RN: alternatives to GNP/GDP – towards sustainability


Jan Slakov

Dear RN list,   Jan. 3

There are two messages in this posting; it was hard to decide which to put
first. In the end, I decided to put the shortest one first, but I urge you
to read the second one too, as it also gives some good leads on ways to move
towards sustainability and away from the thinking that brought us GATT,
NAFTA, IMF, MAI and all that other nonsense.

all the best, Jan

Date: Thu, 17 Dec 1998 12:46:54 -0500
To: •••@••.•••
From: "Mike Nickerson, Inviting Debate" <•••@••.•••>
Subject: A System Tune-Up.

                A System Tune-Up for the Coming Era

        Powerful new tools are available to deal with
unemployment and climate change.  Joe Jordan, is committed
to bringing them to public attention.  If we choose to use these tools,
we can turn the tide of events and put hope back into the future.

The plan has two parts.
        The first is to acknowledge that pollution, unemployment
and resource depletion are problems and to include them in our
assessment of progress.  At present, GDP (Gross Domestic Product)
is used to measure progress.  It is a tally of all the money spent in a year.
GDP is a poor measure of well-being since it makes no distinction
between desirable expenditures like food and education and
'regrettable' ones like burglar alarms and the treatment of
pollution related disease.

        The "7th Generation Bill", which Mr. Jordan is working on as a
Member of the Canadian Parliament, proposes an improved measure of
well-being.  It will account for depletion of natural resources and
subtract 'regrettable' expenditures.  It will also acknowledge
contributions to well-being for which no money is paid.  Homemaking, child
and elder care and voluntary community activity all improve our well-being.
When they are not recognized, as when GDP ignores them, they are
depreciated.  The result is fewer of these services provided less

        Improving our measure of well-being would be like getting
new eyes with which to see as we steer our way into the future.

The second step:
        Once we have accepted the broader range of costs and benefits that
affect well-being, subtle shifts in our governing process will help

        It is popular to resent taxes, yet few of us object to the
education, health care, fire protection and other services they pay for.
However, the system needs a tune up.  Even though Canada has acknowledged
the serious dangers of climate change, billions of our tax dollars are used
to subsidize the very processes which deliver carbon fuels and make it easy
for us to pollute with them.  Any effort to address climate change without
reassessing the employment of our tax money in this way is like running an
air conditioner while the furnace is blazing.  Better that we should use
tax power to encourage solar energy where every step taken reduces the need
to use polluting fuels.

        Taxes are a powerful tool.  Besides raising money for public
services, it is well known that when something is taxed, we get less of it.
Taxing employment (income tax) makes it more expensive to hire people,
which results in fewer jobs.  If we taxed pollution, polluting activity
would cost more and we would do less of it.  Doesn't it make more sense to
tax things we don't want rather than taxing the things we do want?  Tax
shifting, as this is called, can put more money into people's pockets and
actively discourage the release of dozens of pollutants that are proven to
cause problems.  In the revised system, we would be encouraged to avoid the
pollution taxes.  Companies would compete to provide non-polluting
alternatives and real progress would be made.

        Full cost accounting is where the costs of diminished resource
supplies, pollution and unemployment are included when calculating the cost
of producing goods and services.  If prices included these external costs,
we could, in our millions, help solve critical problems by shopping for
bargains.  Because nature doesn't charge for supplying resources and
absorbing waste, there are no real prices to fill the accounting columns.
The social costs of unemployment are even harder to assign to particular
products.  With tax shifting, however, we need only identify the value that
citizens put on health, the environment and dependable social relations.
The tax tool can then be applied accordingly and problems would be
discouraged and solutions given the advantage.

        An expanded measure of well-being along with a slow but steady
shift in the source of tax revenues can go a long way toward securing the
future.  The "7th Generation Bill"
<http://www.cyberus.ca/choose.sustain/well-being.shtml> aims to focus
public concern on this opportunity.  You can help make it happen.

