DOWN WITH GDP?

That was the question taken up yesterday afternoon by the Senate Commerce Committee’s Subcommittee on Interstate Commerce, Trade and Tourism. Or at least chairman Byron Dorgan took it up -- he was the only senator to appear at the hearing. The event convened a panel of experts to discuss the GDP’s failure to measure environmental degradation, levels of poverty, income disparity, health, or quality of life, and the hazards of using the term as a stand-in for the overall well-being of our country. The event came almost 40 years ago to the day since Robert F. Kennedy made a speech at the University of Kansas raising the same question:

"Our gross national product counts air pollution and cigarette advertising and ambulances to clear our highways of carnage," said Kennedy. "It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl."

The problem with GDP, argued Kennedy, which remains true today, is that it includes a lot of things that destroy the environment, health, and peace of the world as positive but doesn't look at other valuable measures: "It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country."

As Dorgan pointed out before the hearing, when economist Simon Kuznets came up with the term "Gross National Product" to define the total market value of all goods and services produced within a year back in the 1930s, he cautioned that it should not be interpreted as a valid measure of societal well-being or the overall economic state of the country. Unfortunately, for policy makers and the press, GDP has become a catchall term, to the exclusion of other measures.

Karen Davis of the Commonwealth Fund acknowledged that in the current breakdown, a heart attack is accounted as a net gain for GDP, as all the health and service expenses related to it would put money into the system. Davis also noted that though we spend twice as much per capita on health care than other industrialized nations, we're 19th out of 19 countries when it comes to mortality amenable to medical care – meaning like overall GDP, the amount of money spent doesn't guarantee quality.

GDP also does a poor job of accounting for income inequity. As witness Robert Frank, a professor of economics at Cornell University argued, GDP does not take into account relative income, which is a much better predictor of well-being than absolute income. And since the 1970s, income growth has been almost entirely confined to the highest earners, and per capita GDP's tracking of changes in average income can't track those increase disparities.

Essentially, argued witness Jonathan Rowe of the West Marin Commons, by using GDP alone "we look at means to the results, but we don't look at results."

Having established that GDP is an insufficient measurement tool, the question then becomes, how can we measure these other elements. Absolute income shouldn't be the primary determinant of individual well-being, but how does one evaluate largely subjective ideas about how well-off a society is? Bhutan, for example, has adopted a assessment, which includes economic, health, and environmental wellness of the populace. But as Dorgan pointed out, "Who knows what happiness is?" The question really is, how can we measure progress. The U.N. has adopted a "Human Development Index" that includes life expectancy, literacy, and purchasing power, along with traditional GDP. In his testimony today, Bureau of Economic Analysis director Steven Landefeld recommended bringing together epidemiologists, physicians, geologists and engineers as well as economists to devise a new set of tools. There's no legislation for getting this sort of thing started on the table right now, but the subcommittee -- or at least Dorgan -- seems to be considering it. It's been four decades since Kennedy raised this question, so perhaps it's about time we reevaluate using GDP as our sole measure of quality of life in America.

--Kate Sheppard