by Rob Dietz
Even with such popular support for change, society still employs measures that are failing to get the job done. Members of the mainstream media religiously report the Dow Jones Industrial Average, with cheers of delight when it rises and howls of protest when it falls. The Dow Jones is an index that tracks the stock prices of thirty super-sized U.S. corporations. If Boeing’s stock price increases because it is expected to sell more weaponry, or if Exxon Mobil’s stock goes up because it can exploit tar sands (with accompanying impacts on the landscape and climate), then the Dow Jones tends to go up. Are the activities that increase these stock prices necessarily good for society? Newscasters, investors, and the public overlook the repercussions of a rising Dow Jones because they have become accustomed to shooting for a higher score. CEOs manage corporations specifically to maximize their stock prices.
Just as an obsession with stock prices can promote corporate growth that may harm society, obsession with GDP can promote economic growth that may also be detrimental to society. The current state of global ecological overshoot was at least partially caused by our focus on, and attempt to maximize, a narrow set of economic indicators. Economic growth could not have become such a high priority if indicators such as GDP had never been invented. GDP has undermined the goal of economic welfare that it was supposed to support because people have ended up serving the abstract (but quantitative) indicator instead of the concrete (but qualitative) goal.17
“We manage what we measure” is a cliché often uttered in business boardrooms, but it rings true. You could also say that we “mismanage what we mismeasure.” In this case, we mismanage the scale of the economy because we’re treating an indicator of its size—GDP—as if it were a measure of social performance. If we want to achieve a sustainable and fair economy that provides a high quality of life, it’s crucial to get the measures right.
WHAT COULD WE DO INSTEAD?
When a lightbulb burns out, the obvious remedy is to replace it (preferably with an energy-efficient alternative). That’s what we need to do with GDP. As a measure of progress, GDP burned out decades ago, and many people and organizations have noticed that we are fumbling in the dark. For example, the declaration from the first international de-growth conference, held in Paris in April 2008, calls for such a replacement. It says that we need to develop “new, non-monetary indicators (including subjective indicators) … to assess whether changes in economic activity contribute to or undermine the fulfillment of social and environmental objectives.”18 In August 2008, just prior to his election as president, Barack Obama acknowledged that it’s time to try something else. He told New York Times Magazine writer David Leonhardt how much he admired Robert Kennedy’s speech about gross national product, and he stated that environmental concerns require something of a paradigm shift for economics.19
How, then, should we measure economic progress? Researchers have come up with some good ideas. For example, Herman Daly and John Cobb, Jr., devised the Index of Sustainable Economic Welfare (ISEW), which has been developed by other scholars into the Genuine Progress Indicator (GPI).20 These two indicators draw on some of the same consumption data used to calculate GDP, but they take the calculations further. They add in the value of positive actions that take place outside of the market, such as volunteer labor and work in the home. At the same time, they subtract undesirable expenditures on crime, pollution, and family breakdown, as well as the costs of environmental damage and the depletion of natural resources. When GDP and GPI are compared, an interesting picture emerges. While GDP per capita has increased rapidly in the United States since 1950, GPI per capita peaked around 1980, and has flatlined since then (Figure 9.1).21 These data suggest that the benefits of additional economic activity are roughly being canceled out by the costs. For every step forward, we take another step back—all the while increasing the pressure we place on the environment.
One of the most intriguing and most positively named new economic measures is the Happy Planet Index (HPI), an efficiency indicator developed and published by the New Economics Foundation.22 HPI measures the ecological efficiency with which we are achieving good lives. As an equation, it may be expressed as follows:
The numerator in the equation, “Happy Life Years,” is a composite of life expectancy (an objective indicator) and life satisfaction (a subjective indicator, the value of which is obtained from surveys). While life expectancy measures physical health, life satisfaction measures how people actually experience their lives.
HPI measures something very different than GDP. Whereas GDP sums up the money exchanged in market transactions, HPI gauges how well we transform the limited resources available to us into long and happy lives.
FIG. 9.1. Although GDP per capita increased rapidly in the United States between 1950 and 2004, the Genuine Progress Indicator (GPI) per capita has remained relatively flat since 1980. All data are adjusted for inflation and expressed in year 2000 dollars. SOURCE: see note 21.
Rankings based on GDP are unsurprising—the leading “performers” are populous and industrialized (or rapidly industrializing) countries. The top ten nations (adjusted for purchasing power parity) are the United States, China, Japan, India, Germany, Russia, the United Kingdom, Brazil, France, and Italy.23 Many Americans pride themselves on topping this list—on having the biggest economy—and they fret about the way China is gaining ground. Meanwhile, countries like Vietnam (41st), Costa Rica (88th), and Jamaica (113th) don’t measure up. HPI rankings, however, tell a very different story. The New Economics Foundation calculated HPI for 143 countries in the year 2005.24 As Table 9.1 shows, many nations at the top of the GDP list have plenty of room to improve their performance when it comes to translating resource use into well-being.
