By Pamela Haines, Quaker social justice educator concerned about economics and the environment
What did the BP oil spill in 2010 mean for the U.S. economy? Progress.
At least that’s the conclusion of the economy’s de facto benchmark—gross domestic product (GDP). As the massive oil slick seeped into the Gulf Shore, J.P. Morgan representatives noted that economic activity generated by cleanup efforts would likely outweigh losses to tourism or fishing. And what of the hundreds of miles of property damage and ecosystem deterioration? Not counted. The bankers correctly concluded that our standard barometer of economic welfare would likely register the largest oil spill in history as a net gain.”
Ben Beachy and Justin Zorn, in their article, Counting What Counts; GDP Redefined, expound on this familiar problem.
As the authors point out, GDP growth has tended to accelerate with crime rates, smog levels, and commuting time, while slowing with vacation days and family-cooked dinners. It’s clear that something needs to change. Even the man who was charged with creating GDP in the 1930’s warned that “the welfare of a nation can scarcely be inferred from a measurement of national income”. But this article provides a useful framework for thinking about what can take its place.
Beachy and Zorn discuss the pros and cons of subjective metrics (i.e. based on surveys of how happy people feel); composite indexes, which weigh a variety of measurable factors; and an adjusted-GDP measure. They argue for the simplicity and political punch of the latter, and recommend the creation of four new national indicators: current economic welfare (G2), sustainable economic welfare (G3), current general welfare (G4), and sustainable general welfare (G5), suggesting a list of measures that would be included in each one. G2 to G5 would stand alongside GDP (G1), in the same way that the federal government uses U1 through U6 as complementary measures of unemployment.
To overcome the obstacle of interest group opposition to creating a new indicator, they suggest the feasibility of building a winning coalition in Congress. “Social conservatives (seeking to formally account for work in the home), market-oriented moderates (seeking to better capture the benefits of entrepreneurship), economic progressives (seeking to adjust income for inequality), and environmentalists (seeking to internalize the cost of carbon emissions) could form the backbone of a surprising alliance for the development of new, twenty-first century indicators.”
I’ve read many articles on GDP, but Beachy and Zorn left me feeling both better informed and more hopeful about the possibility of actually getting an alternative.