GDP vs. GPI in US
File:GDP vs GPI in US.jpg” by Trinifar is licensed under CC BY 2.0

GPI vs. GDP: Does Size Matter More Than Substance?

By Robert Hunziker

[This article was first published in CounterPunch on August 16, 2021.]

Ilhan Omar
“Ilhan Omar” by Lorie Shaull is licensed under CC BY-SA 2.0

U.S House Representative Ilhan Omar (D-MN) recently introduced a bill in Congress to overhaul GDP, the nation’s most watched economic indicator. On July 30th she introduced the Genuine Progress Indicator (“GPI”) Act. It would be a significant change for the trajectory of the socio-economic system.

GPI is a new way to calculate GDP, but passage of the act in Congress is dependent upon whether it can displace the all-important “only size matters” syndrome that underlies and determines GDP. In contrast, GPI offers considerable substance and a new way to measure economic performance that’s in concert with the planet and with its inhabitants.

Hopefully, GPI gets a decent hearing in Congress because major turning points in socio-economic and political affairs can make a difference for generations to come.

A prime example of a positive turning point is the Battle of Saratoga in the 1777 victory by the colonists over the British, which was the world’s greatest army at the time. It was a crucial turning point in the American Revolution, convincing France to enter the conflict on behalf of the colonists. That turning point brought forth a new nation.

In contrast, an example of a negative turning point is the Supreme Court 1896 Plessy v. Ferguson decision upholding Louisiana’s statute mandating segregation in all public facilities, thus legally embedding bigotry for nearly 60 years. That turning point still stings.

Today, we may be witnessing one more major turning point via Representative Ilhan Omar (D-MN). Her proposal has the potential to change the socio-economic trajectory of America and the world in a multitude of ways by leveling the playing field for income distribution, infrastructure development, fair labor practices and ecosystem sustainability, none of which GDP recognizes.

GDP only measures the “size of the economy” whereas GPI measures the true breadth of economic benefits and losses, such as: (1) unpaid labor (2) sustainable job skills (3) infrastructure and (4) ecosystems services, as well as accounting for the costs of growth and its collateral issues: (a) resource depletion (b) greenhouse gases (c) income inequality, and (d) domestic abuse. GDP ignores all of the aforementioned.

GPI may be the only way to unify attention for badly needed mitigation efforts of life-sourcing ecosystems. Without them, the planet will die.

Meanwhile, as for GDP, certain questions must be addressed: Growth for whom and at what costs? GDP does not husband life-sustaining resources, but it does consume those same resources, which is an overt expression of a civilization that has lost its way on a trip down the proverbial rabbit hole.

Omar’s proposed bill says: “To direct the Secretary of Commerce to establish an alternative metric for measuring the net benefits of economic activity, and for other purposes… the ‘genuine progress indicator’ to measure the economic well-being of households, calculated through adjustments to gross domestic product that account for positive and negative economic, environmental, and social factors that contribute to economic activity….” That is brilliant!

The “costs” listed within GPI actually define the impending extinction risks for the world at large, for example, costs that are missing from GDP but included within GPI: (1) water, air, and noise pollution at the household and national level (2) loss of farmland and productive soils, including soil quality degradation (3) loss of natural wetlands, primary forest area and other at-risk ecosystems (4) high amounts of carbon dioxide and other greenhouse gas emissions (5) depletion of the ozone layer (6) depletion of nonrenewable sources of energy.

Unfortunately, it’s not likely that GPI will get out of committee in the House of Representatives for several obvious reasons: If the costs listed in GPI were adapted to GDP, actual reported GDP would be all minuses, like -5% to -25%, not +2% to +6%.

Oops! How would the Dow Jones Industrial Average react? Most likely, it would go haywire, directionless, out of control, similar to many ecosystems of the planet that have gone haywire, like the Amazon Rainforest (alarmingly becoming a carbon emitter instead of a carbon sink) or the Great Barrier Reef (>50% of corals bleached in only 5 years) or Siberian permafrost (biggest fires ever recorded) or the Arctic (tragic loss of world’s biggest reflector of solar radiation) or Greenland (big super meltdown underway) or Antarctica (glacial ice flow accelerating way beyond expectations) or the 2/3rds loss of wild vertebrates in less than 50 years.

So, yes Representative Omar’s GPI bill is an excellent idea, but it will likely fail because only size matters in America, and America’s GDP proves it by ignoring reality: (1) pollution costs ignored (2) loss of crucial farmland (3) toxic poisoning (pesticides) of soil (3) mono-culture artificially fertilized crop soil degradation (4) paved wetlands destroy the “kidneys of the planet” (5) excessive greenhouse gases (the US emits 28% of world emissions with only 5% of world population) (6) subsidizing depletion of nonrenewable sources of energy.

