PROBLEMS WITH THE GDP
"Ecological economists
forsee an apocalypse. They warn that we have reached a unique juncture
in human history that, ecologically speaking, the world is already full
and further expansion will lead us into an ecological nightmare, a prolonged
and possible permanent 'age of despair'... William Rees co-author of The
Ecological Footprint. and a leading spokesman of the new economics,
warns that the five- fold expansion in the world economic activity since
WW II (and 20- fold increase this century) 'has produced an unprecedented
level of material and energy exchange between the ecosphere and the human
economic subsystem.' He points out that 40% of the terrestrial and 25%
of the marine photosynthesis has now been diverted to human use. He sees
ozone depletion, climate change, deforestation, soil degredation and the
loss of biodiveristy as warning signals telling is to stop stressing our
ecosphere or die...
The chief measurement
of our growth is the Gross Domestic Product (GDP) and it is seriously
flawed.
Consider:
When the Exxon Valdez spilled its load of oil into the Gulf of Alaska-
a dark moment in recent American history- America's GDP went UP. (A lot
of money was spent on cleanup, media coverage, ecological testing, legal
fees, etc.) Money changed hands. The country became "healthier".
Everytime there is a car accident or newly diagnosed cancer patient, whenever
personal or societal catastrophies occur, the GDP goes up and the economy
"gains".
Walking, biking, and mass transit contribute less to the GDP than using an automobile. Trains contribute less than airplanes; an extra blanket or sweater less than raising the thermostat; one- child families less than six- child families; eating legumes less than eating beef; starting a vegatble garden less than buying at the supermarket; staying at home to raise your child less than getting a part-time job at Wendy's. GDP measures the "goods" and not the "bads". That's why ecological economists have developed their own measures of conomic welfare, ISEW. The Index of Sustainable Economic Welfare was developed by Herman Daly and John Cobb in 1990..."
Two ways to measure
economic welfare : GDP and ISEW
As conventional economic measurements come increasingly divorced from
reality, the Voodoo gap opens up.
Summer 1997