale deforestation, it is better not to have that bauxite mining.
And the list of companies and projects getting a “no” from Ramesh is growing. ‘Livelihood environmentalism’ is what India needs, Ramesh says – a system that cares for bodies of water, forests and land on which the nation’s farmers, fishermen and tribal groups depend. These ecosystems are as essential to Indiaas its new factories and mines.
The growth-hungry BRIC countries might indeed be currently scoring high in economic growth. GDP, the most common indicator of growth, does not take the ‘environment factor’ into account, though. The surprises of not having this factor equated might come up at a certain point (but at what costs?)
As previously mentioned, this post is intented to provide some food for thought. This is not supposed to be taken as a complete panorama on any of the subjects discussed. Again, this is a collage of articles that sounded simply ‘interesting’ to the mind of a Brazilian guy, living in Austria and working for India. This shall serve as an insight for someone out there, too.
The triple-catastrophe that stroke Japan earlier in March and the sequence of events that followed it apparently serve not only as a lesson on disaster management and nuclear policy for various different parties, but they also had their say on marketing and media.
Local Viennese newspapers talk about ‘death clouds’, ‘atomic panic’, ‘death reactor’ and ‘ an unstoppable core melt accident‘. On the television, a German reports on tsunami refugees while playing Celine Dion’s Titanic title song. It seems that the 9000+ km of distance between the ‘factual zone’ (Japan) and the reporting agents (Austria) serve as an incubator for the rapid transformation of ‘facts’ into ‘assumptions’.
While the real facts are enough to blow one’s mind out, the ‘could-be’ wave of information is heavily responsible for the ‘incubated hysteria’. As much as leaders insist there is no reason for panic, Geiger counters, a radiation measurement device, are sold out; potassium iodide pills, which prevents the absorption of radioactivity, have seen a gigantic increase in sales as people stock up and some even take them in. And again, we are 9000+ km away from the accident site. In a very interesting commentary by Manfred Perterer in the newspaper “Salzburger Nachrichten” on Saturday 19th, 2011, he writes: “The closer one gets to the site of the events, the more objective TV, radio, online and press services get.”
Having this all said, the consequence is an ‘unfortunate media-sponsored’ opportunity: fear marketing. And the reason is very simple: fear sells! There is nothing like fear-based appeals triggering customers’ imagination and revealing how terrible things ‘could be’ if he/she fails to follow the recommendation given by the seller. The truth is that fear-marketing surrounds us more often than we think. Different mindsets perceive things in different ways. For some people, the consequences of eating non-bio products can be as scary as not having the proper insurance in cases of trouble for others individuals. Both selling propositions can be ‘fear-driven’ at different levels for different customers.
The so-called ‘fear marketing’ appeals to the harm it prevents or removes as well as to the benefit it brings. In both cases, the goal is achieved by either purchasing the ‘product’ (condoms prevent AIDS) or by ‘avoiding the purchase’ (cigarettes kill). According to marketing specialist Martin Lindstrom (as quoted in an article by Marko Kananen from TheBeginner.eu on March 24th, 2011): “Fear will be one of the most important factors pushing the sales far into future. The effectiveness of fear is based on the neurological fact that the brain’s fear is more powerful than the brain’s reasoning circuitry.”
While marketers play with Maslow’s pyramid to get things sold at the costs of fear, the media’s reports on natural disasters such as the catastrophe in Japan deepen consumers’ deficiency of their most basic needs. Whether one can call it “fair-play” or not, this is just food for thought. The fact is that this ultimate madness has to be reasoned out. Sensationalists might make good use of Celine Dion’s hit to tell us what we have to feel. One has to be aware of his brain’s reasoning circuitry weakness, though. Recognizing this weakness and searching for quality factual media to help us make our own opinion might be a good way to avoid being stocked by the ‘death cloud’.
After graduating on ‘International Marketing & Management’ from Lauder Business School, Vienna, Austria, I realized I had spent considerable amount of time on something that ultimately proved my four years of studies/intership were worth something: my diploma thesis on “The Black-and-White Color Scheme in Product Packages: A Study of Visual Perception”.
My 133-page piece of work, result of a six-month research carried during late 2009 and early 2010 is just too valuable to be kept on my bookshelf only. If there is someone out there who has some interest in it, I will be more than glad to share the results of my work. Get in touch!
In the meantime, here is the abstract of my thesis:
The study presents an investigation about the use of colors in product packages. One of the elements responsible for the communication aspect of product packages at the point of sale, individual colors and color combinations are reviewed from the marketing perspective as key on-site consumers’ perception molding and influencing factors. Narrowed down to the specifics of one color scheme, the black-and-white, this research analyses the peculiarities of this so called ‘old-fashioned’ color scheme in comparison to other schemes. Its influence in consumers’ perception of quality and purchase choice is observed through an empirical research conducted via an online platform, whose results indicate instances where the black-and-white color scheme indeed achieves more positive evaluations leading to purchase behavior. Going from the cross-cultural spectrum of meanings and associations of colors to the implications of the use of black-and-white in product packages, this research’s outcome compiles significant knowledge on visual perception. Supported by observation, the lines of research are filled with diligent literature-based citations and expert opinions and supported by the results of observations.
A guide for marketing managers and package designers seeking scientific knowledge leading to concepts of product packages, which fully take up its marketing-oriented applications, and an in-depth study of the achromatic color scheme, that is, black and white in combination, this diploma thesis conclusions go from the insights about color perception’s socio-cultural attributes to the positive relations between consumers’ quality perception and final purchase decision.