GPI and HPI are both summary indicators of economic progress—they attempt to accomplish a difficult task, to paint a picture of economic achievement with a single number. The benefits of a single number are easy reporting and easy scorekeeping. But the danger of using such indicators is that they greatly simplify reality, and, as with GDP, we might end up focusing too much attention on the number and not enough on what’s happening around us. Some researchers, therefore, propose using multiple measures, something of a dashboard approach. The U.K. Department for Environment, Food and Rural Affairs, for example, measures progress in sustainable development through a suite of 68 sustainable development indicators.25 That’s quite a dashboard!
One of the developers of the Happy Planet Index is a psychologist named Saamah Abdallah. Abdallah understands that a steady-state economy requires very different measures of progress than those used to assess our current growth-centric economies, and he recognizes the value inherent in having both summary indicators and a suite of measures. He has therefore proposed creating a set of indicators that takes a hybrid approach.26 This set of indicators would contain three groups: the Environment, the Economic System, and Human Well-Being. Each group would include one headline indicator and a number of more detailed sub-indicators (Figure 9.2).
This grouping helps to separate ends from means—a critical distinction. In the proposed indicator system, sustainable and equitable human well-being is the ultimate end, or key outcome to strive toward. Other economic goals are means in support of this end.
TABLE 9.1. SELECTION OF NATIONS RANKED BY HAPPY PLANET INDEX
To achieve a high level of well-being in society, the economy must provide jobs, stable prices, and equal opportunities to earn income. The economic system, in turn, is dependent on the environment, because all resources used by the economy come from nature, and all wastes produced by it return to nature. The environment also affects human well-being directly, by providing goods and services that are essential to life on earth, such as fresh water and a stable climate. Without these ultimate means (nature’s goods and services) there would be no humans, let alone sustainable and equitable human well-being.
The ecological footprint would make a good headline indicator for the Environment Group of indicators. As
described in Chapter 2, the footprint calculates the biologically productive area of land and water needed to generate the resources consumed in a country, and absorb the wastes produced.27 The footprint accounts for the environmental impacts of trade, meaning that goods produced in China, but consumed in the United States, are captured in the U.S. ecological footprint rather than the Chinese footprint. Other environmental indicators, such as measures of material and energy use, would be important sub-indicators to complement the footprint.
A potential headline indicator for the Economic System Group is income equality. A high degree of equality in society is critical to achieving the goal of sustainable and equitable human well-being. As discussed in Chapter 7, studies have shown that societies with lower levels of inequality tend to have fewer health and social problems, among the rich and poor alike. The ratio of the incomes of the richest 20 percent to the poorest 20 percent of society is a simple measure to calculate and understand, and could be used as a headline indicator for this group. Other measures of how well the economy is functioning, such as unemployment and inflation rates, remain important and should be included as sub-indicators.
FIG. 9.2. The proposed system of indicators considers human well-being to be the ultimate end. This end requires environmental sustainability and economic equality. Arrows point from means to ends. SOURCE: see note 9.
The Human Well-Being Group could use happy life years (the numerator in HPI calculations) as the headline indicator. Of course, well-being is about more than just life expectancy and life satisfaction, and sub-indicators that measure people’s ability to flourish should be included in this group. These sub-indicators should assess how well people are able to meet their psychological needs (for example, needs for autonomy, competence, and connection with others). Multiple indicators of well-being are needed to measure whether people are both “feeling good” and “doing well.”
This three-group system of indicators to replace GDP is embryonic in its development. There are still many stones to turn over in the quest to develop worthy indicators of progress. In fact, one of us (Dan) is currently measuring how close countries are to achieving a steady-state economy, and what this means for their social performance. In a recent paper, he has proposed a set of environmental and social indicators that fits neatly into an ends-and-means framework.28 Further research will continue to identify improved ways to measure progress, but we already have enough knowledge to adopt better national accounting systems and gain a much clearer understanding of how well our economies are performing.
WHERE DO WE GO FROM HERE?
The main obstacle to creating and using a new system of indicators, such as the one proposed in this chapter, is the dominant position society has given to GDP. The problem is not so much that social and environmental data are unavailable, but that GDP always trumps other indicators. As long as the public and private sectors remain united in the hunt for what they view as the ultimate trophy—a bigger economy—we are unlikely to give alternative indicators the attention they deserve. But we would be wise to support efforts to adopt new indicators. As Donella Meadows, one of the authors of the influential book The Limits to Growth, writes:
Indicators arise from values (we measure what we care about), and they create values (we care about what we measure) … [C]hanging indicators can be one of the most powerful and at the same time one of the easiest ways of making system changes—it does not require firing people, ripping up physical structures, inventing new technologies, or enforcing new regulations. It only requires delivering new information to new places.29
In order to knock GDP off its pedestal and replace it with something more sensible, people need to care about indicators. If your financial fortunes are tied to the ups and downs of the stock market, then you tend to watch the market. If you’re a public official and you believe that job creation and progress are possible only with a rising GDP, then you tend to watch GDP statistics. At the moment, most people have little idea about what GDP measures, but if they did, they would probably be a lot less enthusiastic about policies designed simply to increase GDP. Education has a key role to play in helping people, especially government and business leaders, understand that there are other indicators that more closely measure what we truly care about. If the goal of society were to change from increasing GDP to improving human well-being and preventing long-term environmental damage, then many proposals that are currently seen as “impossible” would suddenly become possible.
