With most economic activity on a decline, one that has seen a sharp upturn is the raids by Somali pirates in the Gulf of Aden. After a million dollar ransom was paid out to rescue the Indian crew of Japanese ship MV Stolt Valor, the Indian Navy has swung into action to protect our ships and keep the sea lanes secure.

The pirates however, say that, in the eyes of the world, they have been misunderstood. On telephone, they told the New York Times, “We don’t consider ourselves sea bandits. We consider sea bandits those who illegally fish in our seas and dump waste in our seas and carry weapons in our seas. We are simply patrolling our seas.” Baffling? Actually, the genesis of this ‘industry’ lies in a reaction by poor Somali fishermen against illegal fishing. With no government in Somalia since 1991, and no patrolling, the waters rich with tuna have commercial ships from all over the world trawling illegally. The Somali fishermen then turned vigilantes to confront this attack on their livelihood, and soon found piracy much more lucrative. Illegal fishing by the way is not restricted to Somali waters. Even in the Mediterranean where rights and governance are in place, fishing limits are exceeded more than two times over.

Why is this an important story in times when the world has ‘more serious’ worries of liquidity, recession, collapse of financial and auto firms etc.? Everyone wants the economy to be back on track. But as Jeffrey Sachs, growth economist and Director of the Earth Institute Columbia said in the Guardian recently, “If the political leaders focus only on financial-sector stability, but neglect the long-term problems of energy supplies, climate change, food production, disease control and extreme poverty, then global growth might be restored in the short term, only to succumb quickly to another global bout of rising energy and food prices, and geopolitical instability.”

The pirates are an important example of conflict that has risen over the erosion of exhaustible resources. To avoid such conflicts in the future, a first step is to have a better understanding of what we mean by growth. The link may seem weak till one realises that growth numbers do not price in the costs to the environment, the costs to the society of rising inequality, the family and health costs of increased stress etc. What we need to ask ourselves is : do we really want 9% of the same kind of growth or can we aim for a 9% of something better.
 
This is not an anti-reform piece. This is also not a piece lauding the Gandhian way of life. The issue is are there any other alternatives to the current growth model? There are many. For instance, Nicholas Stern, whose 2006 Economics of Climate Change report suggested that climate change was probably the greatest market failure ever seen, urges policy makers to see that a recessionary period is a good time to build a low-carbon future with the right investments. Another angle of rebuilding a better future comes from Deepak Parekh of HDFC who warned of a housing bubble in India way back in 2005, when he called for all stakeholders to work together to check the speculative angle in rising residential property prices. The booming construction sector had many euphoric, but the double digit growth masked the fact that land speculation kept out a large legitimate demand for housing in our cities. Now with the downturn, builders are reportedly looking at affordable housing.

When Sarkozy asked for a better measure of GDP in January, most did not take him seriously. But he got Stiglitz, Amartya Sen and Jean-Paul Fitoussi to head a commission to work sustainability (depletion of natural resources) and welfare (social equity) explicitly into GDP measurement. There has been some progress on this front now. Interestingly, the present measure of GDP came into being in the US after the Great Depression and WWII. GDP is a measure of market production - it does not account for the depletion of natural resources, degradation of environment etc., it does not look at well being, it does not include distributional issues. A new measure is long overdue.

Sustainability is easier to build in than welfare as concepts such as ecological footprint have been worked out. That is, there are 1.8 hectares of productive land available per capita to satisfy individual consumption. We are currently using 2.2 hectares, with the ecological footprint of the USA at 9.6 and of Bangladesh at 0.5. With rising population and better incomes, higher consumption will only deplete resources faster.  For welfare, quality of life indicators need to be worked out such as access to public services, health, environment etc.

There would be many sceptics to such an approach. However, the single most important lesson that has come straight through the current crash is the need to tackle risk early. Sustainability and equitable distribution of the fruits of growth need to be integrated into growth measurement. A crash that appears far out in the future can knock us out when we least expect it. Then, unlike the crew of MV Stolt Valor, we would be hostages of our own actions for much longer.