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 You Lived In Uzbekistan or Niger?

If it Were My Home is a tool that allows you to compare aspects of life in the states with life in other countries in terms of rates of HIV/AIDS, employment, energy consumption, infant mortality, class inequality, and other factors (based on CIA data).

Here were the results when I compared the U.S. to Russia.

Video of the Day: Measuring What Matters

The Happy Planet Index

The GDP or Is Consumption Gross?

Recommended reading for today is an article by Jonathan Rowe at On The Commons. I recommend it not only because it uses the word iatrogenic to describe the current systems of measuring economic growth, but because it tackles the important topic of GDP myopia. It's a subject I deal with in some depth in Broke is Beautiful.

Economists and politicians measure our nation’s economic health in terms of our Gross Domestic Product (GDP) or Gross National Product (GNP). Simply put, the GDP is the monetary value of all the goods and services bought and sold in the economy. The GNP is the monetary value of all the goods and services bought and sold by U.S. nationals, whether in the country or abroad.

Natural resources, research and development are not capital to the GDP. Education, health care and social services are valuable only to the extent that someone makes cash from them today.

Over at On The Commons Rowe sums it up this way: "This is a black hole to the conventional economic mind. Economists don't even have a language for it; the reigning vocabulary is encoded with the production imperative. An economy consists of goods and services. There are no bads or disservices – no negative products of any kind."

The article discusses the history of thinking on progress, consumption and the GDP, and links the excesses of overconsumption to many social ills, especially our growing health care crisis. (Hence the word iatrogenic)

Yet look around us, (John Kenneth) Galbraith said. If it takes the marketing sector over $150 billion a year to prop up what economists quaintly call “demand”, is it really demand in any sane sense of that word? Does it really have the urgency and unquestionable sovereignty that economists assign to it?

Enlightened Economics

I discovered a blog today written by Ron Robins, a British-born Canadian MBA who is advancing the cause of "enlightened economics." (The site has been added to the blog roll on the right.)

His stated purpose is to "create a discussion in formulating a practical economics that integrates consciousness, natural law, and free-market theory." In other words, he advocates a new way of thinking about economics, and how we measure our economic health as a society.

He discusses topics such as voluntary simplicity, long-term economic thinking,and retiring the GDP, and alternatives to the U.S. Consumer Price Index. He predicts that "Cultural Creatives" will dominate the new economy.

A lot of food for thought and discussion.

*Advaita (non-duality) cartoon provided by Bob Seal