It’s little wonder that the planet is regurgitating a sickness that is endemic to anthropogenic influence throughout the biosphere with raging fires, destructive flooding, and killer heat waves.

Alas, the focus on GDP will never heal a broken planet.

GDP does not calculate its own costs of infinite growth. It cannot because the calculation would be negative every year. And, in an act of absolute absurdity, GDP is measured quarterly, as are corporate profits. So, every three-month performance is meaningful, which is insane, childish, and flat-out stupid. This “hurry up and report the quarter” dicta resembles a shell game. In contrast, ecosystems require a lot of time, much longer than three months. Nature doesn’t compute by the quarter. Conversely, GDP is in such a hurry.

Ilhan’s proposal for GPI is geared to a society that values sustainability of resources and concern for the health of the biosphere and for its inhabitants. But, sad to say, it doesn’t realistically fit into today’s world of neoliberal capitalism. There’s no open slot for anything other than profits. We all pay a price for those profits.

Moreover, it is doubtful that an accurate calculation of depletion and destruction of ecosystems is possible at today’s rapid rate. Who could possibly keep up with it?

Still, it’s brilliant to get the concept into the public domain, and one can only hope.

Based in Los Angeles, Robert Hunziker is a freelance writer and environmental journalist whose articles have been translated into foreign languages and published in over 50 journals, magazines and sites worldwide.

One Reply to “GPI vs. GDP: Does Size Matter More Than Substance?”

  1. Dear Robert,

    As I understand, GPI still operates with the main economic measure of money. Despite inclusion of all negative influences of the capital mechanisms, how do you define the (risks of) lost natural habitats and life? Again on the base of “damage”, as seen from our human point of view?

    We need actually more. We need to equalize values of all human activities and natural processes and include them in the “trade”, better exchange. We must include also our virtues as social, volunteer and domestic works, ecological and cultural values, values of our health, cooperation, with their positive and negative influences, written down as in bookkeeping accounts. And for each individual and organization equally… But the equalizing units must not be monetary, not in today’s sense. Money could be just a part of the system, the monetary value simply. The measuring quantity of all values and virtues can be only – the time. Again! The time needed to make something…And without positive feedbacks of making profits…

    So you can value a million $ of profit (a monetary value), got in an hour of business cheating vs. an hour of handwork. The education and responsibility doesn’t count. You have studied because you wouldn’t have to dig dykes and that you would decide with your mind in the name of others… But an engineer’s calculation values same as screwing in a production in the units of hours…. And finally you can value a (potential) destructive effect of that million profit to the clearing of 100 hectares of forest, for example. How long such a forest would grow again ?? That is its real value and also all negative consequent effects we (or the nature) get from such clearing or a million of profit… Again in the times of regeneration… This will be then real negative effects of gaining GDPs…

    Such a proposal was 2 years ago sent to the European parliamentarians, of course with their total ignorance. This environmental and sociological program is also published in my book Arctic Methane. What is the connection ?? Well, the main reason to start thinking entirely oppositely of our economic principles was this most dangerous threat of the planet to the entire life. It is not any more the human threat, but the answer of the Earth to our threats and destruction. An ascertainment that without big changes in our behaviour also the Arctic problem will not be solved…You also wrote several times about Arctic emissions and with my knowing situation you were one of rare realistic reporters of the appeared problem. Your two or three articles are also described in the book…

    Here you have to understand something. Every “project” we plan or execute in favour and good of people and nature, somehow blind us from this Arctic happening, even if we are aware of it somehow. We think we are highly benevolent for our environment… But the gas is still escaping into atmosphere, even if IPCC ignores it totally and presses down all information about it… Think – the increasing CO2 concentrations rise somehow proportionally with increasing human population and our economy. But the weather catastrophes and threats develop much faster and exponentially in the strength and extents… Could CO2 still be a cause ??

    If we don’t seriously and quickly start working on this Arctic problem (the solutions are also described in the book), the greenhouse will burn and destroy all other human “efforts” of saving the planet, including the misleading (why?) green energies…

    Well, not to extend here this explanation further, I am giving to you and to all, who will eventually read this comment and wish to dig deeper, some links at the end.

    With this problematic in last three months around hundred of world’s national and institutional leaders were seriously warned and appealed to join and act. Again with only 2 or 3 promising answers. I think only the conscious and properly informed top heads of our countries and societies could move the efforts of managing Arctic problem on. Having all the time this in mind and reminding and pushing to all responsible global levels. Leaving the salvation only to lower “decision makers”, even to governments, ministers and their advisers and to the capital – forget to out future… There is, where we must press if we still want to do successfully the other tasks associated with relation between human and nature…

    The preliminary book files of Arctic Methane:.

    The summarise of the Arctic methane facts, main accentuations of the book, and demands we should insist on:

    The sample letter of warning leaders:

    Regards, Milan Malej

Leave a Reply

Your email address will not be published.