        More details are available.  Look for "Measuring
Well-Being" at the Web address above or write for a free copy from:
Joe Jordan, MP, House of Commons, Ottawa, K1A 0A6.  Postage to the House of
Commons is free in Canada.  Email: •••@••.•••

Also of interest: "Why We Will Succeed":


        "Get taxes off our backs and onto our side."

See how we can increase employment
and decrease pollution by changing
the source of public revenues.

                Northwest Environment Watch


Sustainability Project - Inviting Debate
P.O. Box 374, Merrickville, Ontario
K0G 1N0
(613) 269-3500
e-mail:  •••@••.•••

Note from Jan: 
There are other exciting projects going on in Canada, two related ones right
here in Nova Scotia!

Janet Eaton, who many of you will "know" from the anti-MAI effort, is one of
several people who started the Nova Scotia-based Network for Creative
Change. It has a web site, which I can highly recommend and a list serv,
which for now is just for Nova Scotians. (Sorry guys :-( )

Network for Creative Change:


"Do not wait for leaders, do it alone, person to person. "   
                       --Mother Teresa

Now, here is a message Janet prepared for the list serv so we could be
introduced to the General Progress Index or GPI. 

Speaking as a Nova Scotian, I'd much rather we exported the GPI than our few
remaining fish!

all the best, Jan
From: "Janet M. Eaton" <•••@••.•••>

This paper was delivered by Dr.  Ronald Colman, Director of the 
GPI Atlantic Project in Nova Scotia,  at the MAI Inquiry held in 
Halifax, Nova Scotia, November 28, 1998. 

Ronald Colman's GPI  Atlantic is showing what's wrong with our 
current measures of progress and what we can do about it through his 
work on the Genuine Progress Index!! In  this paper he shows how 
GDP/MAI  type mathematics, which is the math that is the foundation 
of every Economics 101 text,  is a math  that misleads policy makers, 
rewards environmental destruction, elevates materialism to the 
primary social ethic, and, for the first time since the Industrial 
Revolution, makes it highly likely that the next generation will be 
worse off than the present one.  He goes on to show  that  there 
is a better way!! 

GPI Atlantic is a non-profit research group that is currently
constructing an index of sustainable development for Nova Scotia, a
Genuine Progress Index, that measures the value of our natural
resources, of unpaid work, of equity, of human and social capital, in
addition to market statistics. And it subtracts rather than adds the
costs of crime, toxic pollution and other activities that detract 
from well-being. 

By integrating social, economic and environmental variables into a
comprehensive set of accounts, it becomes possible to find out 
whether welfare is actually being enhanced or diminished by current 
economic policy. It can send more accurate signals to policy makers 
and help them identify measures that can contribute to genuine 
progress, well-being and prosperity.

Ron Colman and the team of advisors and researchers  he has assembled 
are examining 20 social, sconomic, and environmental indicators, 
selected in consultation with Statistics Canada. Ron is quick to 
recognize and note that GPI Atlantic is building on the pioneering 
work of Redefining Progress in California, of the World Resources 
Institute, and of other leaders in sustainable development 
accounting.  His greatest hope for the project is that it will 
result in an actual tool for the practical use of  policy makers.. . 

Statistics Canada has designated this project as a pilot for the 
rest of the country -meaning Nova Scotia has a chance to take the 
lead in creating a new economy for the 21st century that will 
genuinely reflect  the social, spiritual, environmental, and 
human values of our society. 

For a description of the project, complete background papers, 
and news releases see the  GPI Atlantic Website address:

Ron Colman can be reached at 

The following paper is not on the GPI website so you may wish to 
save it  in your files. 

All the best,
Janet Eaton,
Advisory Council, GPI -Atlantic.


MAI INQUIRY,  HALIFAX,          28 November, 1998


Ronald Colman, Ph.D,  Director, GPI Atlantic

Thank you for coming here today to listen to us. We have learned so
much from you over many years. We appreciate that you are now here to
hear us.

