I just returned from a week in Bhutan as part of the Beyond GDP project. Beyond GDP is raising awareness that Gross Domestic Product (GDP) is an ineffective metric for assessing societal progress or even economic performance. Beyond GDP is also developing and implementing more effective, comprehensive alternative metrics.
GDP simply measures the number of dollars flowing through the economy, not whether those dollars are improving the quality of our lives. GDP places equal value on money spent to keep a child in juvenile jail or money spent to give a child a good education. The GDP registered the clean up costs of the BP Deepwater Horizon oil spill catastrophe as a net gain, completely ignoring the environmental and social impacts to Gulf Coast communities.
There is increasing awareness of the downfalls of the GDP and a growing movement to develop more effective measurements of progress. Bhutan is a world leader in that effort. This tiny Himalayan country has abandoned GDP in favor of a Gross National Happiness (GNH) index. My trip was part of a collaborative innovation lab that brings together change-makers working in government, business, and civil society from Bhutan, Brazil, China, India, Sri Lanka, the United States, and Europe. The Lab is co-sponsored by the Presencing Institute, the government of Germany and the GNH Center in Bhutan.
I realize the "happiness" frame is a bit squishy for the American political and media culture. In fact there was a snarky article on the front page of the Oregonian newspaper the day that John and I left for Bhutan. But despite knee-jerk attempts to trivialize it, the Bhutanese initiative is extraordinary. GNH has nothing to do with the feel-good type of happiness; rather it is a multi-dimensional measure that assesses societal wellbeing through nine domains: psychological wellbeing, time use, community vitality, cultural diversity, ecological resilience, living standard, health, education and good governance.
I was most impressed that the GNH is linked with a set of policy and program screening tools so that it has practical applications. For example, despite pressure from the growing tourism industry, Bhutan has banned helicopter tours because a GNH assessment showed that the increased noise and expense of helicopter fuel and infrastructure outweighed the benefit of added tourism dollars.
This model should prove useful to the work we are doing in the U.S. to assist states in developing more effective measurements of progress and economic performance. So far four states - Oregon, Maryland, Vermont and Utah - are moving forward with development of Genuine Progress Indicator (GPI) initiatives.
The GPI is a Triple Bottom Line approach that quantifies financial capital along with social and natural capital. It recognizes that wellbeing requires more than just economic growth. An event scheduled in June for states interested in developing GPI initiatives already has fifteen states signed up.
In truth I first learned about the problems with the GDP and the alternative GPI some fifteen years ago in grad school but it has a completely new momentum now. More and more people are realizing that our status quo economic system is not delivering the outcomes we want. More and more people are asking whether the economy is working for us or are we just working for the economy? More people are questioning a model based on unlimited consumption on a planet of finite natural resources.
Skeptics blow off Bhutan's effort as trivial given its small size and relatively simple economy. The Bhutanese have no delusions of grandeur; they know they are a small player on the world scene. An excerpt from the statement paper submitted by Bhutan's Prime Minister, Jigmi Y. Thinley, to the U.N. in advance of the Rio+20 summit reads,
"Bhutan is a small Himalayan country, perhaps blessed with relative insignificance, just remote enough not to be entirely hooked to the materialist bandwagon, and small enough, with a population of less than a million, to do its best to put the new economic paradigm into action. In fact, we are determined to do so. ...
We are a country that vowed at the Copenhagen Climate Summit to remain a net carbon sink in perpetuity, and whose Fourth King famously proclaimed three decades ago that "Gross National Happiness is more important than Gross National Product. ...
And yet, there are major limits to what we can do alone. After all, we are not separate from the world around us. We are connected to the internet, television, global trade, and all the consumerist temptations they bring. And greenhouse gas emissions in Chicago, London, and Sydney are melting glaciers in our own Himalayan mountains. We are more than willing to be on the front lines in adopting the new sustainability-based economic paradigm, but we are now intimately connected with the world, and so we need to take this leap as a global community."
Bhutan's pioneering leadership is important. They are providing a concrete example of a different way of organizing and evaluating economic activity. They aren't just criticizing the old; they are building the new. They recognize that the economy is not like the Himalayan Mountains or the Pacific Ocean. It is not a force of Nature or an act of God. It is a human-made construct. We created it. And that means we can re-create it, re-shape it to better meet our needs. We have done so time and time again.
In fact, the current GDP metric and consumption-based economic model was only put in place on a wide-scale in 1944 with the Bretton Woods Act. There was rationale for this system then, but scientists and economists did not realize the scale of consumption that would result or the ecological limits that we would encounter within just a few decades. But now we do know.
Our economy is decimating the natural environment that sustains us and killing factory workers in Bangladesh and elsewhere all in the pursuit of consumption and growth of national GDPs. That certainly doesn't feel like genuine progress and it doesn't make me happy. It is time to go beyond GDP.