The current economy, which is focused on growth and increasing material wealth, is not sustainable by any calculation. The negative consequences of our economic model are becoming increasingly clear, such as ongoing deterioration of our living environment and, in many countries, the disruption of society. To avoid irreparable damage, we have to redefine our current financial and economic system, as well as our notion of growth. From an investor perspective, this means that we need to assess risk and return of investments in a different manner.
GDP does not measure progress: It is human nature to strive for progress. But what progress are we talking about? For a long time, progress was defined in non-economic terms. To begin with, philosophers/economists would talk about happiness. Later, this was translated into utility. Later still, when mathematical models entered economics, this utility was monetized and replaced by an increase in Gross Domestic Product (GDP) as an indicator of material prosperity.
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