Why governments should prioritize well-being

Just over a mile away from here

in Edinburgh's old town

is Panmure House.

Panmure House

was the home of the world-renowned
Scottish economist Adam Smith.

In his important work
"The Wealth of Nations,"

Adam Smith argued,
amongst many other things,

that the measurement of a country's wealth

was not just its gold and silver reserves.

It was the totality of the country's
production and commerce.

I guess it was one of the earliest
descriptions of what we now know today

as Gross Domestic Product, GDP.

Now, in the years since, of course,

that measurement
of production and commerce,

GDP, has become ever more important,

to the point that today,

and I don't believe that this
is what Adam Smith would have intended,

that it is often seen as
the most important measurement

of a country's overall success.

And my argument today

is that it is time for that to change.

You know, what we choose to measure
as a country matters.

It really matters, because
it drives political focus,

it drives at public activity,

and against that context,

I think the limitations of GDP
as a measurement of a country's success

is all too obvious.

You know, GDP measures
the output of all of our work,

but it says nothing about
the nature of that work,

about whether that work
is worthwhile or fulfilling.

It puts a value, for example,

on illegal drug consumption,

but not on unpaid care.

It values activity in the short term
that boosts the economy

even if that activity is hugely damaging

to the sustainability of our planet

in the longer term.

And when we reflect on the past decade
of political and economic upheaval,

of growing inequalities,

and when we look ahead to the challenges
of the climate emergency,

increasing automation,

an aging population,

then I think the argument for the case
for a much broader definition

of what it means to be successful
as a country, as a society,

is compelling, and increasingly so.

And that is why Scotland in 2018

took the lead, took the initiative
in establishing a new network

called the Wellbeing Economy
Governments group,

bringing together as founding members

the countries of Scotland, Iceland,
and New Zealand for obvious reasons.

We're sometimes called the SIN countries,

although our focus is very much
on the common good.

And the purpose of this group
is to challenge that focus

on the narrow measurement of GDP,

to say that, yes, economic growth matters.

It is important.

But it is not all that is important.

And growth in GDP should not be pursued

at any or all cost.

In fact, the argument of that group

is that the goal, the objective
of economic policy

should be collective wellbeing:

how happy and healthy a population is,

not just how wealthy a population is.

And I will touch on the policy
implications of that in a moment,

but I think particularly
in the world we live in today

it has a deeper resonance.

You know, when we focus on wellbeing,

we start a conversation

that provokes profound
and fundamental questions.

What really matters to us in our lives?

What do we value in
the communities we live in?

What kind of country,
what kind of society,

do we really want to be?

And when we engage people
in those questions,

in finding the answers to those questions,

then I believe that we have
a much better chance

of addressing the alienation
and disaffection from politics

that is so prevalent in so many countries

across the developed world today.

In policy terms, this journey
for Scotland started back in 2007

when we published what we call
our National Performance Framework,

looking at the range of indicators
that we measure ourselves against.

And those indicators are as varied
as income inequality,

the happiness of children,
access to green spaces,

access to housing.

None of these are captured
in GDP statistics,

but they are all fundamental
to a healthy and a happy society.

(Applause)

And that broader approach is at the heart
of our economic strategy,

where we give equal importance
to tackling inequality

as we do to economic competitiveness.

It drives our commitment to fair work,
making sure that work is fulfilling

and well-paid.

It's behind our decision to establish
a just transition commission

to guide our path
to a carbon zero economy.

We know from economic
transformations of the past

that if we're not careful,
there are more losers than winners.

And as we face up to the challenges
of climate change and automation,

we must not make those mistakes again.

The work we're doing here in Scotland
is, I think, significant,

but we have much, much to learn
from other countries.

I mentioned a moment ago
our partners at nations

in the wellbeing network,

Iceland and New Zealand.

So I'm noting, and I will leave it to you
to decide whether this is relevant or not

that all three of these countries
are currently led by women.

(Applause)

They too are doing great work,

New Zealand, in 2019,

publishing its first wellbeing budget

with mental health at its heart;

Iceland leading the way on equal pay,
child care, and paternity rights,

not policies that we immediately think of

when we talk about
creating a wealthy economy

but policies that are fundamental
to a health economy

and a happy society.

I started with Adam Smith

and "The Wealth of Nations."

In Adam Smith's earlier work,

"The Theory of Moral Sentiments,"
which I think is just as important,

he made the observation
that the value of any government

is judged in proportion

to the extent that it makes
its people happy.

I think that is a good founding principle

for any group of countries

focused on promoting wellbeing.