Media Clipping — Sat, Aug.8th, 2009 Chronicle Herald

Measuring economic reality: N.S. takes the lead

SURELY you follow the economic recovery saga. Every new report — on consumer spending, jobs, credit, whatever — sends the stock markets crazy, either up or down. Governments may stand or fall on whether growth resumes. And that peculiar branch of show business, TV business reporting, relentlessly applauds the "good news" at the slightest presumed uptick.

What we crave is "growth" — the more the better, as measured by the Gross Domestic Product (GDP) index. But have you stopped to ask what it is we’re wishing for?

We want to pick up where we left off, don’t we? Perhaps minus the financial miscreants, some now in jail, who we may fantasize caused it all. But where we left off was unsustainable. That’s why the whole thing crashed. Virtually all the "growth" from 2001 on (in the U.S., with the rest of us trotting behind) was based on consumers going into debt and the housing bubble.

Many people knew it couldn’t last, but officially it couldn’t be admitted because the measuring stick, the GDP, was too crude to pick it up since it measures everything indiscriminately as "growth" — whether it’s mad consumer debt, ponzi schemes, wiping out the forest or the fish, or whatever. It’s all "growth." Who cares what kind?

Is there a more rational way? There is. It’s called the Genuine Progress Index (GPI), that’s been slowly evolving for about 40 years, ever since the alarm arose that the GDP was being used not just to measure the size of economies, as intended, but to define societal values. Economic "progress" was being defined as the accumulation of brute wealth and nothing else. And it’s been getting worse.

Since then, the GPI has been making gradual advances, including in places like Statistics Canada, the OECD and other venues where economic activity is measured in a big way. And here’s the news: The place in the world where the GPI is most advanced is Nova Scotia.

The research group GPI Atlantic has completed such an index for Nova Scotia which it has been constructing since 1987, having produced 20 reports or "accounts" on subjects ranging from the value of volunteer work, soils and agriculture, transportation, fisheries, the costs of crime and so on, meant to guide policy-makers in those areas by providing a "full cost accounting" of those activities — that is, by including the total costs (such as pollution, or social problems) of various economic activities, which GDP calculations dismiss as "externalities."

It’s the first such completed index for any jurisdiction anywhere, says Ron Coleman, head of GPI Atlantic, which has incorporated it into what it calls a "user manual" for Nova Scotian civil servants and policy planners. If the NDP government applies it for decision-making promptly, it will be the first jurisdiction anywhere to do so. France is constructing one, there’s work in Britain, and Coleman is often off to Wellington, New Zealand, and Bhutan where they’re also in an advanced phase.

The NDP has said it would use the GPI. Some of GPI Atlantic’s work has in fact already been incorporated in provincial policy. It was the group’s finding that preventable chronic diseases cost the province nearly a half billion dollars a year that mainly prompted the creation of the Department of Health Promotion and Protection, and the province has used GPI figures on the health costs of smoking ($170 million a year), the savings generated by recycling over the old landfill system ($31 million a year), and the economic value of volunteer work ($1.8 billion a year).

Coleman says Nova Scotia was chosen for the GPI experiment by himself and others because it was "particularly fertile ground." The conventional economic system hadn’t served it well, the place was less materialistic than the North American heartland and was open to the values promoted by the GPI: strong social supports and communities, high rates of voluntary work, natural beauty to be protected, and more. And the cod collapse had just occurred, proving a huge point: that blind growth can be blind destruction.

Measuring economic activity is complicated dry-as-dust stuff, the importance of which is hard for the public to grasp in the age of superficial media. Yet how we count things up says a great deal about us. The GDP is like a household that counts only its income and ignores expenses, debts, what the kids need and myriad other things. The GPI takes account of the full reality. Had it been in place, says Coleman, the bubble that crashed would have been obvious from the beginning.

Nova Scotia does indeed seem to be an unlikely place to be a leader in taking account of reality, but no more unlikely than electing the NDP seemed only a short while ago.

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