The Genuine Progress Indicator Promoting a Sustainable and

The Genuine Progress Indicator: Promoting a Sustainable and Equitable Maryland By Daphne Wysham, Institute for Policy Studies May 22, 2014

What we will cover 1. A brief history of GDP 2. The basics of Maryland’s GPI – What is it designed to measure? What are its components? 3. How the GPI can be used to inform policy decisions and advance new economy initiatives in MD and elsewhere 4. How can activists and community groups support the GPI? 5. How can they be involved in the shift to measure what matters?

A brief history of GDP The economist who developed Gross Domestic Product (or GDP), Simon Kuznets, warned that it shouldn't be used as an instrument of social policy because it could never adequately measure things we value “The welfare of a nation can scarcely be inferred from a measurement of national income. ” "Goals for more growth should be more growth of what and for what. ” ---Simon Kuznets

Robert F. Kennedy on GDP “The [GDP] does not allow for the health of our children, the quality of their education, or the joy of their play…it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans. ” --Senator Robert Kennedy, 1968

GDP: Striving for the wrong thing “What we measure affects what we do…If we have the wrong metrics, we will strive for the wrong things. In the quest to increase GDP, we may end up with a society in which most citizens have become worse off. ” --Joseph Stiglitz et al. 2009

GDP: Counting quantity not quality �The GDP is like a giant calorie counter that tabulates how many calories are in that plate of french fries. It doesn’t tell us if we're better or worse off as a result of eating those greasy fries or an apple instead. �Do we really want “more XYZ” ? Or do we want “better XYZ”? If so, how do we get there?

Beyond GDP: Motivations for a global movement “Statistical indicators can become the structural DNA codes of nations. They reflect a society’s values and goals and become the key drivers of economic and technological choices. ” --Economist Hazel Henderson 1996

A global call to measure welfare, not just output “We are facing both an opportunity and a duty to rethink what progress really means and to build stronger and more inclusive visions for the future of our societies…We have to move towards measuring welfare, not just output. It will constitute a major contribution to stability and democracy” --OECD Secretary-General Angel Gurría, 2007.

Why GDP fails as a measure of economic well-being �GDP is a measure of economic activity, good, bad, and neutral and not a measure of the well-being we receive from consumption. We can be spending more for a lower quality of life and yet GDP will increase. �GDP gives no indication of sustainability. Consumption financed by debt or depletion of human, social, built or natural capital is assumed to be sustainable. �All non-market aspects of the economy (unpaid labor) are excluded. �GDP says nothing about the distribution of wealth, income, or opportunity in society.

GPI = System Change “A system without feedback eventually fails. And our country, our states, our cities — they are all systems. Life creates the conditions that are conducive to life. Period. Full stop. Perhaps, there is no better description of the intent of GPI. Its purpose is to further the conditions that are conducive to life. ” --MD Gov. Martin O’Malley

Maryland’s GPI ü Adopted by Governor O’Malley in 2010. ü Used to provide a more holistic measure of sustainable economic welfare than Gross State Product. ü Based on 26 individual indicators of economic, social and environmental wellbeing.

What is the GPI intended to measure? The Genuine Progress Indicator = A monetized indicator of sustainable economic well-being. Attribute Meaning Limitations Monetized • Benefits and costs that can • be expressed in monetary terms Benefits and costs that cannot be expressed in monetary terms Indicator • An indication of how we’re • performing Not a comprehensive measure Sustainable • Non-declining for generations to come • But with a great degree of uncertainty Economic welfare • Limited to our consumption of goods and services • Not happiness or well being in any other domain

Maryland GPI vs. GSP 1960 - 2010 Gross State Product GPI

GPI Policy Applications: The “GPI note” for legislative analysis

Grassroots outreach in MD �Priorities �#1: Keep GPI in place--executive �#2: Turn GPI from rearview mirror to a tool to help inform future initiatives (GPI Note)--legislative �#3: Get buy-in from business leaders (esp. sustainable ones) �#4: Contextualize the GPI in “new economy” frame �#5: Outreach to faith communities, non-profits, policy -makers on GPI Note possibilities

How can activists support the GPI in their communities? �In Maryland, write a note to the gubernatorial candidates and express your support for seeing the GPI remain in place. �Get cities, towns, counties to adopt the GPI as a metric. �Writer letters to the editor re: GPI, moving beyond GDP �Begin to create competition between counties or cities around the highest GPI as an awareness raising tool. �Any time there is a critical land use plan or other important policy in your community, request a GPI analysis of it.

GPI can play a role in a wide array of public policy issues in Maryland ü Land use plans: By valuing natural capital and the costs of sprawl, the GPI can help guide sustainable land use choices. ü Economic development: The GPI can be the key indicator of economic performance at the local level. ü Tax policy: The GPI can be used to help quantify the broad social and economic implications of taxes and tax incentives. ü Budgeting decisions: Helping set priorities for public expenditures and investments. ü Infrastructure choices: The GPI can help quantify the many benefits of green infrastructure.

How can people be involved in the shift to measure what we treasure? �Read our forthcoming report on the “GPI Note” and be prepared to help us support it as a concept in the next Maryland General Assembly.

Our team �Daphne Wysham, Genuine Progress Project Director: daphne@ips-dc. org �John Talberth, President, Senior Economist, Cocreator of GPI, Center for Sustainable Economy: jtalberth@sustainable-economy. org �Heather Iliff, Vice president, Maryland Non-Profits, heather@mdnonprofits. org �David Hart, New Economy Maryland Field Director: david@ips-dc. org

Learn more at our website http: //genuineprogress. net Follow us on Facebook: https: //www. facebook. com/Moving. Beyond. GDP Twitter: @GPIndicator