by Rob Dietz
Robert F. Kennedy delivered a stunning speech 45 years ago at the very beginning of his ill-fated campaign for the office of U.S. President. He stressed the need for new measures of progress, and his devastating critique of the most influential economic measuring stick included this poetic paragraph:
[T]he gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It 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.
It appears that U.S. leaders and their statistically inclined appointees at the Bureau of Economic Analysis are finally catching on. Carl Lemniscate is the BEA’s head beancounter. His graying temples and baritone voice lend him an air of authority as he answers questions about why it took so long for the agency to produce a better measuring stick for American progress.
“The Bureau is a no-nonsense agency. When we see an opportunity to calculate additional economic figures, we get right on it. People just don’t realize how quickly we responded to Bobby Kennedy’s challenge. Why do you think we switched from gross national product to gross domestic product all the way back in 1991?”
Mr. Lemniscate is referring to the agency’s decision to use GDP instead of GNP as the primary measure of economic activity, a change that many economists and citizens have continued to criticize as failing to address Kennedy’s main concerns. Mr. Leminscate says, “I thought a totally objective measure like GDP would suffice, but it’s hard to satisfy everyone. Still, here at the Bureau, we serve the public.” A smile breaks across his face as he leans back in his swivel chair and says, “That’s why we’re so pleased with our three new measures of economic progress.”
In a press release issued earlier today, the Bureau of Economic Analysis introduced the public to GDI, CCI, and FEI. Mr. Lemniscate says, “I have to admit that at first I was against the idea of using measures other than GDP, but given the quality of these new ones, I’m all for it.”
GDI — Gross Domestic Imperviousness
The main plot in the story of progress is humanity’s domination of nature. Thanks to the magic of economic growth and technological advancement, nature may soon become a distant memory from a bygone era. Also thanks to technological advancement, there’s now a measure that can capture the essence of this domination.
With advancements in satellite sensors and data processing, analysts can produce detailed maps of impervious surfaces — those areas that have been turned into pavement, rooftops, and other manmade surfaces. GDI adds up the nation’s impervious square footage to provide an accurate indicator of humanity’s victory over untamed lands. Mr. Lemniscate says, “The brilliance of GDI is that it tells us how we’re creating real wealth by converting farmland, forests, grasslands, and other useless landscapes into highways, strip malls, muffler shops, ministorage, and other desirable suburbi-scapes.”
CCI — Corporate Competitiveness Index
Competitiveness is the foundation of American progress. It’s the fuel that has driven America to the winner’s circle in the race for planetary supremacy. And no institution embodies the competitive spirit better than the publicly traded corporation. Even though corporations have trounced so many Main Street businesses and outcompeted all sorts of ecosystems in the cutthroat battle to maximize profits, competitiveness has been slipping. If America is going to retain its position as the highest-consuming nation, it needs a measure that can track competitiveness.
CCI is a composite of key statistics for each publicly traded corporation; it includes profit, degree of influence on political decisions, quantity of externalized costs, and percentage of tax liability avoided. Also dubbed the corporate bootprint, CCI quantifies the progress that occurs as corporations accumulate power and eradicate the need for less profitable institutions in society.
FEI — Financial Extraction Indicator
The FEI is akin to another of the Bureau’s measures — total wetland drainage (TWD) — but instead of calculating how much water is drawn out of worthless landscapes, it calculates how much financial wealth is extracted from real assets. Real assets tend to just sit there doing nothing. Take, for example, a house. Sure it offers shelter, warmth, and a place for a family to do whatever families do, but none of that provides market value. Financial institutions can and do change all that. For example, financiers can chop mortgages into sellable and re-sellable little bits. Before the financiers got involved, there was no money changing hands in the market, and the house had only one owner. Enter Wall Street, and we have money whipping around and thousands of anonymous absentee owners — a supremely creative wealth-generating scheme. With all the undisclosed fees and untraceable flows of money involved in such a process, financial institutions are able to accrue wealth that would have remained locked up in real assets.
The FEI aggregates all the instances in which financial institutions extract wealth from families, communities, and even natural areas — a true measure of how our most capable industry can wring wealth from assets held by others. One only needs to look at how the financial institutions handled the housing crisis to recognize that progress in America is synonymous with progress on Wall Street.
With FEI, CCI, and GDI, the Bureau of Economic Analysis has kicked off a new era. As Mr. Lemniscate says, “We manage what we measure. And you can bet we’ll be managing America a whole lot better now that GDP has a few sidekicks to help show off our national progress.”