Why is the MAI so important to some? We must begin by acknowledging
that according to a certain kind of mathematics it is very 
attractive. It can be shown to increase production, to expand trade, 
to lower production costs, and to keep inflation low.

It is the same mathematics that measures economic strength and social
well-being according to GDP growth rates, and that focuses tremendous
attention on related market statistics like interest rate changes,
currency exchange value fluctuations, and gains and losses on the
Toronto Stock Exchange.

It is the same mathematics where the numbers go up the more fish and
timber are sent to market, that counts the depletion of natural
resources as economic gain.

It is the same mathematics where the numbers go up the more crime, 
the more toxic spills, the more divorce, the more gambling, the more 
car accidents there are, because all these generate economic 
activity which adds to growth. It is a mathematics that makes no 
distinctions between economic activities that contribute to or 
detract from welfare.

It is the same mathematics that ignores growing inequality, the value
of unpaid work - including voluntary work, household production and
child-rearing, overwhelmingly performed by women throughout the 
world, and the value of leisure time. All are omitted from the 
equation in GDP / MAI mathematics.

It is the same mathematics that 20 years ago hailed GDP growth rates
in Brazil as an "economic miracle," while half the country got 
poorer, and infant mortality rates sky-rocketed.

And it is the same mathematics that today holds Chile up as a model
for the developing world, because its economy is growing and it is
paying back its loans to the IMF, while its forests are being cut
down, its fish stocks depleted, its rural population sprayed with
toxins long banned in Canada, and its inequality growing.

Interestingly, if you or I used this kind of mathematics on our 
income tax forms, Revenue Canada alarm bells would sound and we 
would be hauled in for interrogation. Imagine a factory owner 
counting the sale of his machinery and capital equipment as profit, 
the way our national accounts count the sale of our natural capital 
assets as economic gain!

Yet that is the mathematics, selectively counting, measuring and
valuing only the quantity of market production, that justifies the
MAI, because it increases production at low cost. It is a mathematics
that makes no distinction: · whether foreign investment protects or
destroys the resources of the host country; · whether investment is 
in clinics or casinos, in schools or gun-running; · whether 
investors use child-labour or sweatshops or adhere to safety 
standards or poison their workers by violating environmental 
regulations; · whether the investment feeds people or undermines the 
food security of the host country by converting self-sufficient 
farms to cotton plantations or shrimp farms or sugar and cocoa 
plantations for consumption at western dinner tables; · whether 
security, equity and environmental quality are enhanced or 

It is a mathematics, in short, that omits long-terms costs and
benefits completely from the equation. It is a mathematics,
unfortunately, that is still taught in our classrooms, and that is 
the foundation of every Economics 101 text. It is a mathematics that
misleads policy makers, rewards environmental destruction, elevates
materialism to the primary social ethic, and, for the first time 
since the Industrial Revolution, makes it highly likely that the 
next generation will be worse off than the present one. 

There is a Better Way of Counting

Here in Nova Scotia we are engaged in a modest project to count some
of the important factors omitted from GDP / MAI mathematics, and to
include them in the equation.

GPI Atlantic is a non-profit research group that is currently
constructing an index of sustainable development for Nova Scotia, a
Genuine Progress Index, that measures the value of our natural
resources, of unpaid work, of equity, of human and social capital, in
addition to market statistics. And it subtracts rather than adds the
costs of crime, toxic pollution and other activities that detract 
from well-being. 

By integrating social, economic and environmental variables into a
comprehensive set of accounts, it becomes possible to find out 
whether welfare is actually being enhanced or diminished by current 
economic policy. It can send more accurate signals to policy makers 
and help them identify measures that can contribute to genuine 
progress, well-being and prosperity. It can let citizens know how we 
are really doing as a society, and how we can live sustainably so 
that future generations will not be worse off because of our 
Counting some of those missing numbers can actually change the policy
agenda. If our natural resources have no value in our accounting
system, we will not give policy priority to supporting sustainable
timber harvesting. While we measure the quantity of market production
but not investments in human and social capital, we will continue to
give tax breaks to business, and view education and health as costs
that need to be cut. Our current system of selective mathematics
actually determines what makes into the policy arena.

