“The Gross National Product includes air pollution and advertising
for cigarettes, and ambulance to clear our highways of carnage.
It counts special locks for our doors, and jails for the people
who break them. GNP includes the destruction of redwoods and the
death of Lake Superior. It grows with the production of napalm
and missiles and nuclear warheads......And if GNP includes all
this, there is much that it does not comprehend. It does not allow
for the health of our families, the quality of their education,
or the joy of their play. It is indifferent to the decency of
our factories and the safety of our streets alike. It does not
include the beauty of our poetry or the strength of our marriages,
or the intelligence of our public debate or the integrity of our
public officials...GNP measures neither our wit nor our courage,
neither our wisdom nor our learning, neither our compassion nor
our devotion to our country. It measures everything, in short,
except that which makes life worthwhile.”
-- Robert Kennedy
“As a result of fractional reserve banking over 90% of our
money
supply is loaned into existence by commercial banks and thus must
grow by enough to at least pay the interest on the loan by which
it was created. This gives a basic growth bias to the economy.
Fractional reserve banking also transfer to private hands the
state’s traditional right to issue money, and does so in
a way
that increases the cyclical instability of the economy. The
corrective call for 100% reserve requirements has been made
periodically not only by so-called ‘monetary cranks’(Frederick
Soddy), but also by economists of impeccable reputation such as
Frank Knight and Irving Fisher.”
- Prof. Herman Daly, co-author of For the Common Good, former
economist World Bank.
“The second greatest error in economics is the confusion
of wealth, which is a magnitude with an irreducible physical dimension,
with debt (money), a purely mathematical or imaginary quantity
(Daly, 1996). The shortcomings of measures of economics, such
as the GDP and national income accounts, have long ago been acknowledged
by one of its architects Simon Küznets (1954, 1965), and
more recently Waring (1988) and Daly and Cobb (1994). The emergence
of new measures of economic, societal and ecological well-being
is evidence that some of these shortcomings are finally being
addressed. For example the UN Human Development Index (HDI), the
Index for Sustainable Economic Welfare (ISEW; Cobb), the Genuine
Progress Indicator (GPI; Cobb, Anielski), the Index for Economic
Well-being (IEW; Osberg and Sharpe), and the Index for Social
Health (ISH; Miringoff).
Yet even these important reforms in national accounting towards
a more honest assessment of the economy of the nations will be
meaningless without understanding the fundamental root of the
economic growth paradox, that is the nature of money and how its
creation (and destruction) affects the well-being of nations.
Money is the lifeblood of all economies yet few understand how
it is created and how this process leads to destruction of living
capital (human, social, and natural) and the real wealth of nations.
Only fundamental reform of monetary policy and the process of
money creation will the chrematistic world of virtual wealth (stock
markets, currency markets) become aligned with oikonomia –
stewardship of the physical world and human experience of quality
of life.”
- Economist Mark Anielski
|
Reprinted with Permission from GPI Atlantic - by Ron Colman.
There is no more pervasive and dangerous illusion in our society
than the equation of economic growth, as measured by GDP, with
well being and prosperity.
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.
Are we "better off" as a result of decades of continuous
economic growth? Certainly we have bigger houses and more cars,
appliances, and home entertainment equipment. We are also less
peaceful and secure, three times more likely to be victims of
crime than our parents a generation ago. We are more time stressed.
Average unemployment rates have risen each decade. Our jobs are
more insecure. Our debt levels are higher. Real incomes are declining.
Child poverty is increasing. And economists predict that, for
the first time since the Industrial Revolution, the next generation
will be worse off than the present one.
More dangerously, blind growth has undermined our natural resource
wealth, produced massive pollution, and changed the climate in
a way that now threatens the planet. Are we happier? A recent
U.S. poll found that 72% of Americans had more possessions than
their parents, but less than half said they were happier than
their parents.
Natural Resources Devalued
Activities that degrade our quality of life, like crime, pollution
and addictive gambling, make the economy grow. The more fish we
sell and the more trees we cut down, the more the economy grows.
We assign no value to the natural resources on which our economic
wealth is ultimately based, and we count their depletion as gain
in our growth statistics. This is like a factory owner selling
off his machinery and counting it as profit, with no regard to
the reduced flow of goods and services in the future?
Growth is simply a quantitative increase in the physical scale
of the economy, and tells us nothing about our actual well being.
The obsession with growth and its confusion with genuine development
and quality of life have sent misleading signals to leaders and
public alike, distorted policy priorities, blunted effective remedial
action for social and environmental problems, and led us down
a dangerous and self-destructive path.
