Wednesday, 2 June 2010

Dethroning GDP: the King is dead, long live the King?

A couple of months ago I was in New York for what was quite possibly the most interesting meeting I've ever attended. Now, based on most of the meetings I've attended, this is not a great compliment. But when I left the meeting room I was, dare I say it, inspired. I was struck - more than ever - by how important a role GDP plays in all our lives and how important it is that more appropriate measures are used to gauge our progress. We were not so naive, however, to think the revolution would be easy.

The meeting, entitled "Dethroning GDP", was organised by the think tank Demos and the Rockefeller Brothers Fund. It was focused on the USA and aimed to give traction to the movement there to develop alternative indicators of progress and wellbeing. It brought together 30 or so prominent Americans, including senior policy makers, leading thinkers and practitioners, and communications experts. Nic Marks from the New Economics Foundation and I were also invited to give some international perspective.

The highlight was Joseph Stiglitz, who really has emerged since the Stiglitz-Sen-Fitoussi report as the global champion of these ideas. He gave a great opening speech on his Sarkzoy Commission report and the importance of its findings for the US. The Commission looks set to continue its work, and to be associated with the OECD in some way. The details were still to be sketched out but I am sure I was not the only one present to be pleased: the Commision's work has had an impact far and wide, in part because of the quality of the research and in part because such a distinguished of people could work together and agree on something (perhaps Prof Stiglitz's next nobel prize should be for Peace).

I was also interested to hear Joe Stiglitz say he was becoming interested in the potential for conversations about measurement metrics to bring people together and find common ground among those who usually disagree. This was something we saw to an extent in Australia during our work on Measures of Australia's Progress. People with very different political ideologies would walk into a meeting to discuss "Poverty" (or Financial Disadvantage as it is disingenuously called in Australia) on the defensive and ready for a fight. Two hours later, after agreeing on just about everything on the agenda, including why it is important to tackle poverty and how it should be defined and measured, they would walked out of the room and off to the pub with their new found friends (where they perhaps might have got into a fight over what policies were needed to tackle poverty, something we most certainly did not try to agree on in the meeting).

This is a potentially important area, ripe for research, and one which seems to have great potential to engage those who are trying to find policy solutions in areas where people almost always disagree. It might not lead to deciding on what policies are needed. But it can lead to claiming some common ground and building consensus about the outcomes that are being sought. It won't find the solutions for some of our wicked problems, but it can take us several steps in the right direction.

After Prof Stiglitz's talk, discussion quickly turned to the importance of communication and alternatives to GDP. We agreed that we were looking to change society to one where debate about policy effectiveness was couched in terms of wellbeing, not economic output. A society in which if a policy maker announced that such and such a policy would lead to economic growth, the reflex reaction would be "So what? Tell us what it will do to our wellbeing". We also realised that achieving this goal would mean changing the paradigm (a much overused expression I know, but one which is appropriate here). Our overuse of GDP was so pervasive throughout the entire machinery of government, and so habitual, that it needed to be tackled as if it was an addiction. No amount of new indicators alone will dethrone GDP. We need indicators, updated daily and in real time, that could challenge the constant drip feed of economic information that saturate us daily. Something to replace - or at least balance - the Chinese water torture of stock exchange data and currency movements that appear to be so meaningful for our daily lives because we hear about them so often.

When the day ended there was a tangible sense of excitement. 2010 really does feel like the best opportunity since the System of National Accounts was born to dethrone GDP. We might not know how to topple the throne, or where the next monarch will come from, but maybe, just maybe, the right people were in that room to start the revolution.


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