1 00:00:00,520 --> 00:00:05,120 Speaker 1: A G, A D in a P three letters quite 2 00:00:05,120 --> 00:00:08,959 Speaker 1: a lot of impact, formally standing for gross domestic product 3 00:00:09,400 --> 00:00:12,039 Speaker 1: the sum value, and will get back to that word 4 00:00:12,119 --> 00:00:15,480 Speaker 1: value in a second of all goods and services produced 5 00:00:15,480 --> 00:00:18,959 Speaker 1: in an economy, usually a nation state like the US, 6 00:00:19,520 --> 00:00:22,520 Speaker 1: Great Britain, China, and so on. It's been the yardstick 7 00:00:22,560 --> 00:00:26,920 Speaker 1: by which we've measured what a country's economic output basically 8 00:00:27,160 --> 00:00:30,040 Speaker 1: is ever since World War Two, and perhaps just a 9 00:00:30,040 --> 00:00:32,520 Speaker 1: little before that. Our guest will give us a history 10 00:00:32,600 --> 00:00:37,519 Speaker 1: lesson momentarily, but does it really deserve its pedestal Well not, 11 00:00:37,640 --> 00:00:40,479 Speaker 1: According to our guest, it might as well stand for 12 00:00:40,600 --> 00:00:45,680 Speaker 1: gross dumb product or grossest dumb product, responsible for all 13 00:00:45,760 --> 00:00:48,880 Speaker 1: manner of sins, ranging from the pillaging of a South 14 00:00:48,960 --> 00:00:53,360 Speaker 1: Pacific island paradise to an instrument of oppression used by 15 00:00:53,440 --> 00:00:58,680 Speaker 1: austerity craven Northern Europeans to hammer poor, innocent little grease. 16 00:01:08,600 --> 00:01:11,880 Speaker 1: This is Bloombook benchmark. I'm Daniel Moss, executive editor for 17 00:01:11,959 --> 00:01:15,000 Speaker 1: Global Economics in New York, and I'm Scott Landman and 18 00:01:15,120 --> 00:01:20,319 Speaker 1: Economics editor with Bloomberg in Washington. Today. Lorenzo Fiora Monty, 19 00:01:20,440 --> 00:01:24,080 Speaker 1: a professor at the University of Pretoria in South Africa 20 00:01:24,640 --> 00:01:27,320 Speaker 1: is joining us. He's the author of the World After 21 00:01:27,480 --> 00:01:32,000 Speaker 1: g d P and before that, Gross Domestic Problem. He's 22 00:01:32,000 --> 00:01:34,480 Speaker 1: calling for more than just taking down g d P. 23 00:01:35,280 --> 00:01:39,440 Speaker 1: In the process, he's offering a revolution, not just in economics, 24 00:01:39,480 --> 00:01:43,479 Speaker 1: but in how we determine our happiness or place in life, 25 00:01:43,520 --> 00:01:47,920 Speaker 1: the universe and all that stuff. So Lorenzo, welcome to Benchmark. 26 00:01:48,400 --> 00:01:51,320 Speaker 1: It's a pleasure to be with you. Now. You're not 27 00:01:51,440 --> 00:01:54,960 Speaker 1: actually in South Africa right now? Where are you? And 28 00:01:55,360 --> 00:01:58,800 Speaker 1: what are you doing on Skype? I am connecting from Italy. 29 00:01:58,880 --> 00:02:02,360 Speaker 1: Were unpromoting the Italian edition of Gross Domestic Problem when 30 00:02:02,400 --> 00:02:05,800 Speaker 1: my first book published in English in and I'll be 31 00:02:05,880 --> 00:02:08,359 Speaker 1: soon traveling across Europe to promote the new book, The 32 00:02:08,400 --> 00:02:12,200 Speaker 1: World After a GDP, which you have just mentioned. And 33 00:02:12,360 --> 00:02:16,720 Speaker 1: does your travel budget include lots of austerity? My troubled 34 00:02:16,760 --> 00:02:19,480 Speaker 1: budget includes a lot of meetings and meeting people and 35 00:02:19,560 --> 00:02:22,960 Speaker 1: talking to communities, talking to students at universities, talking to 36 00:02:23,440 --> 00:02:25,679 Speaker 1: small businesses and so on and so forth. I don't 37 00:02:25,680 --> 00:02:28,880 Speaker 1: think that's austerity. That's actually a lot of flunt, although 38 00:02:29,080 --> 00:02:33,720 Speaker 1: it may not necessarily reflecting our GDP accounts well. Federal 39 00:02:33,760 --> 00:02:37,919 Speaker 1: Reserve Chair Janet Yellen this month called GDP a noisy number, 40 00:02:38,000 --> 00:02:41,080 Speaker 1: But your concerns go way beyond that. What is it 41 00:02:41,120 --> 00:02:45,760 Speaker 1: that bothers you most well? GDP has become much more 42 00:02:45,800 --> 00:02:49,920 Speaker 1: than a statistic. It's become the benchmark of success across 43 00:02:50,000 --> 00:02:54,640 Speaker 1: the world for economies, for companies, for societies at large. 