If I tell a class of students that they should devote great effort to
their research paper, that they will learn a lot from it, that it 
will hone their research skills, that it is the most important part 
of the course, and that it is worth 5% of the final grade, then the 
students may be forgiven for putting all their effort into the exam 
instead. What we count signifies what we actually value far more 
potently than what we say. 

No one today argues publicly for a degraded environment, for greater
inequality, for more crime or less job security. But we can talk
ourselves blue in the face and profess adherence to all the right
principles. Until we officially count and measure them in our core
accounts, they will not be seen as having real value, and they will
never make it to the top of the policy agenda.

The time is more than ripe to change our accounting system and to
adopt a more genuine and comprehensive measure of progress. And there
is probably no region in the country that is more fertile ground for
this change than the Atlantic provinces, for three basic reasons:

· No one in this region needs convincing that counting natural
resource depletion as growth can be economically disastrous. Maybe in
British Columbia enough people still believe that resources are
forever. But here we have actually seen the loss of a resource come
full circle back into the economy as a catastrophic cost. Through
TAGS, through 40,000 unemployed fishermen, we are now actually paying
the price in hard cash for failing to value our fisheries as a 
capital asset. 

What policy-maker, of whatever political stripe, would not welcome an
early warning system that allows a timely, graduated response to a
depreciating asset before we are faced with another crisis? The
question is not theoretical. A year ago, the National Round Table on
Environment and Economy warned that our Maritime wood lots could be 
on the verge of a collapse, analogous to the period preceding the
collapse of the cod fishery. 

· Secondly, there is no illusion here that conventional economic
mathematics has ever really worked for this region, at least in the
last 100 years. There is perhaps a greater openness here to an
alternative system that values our true assets than in a region like
Upper Canada that is more firmly yoked to the TSE, the Bank of 
Canada, to company headquarters and to the other institutions of 
blind growth. 
· Thirdly, for some reason, the materialist juggernaut has not
irrevocably paved this region over, at least not yet. Community 
values are still remarkably strong. There is still a gentleness,
straightforwardness, generosity, and willingness to help our
neighbours that has not yet succumbed to greed and egoism. Visitors
feel it. Locals who leave for greener economic pastures often return
after some years, drawn back by a mysterious magnet that has more to
do with quality of life than quantity of possessions. 

But we are not immune. Small community schools are being replaced by
massive private-public partnered crowd control enclosures. From a
fraction of the national average 30 years ago, crime rates are rising
fast to meet national standards. Government-supported gambling is
eroding the social fabric. Free trade brings Walmarts to replace 
small local stores. And yet, we still have a narrow window of 
opportunity. It is still possible here, I am convinced, to garner 
overwhelming public support for an index of genuine progress that 
reminds people of their true values.

Cutting Through MAI Math

This local project can, I think, contribute to the MAI debate, 
because even a small move towards fuller cost accounting, that 
begins to consider social and environmental variables in the 
equation, can demonstrate how spurious MAI math really is. For 
example, the math of globalization shows that transporting goods 
over vast distances can keep prices lower than producing those goods 
at home. Sobey's can sell a California lettuce for less than it 
costs a local farmer to grow one.

But what is missing at the checkout register? That price excludes
energy subsidies, the true costs of transportation, the cost of
greenhouse gas and other emissions from refrigerated trucks and
warehouses, soil erosion from monoculture growing methods, the health
effects of pesticide residues, the loss of local jobs, the loss of
potential local inputs into production.

When all that has no value, when it is not counted at the checkout
register, then the California lettuce looks very attractive. It
appears cheap to the consumer, profitable to the producer, and it
creates enough intermediate economic activity to keep the growth
figures climbing. Sadly, all the hidden and forgotten costs will be
paid, many of them by the next generation.

