Quote of the Day: Measuring Well-Being

Consumption is what we do, and, no matter how often it is demonstrated to be unsatisfying, we go on believing in it. No American Administration has ever seriously considered a yardstick for success other than the G.N.P. Our economists point to the long-term stagnation of the Japanese economy as though it were an index of discomfort and unhappiness, despite the fact that the Japanese live better in almost all ways than nearly ninety-nine per cent of the people on the planet. My parents were two educated (Harvard, Regis) members of blue-collar families. I noticed early that their view of success had not made them happy, while the siblings they had “left behind” were quite merry.-Thomas McGuane, The New Yorker

Growing Beyond Growth

Yale Environment 360 today tackles the question of whether our focus on economic growth harms our well-being.  James Gustav Speth wrote:

There are some, myself included, who believe that the U.S. is now experiencing uneconomic growth. If one could measure and add up all the environmental, security, social and psychological costs that U.S. economic growth generates at this point in our history, they would exceed the benefits of further ramping up what is already the highest GDP per capita of any major economy.

Though not widely accepted, the case is strong that growth in the affluent U.S. is now doing more harm than good. Today, the reigning policy orientation holds that the path to greater well-being is to grow and expand the economy. GDP, productivity, profits, the stock market, and consumption must all go up. This growth imperative trumps all else. It can undermine families, jobs, communities, the climate and environment, and a sense of place and continuity because it is confidently asserted and widely believed that growth is worth the price that must be paid for it...

It is time for America to move to post-growth society where the natural environment, working life, our communities and families, and the public sector are no longer sacrificed for the sake of mere GDP growth; where the illusory promises of ever-more growth no longer provide an excuse for neglecting to deal generously with our country’s compelling social needs; and where true citizen democracy is no longer held hostage to the growth imperative.

GDP: America's New Misery Index?

Truthout published an article today that is well worth a read in its entirety.  Mark Provost in "Why the Rich Love High Unemployment" argues that the "jobless recovery" is not a fluke, rather high unemployment has been a boon to the super rich.  Political focus on the GDP and corporate profits as the sole measure of economic health have made jobs a low priority.  While the U.S. has the second largest GDP growth from 2008-2010 (after Canada) of the G-7 countries, it has the highest unemployment. Provost writes:

A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion. At some level, corporate executives are aware that they are lowering workers' living standards... Call it the "paradox of profitability." Executives are acting in their own and their shareholders' best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts. But what has been good for every company's income statement has been a disaster for working families and their communities...

In the first Great Depression, President Roosevelt created an alphabet soup of institutions - the Works Progress Administration (WPA), the Tennessee Valley Authority (TVA) and the Civilian Conservation Corps (CCC) - to directly relieve the unemployment problem, a crisis the private sector was unable and unwilling to solve. In the current crisis, banks were handed bottomless bowls of alphabet soup - the Troubled Asset Relief Program (TARP), the Public-Private Investment Program (PPIP) and the Term Asset-Backed Securities Loan Facility (TALF) - while politicians dithered over extending inadequate unemployment benefits...

Proponents of labor-market flexibility argue that it's easier for the private sector to create jobs when the transactional costs associated with hiring and firing are reduced. Perhaps fortunately, legal protections for American workers cannot get any lower: US labor laws make it the easiest place in the word to fire or replace employees...

America's labor market depression propels asset price appreciation. In the last two years, US corporate profits and share prices rose at the fastest pace in history - and the fastest in the G-7. Considering the source of profits, the soaring stock market appears less a beacon of prosperity than a reliable proxy for America's new misery index.

But Are We Well?

Dave Burris in Town Square Delaware joins the chorus of voices calling for an end to using the GDP alone as a measure of our economic health. 

For generations, government officials have measured the state of the state and nation via one statistic: Gross Domestic Product, formerly known as the Gross National Product.

It stood to reason that the greater economic production in our society, the better off everyone would be; the rising tide would lift all boats. And to a point, that proved true. The introduction of indoor plumbing greatly increased quality of life for Americans. As did antibiotics, the computer, and craft beer (okay, maybe that last on did more for me than society at large, but you get the point.)

