Ditching the GDP: Report from Sarkozy/Stiglitz commission

The Commission on the Measurement of Economic Performance and Social Progress, a group initiated by French president Nicolas Sarkozy, has released a set of recommendations for a more sophisticated set of indicators to replace the concept of GDP (gross domestic product). Columbia economist Joseph Stiglitz is chair of the commission.

The draft of the report dated June 2, 2009, is available at this address.

In an article for The Guardian (see “The Great GDP Swindle,” Stiglitz emphasizes the need for a new regime for the measurement of economic progress:

If we have poor measures, what we strive to do (say, increase GDP) may actually contribute to a worsening of living standards. We may also be confronted with false choices, seeing trade-offs between output and environmental protection that don’t exist. By contrast, a better measure of economic performance might show that steps taken to improve the environment are good for the economy.

An article by Saamah Abdallah, researcher at the New Economics Foundation (nef), calls the new report “bold. (See “Sarkozy and Stiglitz challenge GDP ‘fetish.'”)

However, Abdallah sees a danger if policy leaders decide to take only partial measures to correct the current GDP mindset:

The report carries many recommendations, and there’s a risk that politicians will latch onto the easier ones, without really taking home the big message: namely, that we need to radically shake up our understanding of progress and success.

Abdallah’s organization has created a “Happy Planet Index” designed to measure humanity’s progress in a more holistic fashion.

AB — 14 Sept. 2009

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‘Life Inc.’ author Douglas Rushkoff on Colbert Report

Douglas Rushkoff, who writes about media and popular culture, appeared July 15, 2009, on The Colbert Report. Rushkoff is currently promoting his new book, Life Inc.: How the World Became a Corporation and How to Take it Back.

Rushkoff does a great job explaining the premise of his book, which is that corporations are only happy when individuals are contributing to the GDP, which is why they are always bugging us to do something productive rather than something useless like, for example, going out and watching birds.

As always, Colbert does a great job of helping Rushkoff explain his book by pretending not to like it. Here’s a link to the video — it’s a great six minutes.

AB — 17 July 2009

Is higher GDP a good thing?

Today’s news that the U.S. GDP shrank by 6.2 percent in fourth quarter 2008 got me thinking about the question whether a growing GDP is actually a good thing.

Some people would say I must be crazy (or even evil) to even ask that question. Growth is an important assumption behind the prevailing economic model — the economy must grow so more people can live at a higher level materially.

The Wikipedia entry for gross domestic product (GDP) defines and explains GDP.

Wikipedia also has an entry for an interesting alternative measure, the Happy Planet Index (HPI), advocated by an organization called the New Economics Foundation (nef).

The nef says it is creating “a new framework for real wealth creation by redefining wealth to focus on increased well-being and environmental sustainability rather than on just having and consuming more things.”

AB — 27 February 2009