|
December 28, 1999
The Genuine Progress Indicator Shows Continued Decline in Quality of Life
by Phillip Johansson
While the GDP rises, an alternative index released by Redefining Progress shows that genuine
economic progress eludes most Americans.
SocialFunds.com --
The Gross Domestic Product (GDP), the sum in dollars of our voluminous and growing consumption, is
regularly applied as an index of economic progress in the U.S. and elsewhere. Redefining Progress,
a San Francisco-based public policy organization, recently released its update on the Genuine
Progress Indicator, or GPI, an alternative to the GDP that better reflects the way most people
interact with economic forces.
 For instance, if you've recently had ongoing
and expensive cancer treatment, a drawn out divorce with two lawyers billing hundreds of hours, and
a three-car accident that totaled your new car, you've had a banner year according to the Gross
Domestic Product (GDP). Because the GDP is only a gross tally of money spent in the U.S., goods and
services purchased by households or governments, regardless of how or why it was spent, your
terrible luck has boosted "economic growth."
By incorporating environmental, social, and
health factors long ignored by traditional government measures, the Genuine Progress Indicator
(GPI) better represents the quality of our lives and not simply money changing hands. According to
the recent report by Redefining Progress, "Why Bigger Isn't Better: The Genuine Progress Indicator
1999 Update," the economy everyday people experience is continuing a downward trend as we confront
the new millennium despite the growing GDP.
Researchers report that the GPI peaked in
1980 at $1.9 trillion ($US) and has been declining ever since. While the GDP rose from $20,310 per
capita in 1980 to $27,939 per capita in 1998, the GPI fell from $8,722 to $6,649 during the same
period. In 1998 the GPI dropped to $1.7 trillion. The drop in the GPI, 2.3% since 1990, is
primarily due to a growing income gap and declining quality of life for many Americans.
"Progress is more than simply money changing hands," said Joanne Kliejunas, executive director
of Redefining Progress. "'Why Bigger Isn't Better' debunks the modern-day myth that a booming
economy delivers an improved quality of life."
The GPI differs from the GDP in that it
does not count negative or defensive expenditures as economic positives. For example, it does not
include more than $100 billion spent on addressing water, air, and noise pollution, $28 billion for
the costs of crime, from replacing stolen goods to increased prison buildings, or $1.333 TRILLION
for the loss of nonrenewable resources like old-growth forests, all factors calculated as growth in
the GDP.
The GPI also includes and quantifies many benefits currently ignored by the GDP.
For instance, women still largely perform the work of shopping, cooking, cleaning, childcare, and
household upkeep, yet this nearly $2 trillion sector of the social economy is virtually invisible
to the GDP. Millions of hours donated by volunteers under the auspices of civic, nonprofit, and
religious groups make a tremendous contribution to community well-being and have zero effect on the
GDP.
The Genuine Progress Indicator recognizes the concrete values of time spent doing
positive work for the community and its environment. Therefore, while the GDP counts only the money
spent on a VCR and video to "baby-sit" your children, the GPI better reflects our societal values
by counting the time spent reading with them.
The real gains from the growth reflected by
the GDP have increasingly benefited the highest income earners in the U.S. From 1975 to 1998, the
proportion of total income received by the poorest fifth of the population dropped from 4.4 percent
to 3.6 percent, while the proportion received by the richest fifth increased from 43.2 percent to
49.2 percent. In other words, the rich are getting richer while the poor get poorer.
"For
much of this decade there has been a paradox at the core of American life," said Kliejunas.
"Politicians and the media say the economy has been booming. And yet many people are struggling
harder than ever only to feel less well-off and see their quality of life slipping away."
According to Kliejunas, there are three main reasons for this paradox: economic growth is not
distributed equally; growth is purchased by increasing financial debts to the future, through
overseas borrowing and failing to invest enough in future productivity; and finally, the costs of
growth include degradation of natural assets and depletion of natural resources, an ecological
"borrow" from the future that we can never hope to repay.
The GDP, the government's chief
measure of economic activity, fails the public as an indicator of progress by ignoring social and
environmental well-being. Endorsed by Nobel laureates and some of the nation's top economists as an
essential step toward more realistic accounts, the Genuine Progress Indicator explains why many
Americans feel the "boom" has passed them by.
www.rprogress.org
©
SRI World Group, Inc. All Rights Reserved.
Top
| 