44 00:02:54,760 --> 00:02:56,840 Speaker 1: And I wouldn't be too bothered if it was just 45 00:02:56,880 --> 00:02:59,880 Speaker 1: a noisy number. What bothers me is the fact that 46 00:03:00,120 --> 00:03:05,160 Speaker 1: it's a system of perverse incentives. It's it's become basically 47 00:03:05,320 --> 00:03:09,400 Speaker 1: a guideline for policymaking, and that's very problematic because their 48 00:03:09,480 --> 00:03:13,240 Speaker 1: politicians will take certain decisions because they increase GDP and 49 00:03:13,280 --> 00:03:16,160 Speaker 1: they want to be you know, you know, like graded 50 00:03:16,160 --> 00:03:18,800 Speaker 1: on their GDP credentials and economic growth, and there's going 51 00:03:18,840 --> 00:03:20,800 Speaker 1: to be a skate effect, as we have seen in 52 00:03:20,840 --> 00:03:24,800 Speaker 1: the past, you know, eighty years across society, everybody's playing 53 00:03:24,800 --> 00:03:27,920 Speaker 1: a game to increase GDP and economic growth as a result, 54 00:03:28,120 --> 00:03:31,640 Speaker 1: even though when those decisions are very detrimental to society. 55 00:03:31,880 --> 00:03:35,080 Speaker 1: I was teasing you about the austerity on your travel budget, 56 00:03:35,120 --> 00:03:37,840 Speaker 1: but you make a serious point in your book, which 57 00:03:38,000 --> 00:03:42,160 Speaker 1: is that GDP and projections of GDP can be used 58 00:03:42,240 --> 00:03:46,400 Speaker 1: as a political bludgeon in policy debates. Absolutely. I mean, like, 59 00:03:46,960 --> 00:03:48,800 Speaker 1: you know, I want to make this point very strong. 60 00:03:48,960 --> 00:03:53,040 Speaker 1: If GDP was just a flowed number or imperfect number, 61 00:03:53,120 --> 00:03:55,840 Speaker 1: I wouldn't have written two books about it. I believe 62 00:03:55,960 --> 00:04:01,120 Speaker 1: it's basically a skeleton of what soci I T really 63 00:04:01,160 --> 00:04:03,200 Speaker 1: wants to achieve. And in a sense, you know, like 64 00:04:03,320 --> 00:04:06,440 Speaker 1: it creates those incentives and rewards that you know, make 65 00:04:06,480 --> 00:04:09,640 Speaker 1: people take the wrong decisions. And this is happening every day. 66 00:04:09,640 --> 00:04:12,680 Speaker 1: I mean, governments around the world try whatever they can 67 00:04:12,760 --> 00:04:16,080 Speaker 1: to increase GDP because this has a positive effect in 68 00:04:16,200 --> 00:04:20,279 Speaker 1: terms of public image and probably may increase foreign direct investments, 69 00:04:20,400 --> 00:04:22,440 Speaker 1: and it pleases the World Bank and the IMP and 70 00:04:22,440 --> 00:04:24,960 Speaker 1: all of that, or the European Union if you're in Europe, 71 00:04:25,320 --> 00:04:29,120 Speaker 1: even though these decisions may lead to cutting social welfare, 72 00:04:29,520 --> 00:04:33,600 Speaker 1: may lead to destroying the environment and and creating social inequality, 73 00:04:33,640 --> 00:04:36,120 Speaker 1: all the things that we prepared to care about when 74 00:04:36,160 --> 00:04:40,000 Speaker 1: we talk about sustainable and equitable developments and the SDGs. 75 00:04:40,160 --> 00:04:43,960 Speaker 1: So basically we are in this schizophrenic situation in which 76 00:04:44,240 --> 00:04:47,960 Speaker 1: we follow certain rules to please the GDP ideology, but 77 00:04:48,040 --> 00:04:50,320 Speaker 1: at the same time we seem to recognize that those 78 00:04:50,360 --> 00:04:53,320 Speaker 1: decisions are wrong and we should do differently, and yet 79 00:04:53,400 --> 00:04:55,560 Speaker 1: we can't because when we try to do differently, we 80 00:04:55,640 --> 00:04:58,360 Speaker 1: get punished. So you mentioned Greece. I mean, I don't 81 00:04:58,360 --> 00:05:01,320 