The establishment reconsiders BNP

In Signs, I reported on the establishment's look at replacing the Gross National Product (GNP)with something new. Naturally, that something new already exists and is being used. Redefining Progress (a think tank) started in 1994 by Ted Halstead has been working toward this goal by developing the Genuine Progress Indicator.

The GPI incorporates personal consumption data just as the GNP. It adjusts those figures for some factors and adds others. The GPI looks at income distribution, adds the value of household and volunteer work and higher education. It looks at the costs for resource depletion due to crime and pollution, long-term environmental damage, negative changes in leisure time. It adds the cost of defense expenditures, accidents, misfortunes, illness or what people spend to prevent any changes in their lifestyle, medical and repair bills, pollution control devices, etc.

The life expectancy of consumer durables and infrastructure like roads, electricity lines can be negative if representing losses. The amount of monetary reserve a nation maintains or borrowed capital it has, is a sign of health or illness. If used for in-country investment it is positive and only becomes negative when used to finance consumption.

If a nation allows its capital stock to decline, or if it finances consumption with borrowed capital, it is living over its resources. The GPI counts net additions to the capital stock as contributions to well-being, and treats money borrowed from abroad as reductions. If the borrowed money is used for investment, the negative effects are canceled out. But if the borrowed money is used to finance consumption, the GPI declines.

The heat could be off the financial system, while other areas like health care will be scrutinized for their ability to keep people healthy!

Changing how we define and measure progress will make a huge difference in our lives, our choices and our way to see the world. Because the traditional measure of national production remains in each measure, we might not feel the change quite as much as if were just replaced, not added to with other measures.