Cynics might say that people will always go for the lowest price, the
greatest personal convenience, the best bargain. That is the MAI 
logo. But I don't think so. I am convinced that if Nova Scotians 
know all the numbers in the equation, and not just a selective few, 
they will naturally incline to wise choices.

We recently spent $112 million on the 45-kilometre Cobequid by-pass 
on Highway 104. That $112 million could have closed the poverty gap 
for 25,000 of the 46,000 Nova Scotia children who live in poverty. 
Would Nova Scotian motorists be willing to drive a few kilometres an 
hour slower on the old road or take a few extra minutes on their 
journey to help eliminate child poverty in the province? If they 
knew those few extra numbers, currently invisible, I'm convinced the 
answer would be a resounding "Yes."

Not only that, eradicating child poverty would be a good economic
investment for the province. Numerous studies show that child poverty
is directly correlated with poor health, premature death, and poor
educational attainment, which translate directly into higher social
costs and poor workplace productivity down the road, and which come
back to the economy as costs as surely as the depletion of the

This is not rocket science. It is street-sense economics. Ordinary
Nova Scotians can understand it, and respond with wisdom and

I may be hopelessly naïve. But I do believe that even those most
firmly convinced of the value of MAI-type agreements would see the
equation differently if just a few extra numbers were added to the

I recently read an interview with the Chief Executive Office of 
Philip Morris, who earns a tidy $4 million a year. Using the 
selective MAI / GDP type mathematics that is confirmed by all we're 
taught and read in the press, that man looks "rich." His apparent 
wealth is envied and emulated, he may receive honorary degrees from 
universities he supports, or may head the local United Way, like the 
President of Imperial Tobacco in Montreal. Not only rich, but a 
respected citizen! 
Even if we discount the social costs of what he produces and sells -
(Personally I can't do that, because I feel a pain in my heart every
morning when I see the 13 and 14-year-old schoolgirls puffing away on
the street corner as they wait for the school bus, or when I read 
that the number of teenagers who smoke regularly has tripled in 
recent years) - but even if we can't expect the Philip Morris CEO to 
count these costs, there are others he can not so easily ignore.

In the interview he reveals that he arrives at the office at 6am 
every morning, and leaves at 10pm. He works weekends. "What else do 
you do, aside from work?" asks the interviewer. "Sleep," he replies. 
An impoverished lifestyle, methinks. No time to listen to music, to 
read a book, to play with children, to walk in the woods. (And how 
easy it must be to cut down a forest when there is no time to enjoy 
the trees and trails.)

Even the CEO of Philip Morris must understand the meaning of a few
extra numbers - the costs of overwork, the health effects of stress,
no time with family. If his account books reflected just the value of
time and health, in addition to sales and profits, I don't believe he
would remain unmoved.

Thirty years ago, almost to the day, just before he was assassinated,
Robert Kennedy said: Too much and too long, we seem to have
surrendered community excellence and community values in the mere
accumulation of material things..The GNP counts air pollution and
cigarette advertising and ambulances to clear our highways of
carnage..Yet the gross national product does not allow for the health
of our children, the quality of their education, or the joy of their
play..It measures neither our wit nor our courage; neither our wisdom
nor our learning; neither our compassion or our devotion to our
country; it measures everything, in short, except that which makes
life worthwhile.

Of course, it would be a much more direct path to a decent society if
policy-makers recognized fundamental human, social and environmental
qualities as having intrinsic value in their own right, and if these
values were considered in all policy decisions. But until then, and
while money and economic criteria still dominate the policy arena, 
and the consumer ethic guides the behaviour of ordinary citizens, a
genuine progress index at least can demonstrate convincingly that
these non-material values are also the living basis of true wealth 
and well-being.

There is no doubt that if the full social, economic and environmental
costs of the MAI were included in the equation, we would see through
the simplistic, narrow, spurious mathematics of the globalization
dogma in an instant, and begin investing in genuine security,
humanity, community strength and ecological resilience, that are the
actual basis of wealth and prosperity, and, at a more profound level,
that give life meaning and make life worthwhile.