Academic journal article Journal of Business Administration and Policy Analysis

Measuring Genuine Progress

Academic journal article Journal of Business Administration and Policy Analysis

Measuring Genuine Progress

Article excerpt

There is a remarkable consensus that crosses all political divisions on the fundamental principles of a decent society and on the benchmarks that would signify genuine progress. We all want to live in a peaceful and safe society without crime. We all value a clean environment with healthy forests, soils, lakes and oceans. We need good health and education, strong and caring communities, and free time to relax and develop our potential. We want economic security and less poverty.

No political party officially favours greater insecurity, a degraded environment, or more stress, crime, poverty and inequality. Why then do we see policies that promote those very outcomes? Why are we unable to create the kind of society we genuinely want to inhabit in the new millennium? Why can we not order our policy priorities to accord with our shared values and human needs?

One reason is that we have all been getting the wrong message from our current measures of progress. All of us -- politicians, economists, journalists and the general public -- have been completely hooked on the illusion that equates economic growth with well being and prosperity. Indeed, there is probably no more pervasive and dangerous myth in our society than the materialist assumption that "more is better."

Look at the language we use: When our economy is growing rapidly, it is called "robust", "dynamic", and "healthy". When people spend more money, "consumer confidence" is "strong". By contrast, "weak" or "anemic" growth signals "recession" and even "depression". Increased car sales signal a "buoyant recovery. "Free" trade actually means "more" trade. The more we produce, trade and spend, the more the Gross Domestic Product (GDP) grows and, by implication, the "better off" we are.

This was not the intention of those who created the GDP. Simon Kuznets, its principal architect, warned 40 years ago:

The welfare of a nation can scarcely be inferred from a measurement of national income....Goals for 'more' growth should specify of what and for what.

Our growth statistics were never meant to be used as a measure of progress as they are today. In fact, activities that degrade our quality of life, like crime, pollution and addictive gambling, all make the economy grow. The more fish we sell and the more trees we cut down, the more the economy grows. Working longer hours makes the economy grow. And the economy can grow even if inequality and poverty increase.


Here in Canada we are currently enamoured with the "dynamic" American economy and its rapid growth rates. But we do not often ask, as Kuznets counsels, what is driving that growth.

One of the fastest growing sectors of the American economy is imprisonment, at an annual growth rate of 6.2% per year throughout the 1990s. One in every 150 Americans is now behind bars, the highest rate in the world along with Russia, compared to one in 900 Canadians and one in 1,600 Nova Scotians. The O.J. Simpson trial alone added $200 million to the U.S. economy, and the Oklahoma City explosion and Littleton massacre fueled the booming U.S. security industry, which now adds $40 billion a year to the economy, with most sales now going to schools. Is this our model of a "robust" and "healthy" economy?

Gambling is another rapid growth industry -- a $50 billion a year business in the U.S. Divorce adds $20 billion a year to the U.S. economy. Car crashes add another $57 billion. Prozac sales have quadrupled since 1990 to more than $4 billion -- a sign of progress? The more rapidly we deplete our natural resources and the more fossil fuels we burn, the faster the economy grows. Because we assign no value to our natural capital, we actually count its depreciation as gain, like a factory owner selling off his machinery and counting it is profit.

Overeating contributes to economic growth many times over, starting with the value of the excess food consumed and the advertising needed to sell it. …

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