However, somewhere along the line we reached a place where new innovations and GDP increases failed to bring real increases in quality of life. The iPad 2 did not magically increase quality of life over the iPad 1.

Not only that, but GDP is not a measure of overall well-being. As Dr. Martin Seligman discusses in his book, Flourish, GDP goes up anytime there is a divorce. Or a car crash. Antidepressant use rises, so does GDP. And so on.

Surely, there must be a better way in 2011 to measure the quality of life in our society, incorporating not only economics, but also long-term sustainability and overall well-being.

Read the rest at Town Square Delaware.

What if the Economy Listened

Scott Gast writing on Post Growth ponders what it would mean for the world if we measured the economy's effect on something other than the market itself;

But what if the economy listened? What if, for a minute, the economy stopped talking to itself—to its own swirl of messages and indicators and pundits and forecasts—and actually gave an earnest ear to the world around it? Here’s Steingraber in a 2009 column for Orion magazine:

“Imagine that ecological metrics were as familiar to us as economic ones. Imagine ecological equivalents to the Dow, NASDAQ, and S&P that reported to us every day—in newspapers, on radio, on websites, on the crawl at the bottom of TV screens, on oversized tickers in Times Square—data about the various sectors of our ecological system and how they are faring. What are the atmospheric parts per million of carbon dioxide today? Has the extinction rate become inflationary? What is the exchange rate between sea ice and fresh water? What is the national deficit of topsoil?

Suppose that ecological pundits discussed every night on cable TV the ongoing disappearance of bees, bats, and other pollinators and the possibly dire consequences for our food supply. Suppose we received daily reports on the status of our aquifers. Suppose legislators and citizens both agreed that if we don’t take immediate action to bail out our ecological system, something truly terrible will happen. Our ecology will tank.”

***

What would a listening economy look like? One thing I bet it wouldn’t look like would be a growing economy. A listening economy would be aware of the world beyond itself—that there is a world beyond itself—which means it would know that there’s no more room to grow. It would be a good conversationalist: it would listen to the world it lives in and respond accordingly. It would be less noisy, because listening requires periods of quiet and slowness and caution. It would be principled—and its highest principle might be the precautionary principle. It would know that listening is progress. It would know that listening is related to learning.

Oh Yeah, and People Might Starve Too

Why is it that in our culture the only legitimate argument for anything seems to be its effect on making money?  I have brought this up before when it comes to arts funding.  We always try to argue that we should fund arts because of the economic impact artists have on an area.  We argue for arts education funding with the claim that music makes you good at math with which you can, presumably, make actual money.

Do we not place any value on doing things because they are good for the community and society, because doing them makes our nation a more pleasant place to live, because they are morally right?  It seems that we do not consider such arguments to be serious enough.

Take this example.  In The Shamanic Economist, the author says he is going on a one day, symbolic hunger strike to protest extreme austerity measures.  The arguments against cuts to food programs all come down to our ability to boost productivity and bring in money.

The point I personally hope to make is that it is the height of folly, even in an austerity budget, to axe the very things that are necessary for people to work and live. To a limited extent, the government must support such things as food, housing, safety, and transportation.

Let me start with transportation as an example. Broad cuts in transportation leave significant numbers of people at home, unable to get to work. When people don’t work, they don’t pay taxes. And when people don’t pay taxes, that makes the budget situation worse, not better.

It is the same with food. When people can’t eat, the quality of their work suffers almost immediately. If they are looking for work, the quality of their job search declines in the same way, and the tendency for employers to take them seriously or view them favorably all but vanishes. In the United States today, it is basically impossible for a person who looks like they are suffering from hunger to find a job. But again, as long as they aren’t working, they aren’t paying taxes. Thus, withholding food from people does not improve the budget either.

I am not suggesting that by focusing on the economic impact or making an argument based on taxes and revenue that this is the only thing on the writer's mind.  I don't believe this author is concerned about people going hungry only because it affects the quality of their work.  But it does point to a framework for discussion, in which the only thing were are able to consider-- the only "valid" argument we can make-- is a financial one rooted in the concept of economic prosperity measured in terms of GDP.  Is that truly the only thing worth considering when making policy?

Video of the Day: Measuring What Matters

The Happy Planet Index