The alternative is no mystery. In fact, there is a remarkable
social consensus on fundamental values and on the goals that signify
genuine progress. We all want a safer and more peaceful society
with less crime, a clean environment and healthy natural resources,
greater economic security and less poverty, better physical health,
more free time, and stronger communities. We want to become wiser,
freer, and more caring. We are completely capable of measuring
our progress in this way, and of reordering our policy priorities
accordingly, to create the kind of society we genuinely want to
inhabit in the new millennium.
No political party officially favours greater insecurity, a degraded
environment, or more stress, poverty and inequality. Why then
do we see policies that promote those very outcomes? It is nobody's
fault. We have all been receiving the wrong messages from the
misuse of the GDP as a measure of progress, and we have all been
hooked on the economic growth illusion. But we will never leave
our children a better legacy until we cut through the myth that
"more" means "better", and until we stop gauging
our economic "improvement" by how fast the economy is
growing by GDP.
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. But having a more
peaceful society and spending less on prisons, burglar alarms
and security systems actually shows up as disadvantage in our
GDP and growth statistics. The booming U.S. security industry
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 $3 billion - a sign of progress?
Overeating contributes to economic growth many times over, beginning
with the value of the excess food consumed and the advertising
needed to sell it. Then the diet and weight-loss industries add
$32 billion a year to the U.S. economy, and obesity-related health
problems another $50 billion, at the same time that 20 million
people, mostly children, die every year from the effects of poor
nutrition in the world
Toxic pollution, sickness, stress, and war all make the economy
grow. The Exxon Valdez contributed far more to the U.S. economy
by spilling its oil than if it had delivered the oil safely to
port, because all the cleanup costs, lawsuits and media coverage
added to the growth statistics. The Yugoslav war is costing the
NATO countries $60 million a day, and our economies will benefit
even more by rebuilding what we destroy (ed. the same concept,
of course, applies to the Iraq war).
Growth and Inequality
Even in material terms, measuring well being by growth rates
does not tell us how many people have been left behind by the
growth spurt of the 1990s. Indeed, the economy can mushroom even
while inequality and poverty grow. The U.S. Census Bureau reports
that income inequality has risen dramatically since 1968, by 18%
for all U.S. households and by over 23% for families. The richest
1% of American households now owns 40% of the national wealth,
while the net worth of middle class families has fallen steadily
through the 1990s due to rising indebtedness. Bill Gates alone
owns more wealth than the bottom 45% of U.S. households combined.
Is this the example we want to emulate?
In Canada neither GDP nor inequality have grown as rapidly as
in the U.S. But despite the economic recovery of the 1990s, child
poverty has increased by 47% since the House of Commons unanimously
vowed to eliminate it in 1989. Here in Nova Scotia, real income
after taxes and transfers has fallen by 24% for the poorest 40%
of Nova Scotian families since 1990. In other words, there is
no guarantee that the tide of economic growth lifts all boats,
and the evidence indicates that the opposite is frequently the
case.
Measuring progress by the sum total of economic activity is like
a policeman who counts his contribution by adding up all the street
activity he observes. The lady walking her dog, the thief stealing
the car, the children playing on the corner, the thug hitting
someone with a lead pipe - all are recorded equally. Like the
policeman's log, our growth statistics make no distinction between
economic activity that contributes to well being and that which
causes harm. We expect more of our policeman, and we should expect
no less of our leadership.
But surely, it is argued, growth is necessary to create jobs.
Next, we'll look at the evidence and at better ways to measure
our well being and progress.
To Part Two
|
Lee
Kyung-hae, father of two, fatally stabbed himself after climbing
onto a high security fence during a violent protest against the
World Trade Organization (WTO) and waving a banner that read "WTO
kills farmers". A delegation of South Korean farmers read
a statement after Lee's death that called his suicide an act of
sacrifice to show his disgust at "how the WTO was killing
peasants around the world." 
The
Institute of Integrated Rural Development (IIRD), a Bangladeshi
rural development organization, has helped to organize a team
of professionals who have formed an ad hoc committee for moving
beyond the sweatshop model of garment production in poorer nations.
JBM Garments Ltd. is the name chosen for the company to be established.
Our intention is to lease an existing factory which meets the
main needs of our project design. Leasing involves taking over
an existing company, including its name and all its licenses/
registrations, building, equipment and employees. We would then
immediately be able to begin production and marketing, while gradually
educating the management and other employees in Justice Base Management
(JBM). We would gradually make the other changes needed for the
separate company. 
The
Age of Consent: A manifesto for a new
world order, George Monbiot, 2003.