Retire GDP Metrics That Don't Factor Social Progress, The Environment, Natural Resources; Stiglitz

[appalachiablue]

- It's time to retire metrics like GDP. They don't measure everything that matters.- Joseph Stiglitz. The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore. The Guardian, Nov. 24, 2019.

- "It is clear that something is fundamentally wrong with the way we assess economic performance & social progress."

- "The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy."

The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Will we be able to prosper within our planetary boundaries? Can a modern economy deliver shared prosperity? And can democracies thrive if our economies fail to deliver shared prosperity? These are critical questions, yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.

The standard measure of economic performance is gross domestic product (GDP), which is the sum of the value of goods and services produced within a country over a given period. GDP was humming along nicely, rising year after year, until the 2008 global financial crisis hit. The global financial crisis was the ultimate illustration of the deficiencies in commonly used metrics. None of those metrics gave policymakers or markets adequate warning that something was amiss. Though a few astute economists had sounded the alarm, the standard measures seemed to suggest everything was fine.

Since then, according to the GDP metric, the US has been growing slightly more slowly than in earlier years, but it’s nothing to worry about. Politicians, looking at these metrics, suggest slight reforms to the economic system and, they promise, all will be well. In Europe, the impact of 2008 was more severe, especially in countries most affected by the euro crisis. But even there, apart from high unemployment numbers, standard metrics do not fully reflect the adverse impacts of the austerity measures, either the magnitude of people’s suffering or the impacts on long-term standards of living.

Nor do our standard GDP measures provide us with the guidance we need to address the inequality crisis. So what if GDP goes up, if most citizens are worse off? In the first three years of the so-called recovery from the financial crisis, about 91% of the gains went to the top 1%. No wonder that many people doubted the claims of politicians who were then saying the economy was well on the way to a robust recovery..During the Clinton administration, when I served as a member and then chairman of the Council of Economic Advisers, I grew increasingly worried about how our main economic measures failed to take into account environmental degradation and resource depletion.

If our economy seems to be growing but that growth is not sustainable because we are destroying the environment and using up scarce natural resources, our statistics should warn us. But because GDP didn’t include resource depletion and environmental degradation, we typically get an excessively rosy picture. These concerns have now been brought to the fore with the climate crisis...
More, https://www.theguardian.com/commentisfree/2019/nov/24/metrics-gdp-economic-performance-social-progress

Also, Climate Change In The Next Decade, What Climate Change Will Look Like, Nov. 2019 Business Insider
https://www.businessinsider.com/climate-change-in-the-next-decade-2019-11#last-year-the-ipcc-warned-that-we-only-have-until-2030-to-act-in-order-to-avoid-the-worst-consequences-of-severe-climate-change-2