As I See It: Measuring What Counts

Published: January 29, 2007

by Victor Rozek

Some things are just perfect. The smell of a pie baking in the oven; the laughter of children at play; the satisfaction of reading a great book. Ideas are like that too. Some are so compelling as to be irresistible. The notion that all men are created equal. The admonition to do onto others as you would have them do onto you. President Kennedy's challenge to shoot the moon.

To a less dramatic degree, that's the way I felt when I read David Cameron's idea. He was certainly not the first to articulate this particular notion, much as Kennedy was not the first to ponder going to the moon. But context is everything, and given Cameron's stature and political orientation, his was a bold pronouncement.

Unfortunately, unless you're British you've probably never heard of him. Cameron is the leader of Britain's Conservative Party (a party described as "rather materialistic" by the sober British publication, The Economist). Nonetheless, a conservative political leader stated what millions already know but which--especially here in the rebellious colonies--is seldom given voice. "It's time we admitted that there's more to life than money," Cameron said, "and it's time we focused not just on GDP, but on GWB--General Well-Being." Not as compelling as going to the moon, perhaps, but long overdue and with vastly more potential to improve the lives of working people.

As a measure of economic vigor, there are a number of problems with the way the Gross Domestic Product is calculated, not the least of which is that it is misleading. That is why there is such dissonance between reported economic growth and declining quality of life. Consider that the six-year rise in the combined real earnings of 93 million working Americans totaled less than half of the bonuses awarded by five Wall Street firms for just a single year.

Such disparity is irrelevant in GDP terms because all the system is designed to do is add. Here's the formula: GDP = consumption + investment + government spending + (exports - imports). But while the GDP adds capably, it does so without a shred of discernment about what is being added. Nor does it account for what is being lost.

Say, for example, that you're a developer for a Midwestern software house. The money your enterprise generates will rightfully be reflected in the GDP. But let's say it's winter, everything is frozen, you slip on the steps, fall, and break your leg. Your $600 ambulance ride will also be reflected in the GDP. In fact, from a GDP perspective, it would be better if the X-ray of your leg showed you had bone cancer because cancer treatments necessitate huge long-term financial outlays--all good for the economy, though not so swell for you.

Having a measurement system that is colossally unconcerned with personal welfare is precisely what concerns Cameron. A more useful snapshot of the economy would include an evaluation of economic outcomes: How many people can afford to purchase a home, educate their children, or care for their elderly parents? Are we preserving the commons and providing an adequate infrastructure? Is our water drinkable, are we slowing climatic change? Metaphorically speaking, measuring well-being allows us to determine not only the height of the tree, but the health of the tree.

From a well-being perspective, economics can begin to embrace such concepts as restraint and tense. Viewed through the GDP lens, the future does not exist, and therefore restraint is unnecessary. Over-fishing is profitable, and therefore good for the economy. Toxic spills are expensive to clean up and therefore contribute to economic growth. The destruction caused by hurricanes, earthquakes, tornadoes--all good because disasters necessitate rebuilding which means jobs, materials, and money circulating in the economy. By GDP standards, war--especially if waged on foreign soil--is an economic blessing. At its essence, it is a system blind to consequences.

What Cameron understands is that what is deemed good for the economy is often bad for those working in it. The stress-induced heart attack, the dead zone in the Gulf of Mexico, global warming for that matter, are all hidden costs of prosperity. And it makes little sense to keep measuring failure and calling it success. Europeans have apparently understood this better than we Americans and have been willing to sacrifice illusionary economic growth in favor of quality of life. It's the difference between working to support the economy and having an economy that supports its people. "Well-being can't be measured by money or traded in markets," said Cameron. "It's about the beauty of our surroundings, the quality of our culture and, above all, the strength of our relationships. Improving our society's sense of well-being is, I believe, the central political challenge of our times."

And Cameron isn't alone. BBC News reported that "an adviser to the Prime Minister, David Halpern, told us that within the next 10 years the government would be measured against how happy it made everybody."

Wouldn't that be refreshing? To us, it sounds alien, given years of leadership bent on starving public programs, but it's right there in the preamble of the Constitution: The founders believed one of the functions of government should be to "promote the general welfare." Granted it doesn't say "provide," but nor does it say "impede." The middle ground requires plowing back enough of the economic crop to ensure widespread, fair, and sustainable future yields.

This shift in political thinking is, in part, a result of what The Economist calls the "upstart science of happiness," an emerging discipline that combines psychology and economics. It's a subjective science to be sure, but no more so than optometry, which relies on the subjective experience of the patient to identify his vision problem and to choose the best remedy.

Softening economics with psychology is an acknowledgment that the cycle of production and consumption is not enough for most people. The paradox of capitalism, as The Economist notes, is that it is "adept at turning luxuries into necessities--bringing to the masses what the elites have always enjoyed. But the flip side of this genius is that people come to take for granted things they once coveted from afar. Frills they never thought they could have become essentials that they cannot do without. People are stuck on a treadmill: As they achieve a better standard of living, they become inured to its pleasures."

In fact, over the past 50 years, according to Professor Daniel Kahneman of Princeton University, "the standard of living has increased dramatically and happiness has increased not at all." Given that money by itself has proven to be a poor curator of happiness, researchers want to identify the conditions that contribute to its growth and sustenance.

The usual suspects like friendship, meaningful work, and spirituality are universally valued, easy to identify, and not easily influenced by government policy. But policy can help eliminate some common obstacles to happiness such as needless stress, thereby improving the odds for everyone. Employers will be glad to hear what science already knows: that happiness leads to improved health, resilience, and good performance in the workplace.

And in the workplace the conditions that reduce employee stress are self evident: The ability to earn a living wage; having access to affordable health care; a pension that will not be looted; a safe working environment; adequate vacation time; maternity and paternity leave; and flexible working hours. And beyond work, a measure of security in old age, and the essence of the American Dream--the ability to pass on a better life to our children. These are progressive ambitions, hard-earned and steadily rolled back over the past twenty years. The irony is that Cameron, the conservative, said he wants to create a government that works towards "an ambitious goal to make the British public sector the world leader in progressive employment practice."

I wish him well, and I hope his idea catches on.

In the words of writer and chairman of The Future of American Democracy Foundation, Norton Garfinkle, "When the richest nation in the world has to borrow hundreds of billions of dollars to pay its bill, when its middle-class citizens sit on a mountain of debt to maintain their living standards, when the nation's economy has difficulty producing secure jobs or enough jobs of any kind, something is amiss."

Indeed it is, and Cameron's idea may just be one whose time has come.

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