Center for the Advancement of the Steady State Economy
Regular Contributors:  Herman Daly, Brian Czech, Brent Blackwelder, James Magnus-Johnston, and Eric Zencey. Guest authors by invitation.

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What Do We Do with GDP? (With a Preface on the Establishment of GDP National Park)

Last month in The Daly News, I promised to update readers on the pending establishment of GDP National Park in Montana. First I had to re-designate another acronym. “BP” became Beyond Probabilities due to the certainty of environmental disasters occurring while economic growth is the policy goal. Sure enough, the past month has seen an outpouring of news on various spills, leaks, and blowouts. Reporters’ antennae are tuned in to such mishaps in the wake of the Deepwater spill.

They say “the ironies never cease.” Neither do the ironic acronyms. The pending establishment of GDP National Park will actually be a re-designation of Glacier National Park (GNP)!

Why change the name of Glacier National Park? Well, how can the park retain “Glacier” in its name when the namesake glaciers will be gone in ten years? Seriously, how does a “Glacier National Park” or “Glacier” National Anything justify the name, when the closest thing to a glacier will be the frozen fish section at the Safeway in Missoula?

But why change it to “GDP National Park” as opposed to, say, “Crown of the Continent National Park” or “Going to the Sun National Park?” Let’s face it: The original highlight was the glaciers. In the Crown of the Continent, the jewels were the glaciers. When you’re driving up the Going-to-the-Sun Road, it’s the reflection off all those glaciers that make you think the sun is around the next bend. What set Glacier National Park apart, by God, was the glaciers!

Image Credit: BryanH

So why not identify, right in the title of the park, the force that was big enough to melt those old glaciers, to de-jewel that crown, to retract all that reflection? That force was GDP.

To be more accurate, it wasn’t just any GDP, but a large and growing GDP. (A tiny GDP wouldn’t have been large enough to melt any glaciers.) It was also a GDP that grew on the combustion of fossil fuels and the emitting of greenhouse gases. But who wants a park named “Fossil-Fueled, Large And/Or Growing GDP National Park” or an acronym as unwieldy as “FFLAGGNP?” GDP National Park should suffice to get the message across.

The designation of GDP National Park suggests an approach to what we “do” with GDP in the coming years. Today, some scholars and activists are of the opinion that GDP, as an economic measure, ought to be simply eliminated. Gosh Darn, People, I acronymically say! And here’s why…

If you’re a doctor with an overweight patient, the last thing you should tell that patient is to throw away the scale. The patient needs that scale now more than ever. It just has to be interpreted in a different light. For example, when the patient was a little kid, it was a good, healthy thing when the scale indicated growth from year to year. When the patient became an adult and reached an optimum weight, that was a good thing too. But now, with an overweight patient, increasing size is a bad thing, and the patient needs to know it.

That’s how we should use GDP. GDP is a solid indicator of the economy’s size. Sure, economists of yesteryear considered GDP an indicator of welfare, not just of size. To them, a growing GDP was invariably a good thing. They were analogous to the pediatrician in the overweight patient’s life, always prescribing growth. Unfortunately, many neoclassical economists never grew up, and even after the “patient” started spewing oil left and right, they thought it their duty to prescribe even more growth. But as I reported some months back, economists are developing shades of green and many can be found to support the steady state economy as a policy goal.

So let’s go back to the medical metaphor for a moment. The doctor with the overweight patient should not take away the scale, but rather emphasize it! The patient should monitor that scale closely and, as the readings become larger and larger, become more and more alarmed. But the doctor should also make good use of the blood pressure cuff and the stethoscope, both of which will indicate declining health as the patient balloons out into obesity.

Likewise, we ought to supplement GDP with other indicators such as the Genuine Progress Indicator (GPI) and the Happy Planet Index (HPI). For the global economy and many nations, GPI and HPI will continue to decline as GDP grows beyond optimal levels. With GDP growth now coming at the expense of genuine progress and happiness, we should strive to halt the growth in GDP. That doesn’t mean we should stop measuring it; quite the opposite in fact.

Of course no metaphor is perfect, and GDP may be even more useful than the medical metaphor suggests. For example, all one needs is GDP to indicate the loss of biodiversity. That’s because of the fundamental conflict between economic growth and biodiversity conservation, with the human economy growing at the competitive exclusion of non-human species in the aggregate. For the sole purpose of indicating biodiversity loss, there’s no need to consider GPI or HPI.

Now the devil’s advocate will ask, “Why not just count the endangered species directly, instead of looking for an indicator like GDP?” But counting endangered species is akin to counting oil spills. They don’t come out and advertise themselves. A spill the size of Deepwater won’t escape notice, nor will the endangerment of a species like the polar bear, but the little spills and the little species are often overlooked and sometimes undetectable. Also, many forces are aligned to prevent the counting and reporting of endangered species. (This I learned during my Ph.D. research on the Endangered Species Act.) Even if it weren’t for these forces, you’d have a hard time monitoring the millions of species on the planet.

This type of problem is why we have indicators to begin with! Although it would be nice to know exactly which species are endangered (and how many barrels of oil are spilled, how much topsoil is eroded, etc.), we cannot know, and even if we could, we probably wouldn’t find it worth the expense to ascertain. It is important, however, to have some idea of species endangerment, oil spillage, and soil erosion.

For many indicators of ecosystem degradation, GDP has at least the following advantages: 1) It is a technically sound indicator, especially for biodiversity loss and greenhouse gas emissions; 2) It is already calculated with due diligence by governments, saving conservation and environmental organizations the huge amounts of money they would have to spend on more direct measures of environmental impact; and, 3) GDP data are widely reported by the press.

About all that is needed, then, is a different emphasis in interpreting the GDP data. We have to acknowledge that GDP growth was a good thing while the nation (and global economy) was like a little kid. However, we also have to point out that GDP growth has exceeded the optimum for the planet as a whole, and especially in certain nations that are already very wealthy or waste a lot of resources. (Think Hummers and NASCAR.)

Finally, there is one thing for which GDP is probably unsurpassed as an indicator. Some may argue that GDP isn’t a perfect indicator of greenhouse gas emissions because the carbon intensity of GDP changes. Some may argue that the rate of biodiversity loss changes with the technological regime. Some may argue that, while some water pollutants are increasing as a function of economic growth, others are being phased out. All of them may argue it’s no use trying to add up such distinct environmental parameters as climate, biodiversity, air and water in coming up with a broad indicator of environmental protection, because it’s like adding apples and oranges.

Yet apples and oranges, along with bacon and bourbon, can all be placed in a basket and weighed. If you ingest a small enough basketful, you’ll survive, even if it’s all bacon or bourbon. If you ingest a massive pile, it can be all apples and you’re still dead. Size matters.

And so it seems fruitful, so to speak, to frequently recall the definition of economic growth: increasing production and consumption of goods and services in the aggregate. GDP is a well-established, consistently calculated measure of economic growth. We also know that there is a fundamental conflict between economic growth and environmental protection. So even if we can’t add apples and oranges precisely, we can put two and two together: GDP is clearly an indicator of environmental impact in the aggregate, and may very well be the best such indicator we can hope for.

Idealists will try to throw GDP out with the bathwaters of bureaucratic number-crunching. I say don’t throw the baby out with the bathwater. Perhaps ignorance is bliss, but the fat patient called the polity needs to know the trouble it’s in. They need to know why the glaciers are melting… at GDP National Park!