In the end, most people care much more about spending time with their families, performing well in a meaningful job, or pursuing their hobbies than they do about collecting consumer products and expanding the economy. If we believe that human progress is synonymous with a bigger economy, then GDP is the right measure. If, however, like Robert Kennedy, we believe progress flows from the health of our children, the beauty of our poetry, the strength of our marriages, or the intelligence of our public debate, then we must demand more appropriate measures of progress.
[ CHAPTER 10 ]
ENOUGH UNEMPLOYMENT
Securing Meaningful Jobs
Ultimately society, not the economy, determines how many people are out of work.
BLAKE ALCOTT1
WHAT ARE WE DOING?
Deb Wren is the ideal employee, and her work ethic is one reason why. She grew up on a dairy farm where hard work was the norm, and she routinely helped with chores during her school years. Although she left home to attend college, farm life left a strong impression on her, so after earning her degree, she returned to the family farm to work alongside her father. Wren’s warmth and positive attitude shine through, even as she describes her struggles tending a herd of cows in the frozen winter of upstate New York.
“It was so cold, and we had fifty or sixty new calves—a huge number for our small operation. We were doing our best to keep them warm and well fed. It was aggravating, because calves generally don’t know what they’re doing. But the heifers were even more of a problem. We’d spend the first two hours each morning milking them, and some of them had frostbitten teats—they were hard, scarred, and sore, and the cows would kick like crazy.”2 Considering days like that, a nice, warm office might sound appealing, but Wren looks back on those times with fondness; she thinks that farm work strengthened her bond with her family and helped her develop a healthy appreciation of animals and the outdoors.
Working hard is important, but there’s more to being an ideal employee than just that. You have to care about the work you do. From an early age, Wren found deep meaning in her work. “Growing food became so important to me. I never had to question the validity or purpose behind what I was doing.” Her sense of purpose blossomed into a quest to do meaningful work. And she seems, for the moment, to have found the right place to focus on her passion for both food and nature.
ECO City Farms is a nonprofit organization inside Washington, D.C.’s Beltway that serves as a prototype for sustainable, local urban agriculture. Its purpose is to reenvision farming to improve soil fertility, restore environmental health, provide sufficient income for farmers, and make nutritious food available to all. Even though she’s a part-timer at ECO City, Wren has a wide range of responsibilities. On Mondays she’s an administrator, working with the CEO to write grant proposals, arrange meetings, and develop partnerships with other organizations. On Tuesdays she’s a farmer, feeding the chickens, transporting worms from the compost bin to the aquaculture tanks, watering plants in the hoop houses, amending soil, and transplanting seedlings. On Thursdays she’s a harvester, spending her time picking fruits and vegetables to be distributed through ECO City’s community food subscription program. And on Fridays and weekends, she’s back to being an administrator.
With a penchant for hard work, a strong commitment to her values, and a positive attitude, Deb Wren can do it all. She really is the ideal employee, except for one thing. She’s not actually an employee—she’s a volunteer at ECO City with hopes that a paying job will materializ
e.
Playing down her situation, she quips, “Yeah, it’s a bummer not to be paid.” But she’s clearly willing to make sacrifices. To pursue her dream job, she has strung together a series of unpaid or low-paying internships. Since earning a graduate degree in sustainable development, she has found employment as a babysitter and food-and-drink server to bring in enough income to keep doing some of the other work she believes in.
Wren remains hopeful that she’ll be able to find a paying job that suits her calling, but she’s not free from worry. Jobs to grow food sustainably and restore urban and suburban lands are hard to find. “It’s frustrating,” she says. “[Work like we do at ECO City] is not generally profitable, at least not in a conventional sense, and the nonprofit organizations can’t afford to hire.” She asserts that many young people would like to work in sustainable food systems and related fields, but “the jobs just aren’t there.”
Plenty of people face tough competition for scarce jobs in their chosen fields. However, it’s troubling that a smart, hard-working, educated, and personable job seeker faces such long odds, especially when her desired job makes so much sense in the transition to a sustainable economy. A functional economy should be able to provide an important job to such a valuable employee. What is it about the current economic setup that makes stories like Deb Wren’s all too common?
To answer this question, it’s helpful to examine our motivations for seeking paid employment in the first place. To a certain extent, people work because they enjoy doing so, but they also work for the paycheck. We need income from our jobs to pay the rent and buy food, clothing, and other goods and services. But people also work because of social pressure to do so. Having a good job is an avenue for gaining esteem. One of the most common questions people ask each other when they first meet is, “What do you do for a living?” Moreover, people with gaps in their resumes, say a year or two when they are out of work, may be seen as uncompetitive in the labor force. As a result, many people stick with jobs they don’t really like, especially if they are providing for children or other family members. In some cases, people may like their jobs, but they work more hours than they would choose if they felt they had more freedom.