That's the nutshell message from Michel Gelobter, the new Executive Director of Redefining Progress, a non-profit think tank. When I first visited the organization seven years ago I learned that real economic progress had stopped in 1973. We were in a broad economic decline. A measure Redefining Progress had created, the Genuine Progress Indicator, gave a very different message from our conventional measures such as Gross Domestic Product.
Today things haven't changed very much but the GPI has turned upward.
"This is all about the three E's--- Environment, Economy, and Equity. I would add a fourth E--- Engagement," Mr. Gelobter said.
I asked him to give me a synopsis of the Genuine Progress Indicator.
"It's a great encapsulation of the three E's. It's the GNP--- but with prison time, heart attacks, and clear-cut forests taken out. We also put back in volunteerism and time spent with families. It's our attempt to measure real progress.
"If we don't make those changes we get errors."
I asked for an example.
"Like the error in the 90's when prison building was one of our fastest growing sectors---or by the current zero percent financing of SUVs. The trouble with conventional economic accounting is that it doesn't account for the foundation we're laying for the future. Indiscriminately adding up our economic activity is a way to send the wrong signals. We have to measure what we want."
That's how the Genuine Progress Indicator came about. Starting with a broad measure of the general good--- personal consumption--- they subtract net foreign lending or borrowing. Then they subtract an amount if the distribution of income has become more unequal. They add it if the distribution of income has become more equal.
After that they subtract social costs like the cost of crime ($30 billion), automobile accidents ($158 billion), commuting ($455 billion), family breakdown ($63 billion), lost leisure time ($336 billion), and underemployment ($115 billion). For the year 2000 these losses would have lopped 18.5 percent off the general good of personal consumption.
The biggest losses, however, aren't social costs. They are environmental costs. Here, they estimate items like the depletion of non-renewable resources, the cost of long-term environmental damage, and the cost of ozone depletion, lost farmlands, and lost wetlands. Surprisingly, costs like air, noise, and water pollution are much smaller. All together, these items subtract a whopping 60.5 percent from our true welfare.
If you are tempted to blow-off the environmental costs--- as many would--- I suggest you remember one thing. In the game of life, Nature bats last.
Fortunately, conventional economic accounting also ignores a lot of really good things. Among the positives not counted, the $2,079 billion value of housework and parenting. Not to mention $97 billion value of volunteer work. We're talking about a very large lump under the conventional accounting rug.
Using the same methodology Redefining Progress found the fifties and sixties were good periods for genuine progress. In the seventies, however, a major gap developed. Genuine Progress slowed dramatically. Progress turned negative in the eighties. In the nineties the downtrend reversed--- but our real progress is only a fraction of what conventional indicators tell us.
Needless to say, none of this is on clay tablets. But when it comes to measuring broad national welfare, Redefining Progress is on the right track. Our government accounts belong in the same landfill as the junk shareholders get from corporate America.
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