Speaker 1: think the Greek you know, the Greek population is completely 82 00:05:01,880 --> 00:05:04,960 Speaker 1: you know, like unguilty for for what they've done. They're 83 00:05:05,000 --> 00:05:08,920 Speaker 1: not completely irresponsible for that, but at the same time, 84 00:05:09,440 --> 00:05:13,320 Speaker 1: punishing the society because it has decided to develop itself 85 00:05:13,360 --> 00:05:16,600 Speaker 1: in a different way. It's also a short sighted because 86 00:05:16,680 --> 00:05:19,719 Speaker 1: that is part of you know, like a bigger process 87 00:05:19,720 --> 00:05:23,719 Speaker 1: of creating creating economic interactions and by doing that, so 88 00:05:23,880 --> 00:05:26,440 Speaker 1: you are destroying the future of Europe. And Greece is 89 00:05:26,520 --> 00:05:28,520 Speaker 1: just the first step in a long in a long journey. 90 00:05:29,480 --> 00:05:31,640 Speaker 1: Now let's go back in time for a second, take 91 00:05:31,680 --> 00:05:35,520 Speaker 1: a step back. It's hard to believe in today's world, 92 00:05:35,560 --> 00:05:38,680 Speaker 1: but there once was a time when there was when 93 00:05:38,680 --> 00:05:41,120 Speaker 1: there was no such thing as GDP. Just under a 94 00:05:41,200 --> 00:05:44,440 Speaker 1: hundred years ago. It actually grew out of the need 95 00:05:44,480 --> 00:05:48,159 Speaker 1: to measure the U S economy during the Great Depression, 96 00:05:48,279 --> 00:05:52,440 Speaker 1: even helped the United States calibrate economic policy to win 97 00:05:52,800 --> 00:05:56,080 Speaker 1: World War Two. And now we're at a time when 98 00:05:56,200 --> 00:05:59,359 Speaker 1: it's become a scorecard of economies against each other, a 99 00:05:59,440 --> 00:06:04,560 Speaker 1: quarterly uh yardstick of how each economy is doing, a 100 00:06:04,640 --> 00:06:08,599 Speaker 1: measure of a country's public image. As you just said, 101 00:06:08,760 --> 00:06:12,839 Speaker 1: how did we get to this point from its origins? Well, initially, 102 00:06:12,880 --> 00:06:17,240 Speaker 1: as you said, GDP was invented as an attempt as 103 00:06:17,240 --> 00:06:20,240 Speaker 1: an attempt to deal with the Great Depression. Right at 104 00:06:20,240 --> 00:06:23,760 Speaker 1: the time, government didn't really have any way, any reliable 105 00:06:23,920 --> 00:06:27,400 Speaker 1: measurement of economic transactions in the market, and people were 106 00:06:27,520 --> 00:06:31,440 Speaker 1: not being as as excited about economic transactions anymore. So 107 00:06:31,480 --> 00:06:33,880 Speaker 1: they needed a bit of a thermometer, and they came 108 00:06:33,960 --> 00:06:36,560 Speaker 1: up with the best they could get. Right. The team 109 00:06:36,600 --> 00:06:40,000 Speaker 1: that invented GDP was not completely satisfied by what they 110 00:06:40,000 --> 00:06:41,880 Speaker 1: had done, but they thought, you know, this is probably 111 00:06:41,920 --> 00:06:44,160 Speaker 1: the best tool we can put together at this point 112 00:06:44,160 --> 00:06:46,719 Speaker 1: in time, and and that's how it started. It's a 113 00:06:46,720 --> 00:06:49,119 Speaker 1: sum of market transactions, and I think it was pretty 114 00:06:49,160 --> 00:06:52,479 Speaker 1: okay at the time in which the government really wanted. 115 00:06:52,600 --> 00:06:56,800 Speaker 1: All they wanted was to basically reactivate flows of money 116 00:06:56,920 --> 00:06:59,719 Speaker 1: in the economy. But you know very well that what 117 00:06:59,880 --> 00:07:02,080 Speaker 1: is good in a time of crisis may not necessarily 118 00:07:02,120 --> 00:07:04,359 Speaker 1: be good in a time of you know, normalcy and 119 00:07:04,360 --> 00:07:08,200 Speaker 1: normal economic activities. Just like you wouldn't give a patient 120 00:07:08,360 --> 00:07:12,040 Speaker 1: was healthy medicines necessarily, medicines may be good if you're sick, 121 00:07:12,400 --> 00:07:14,280 Speaker 1: but not if you're healthy. They can make you sick 122 00:07:14,320 --> 00:07:17,360 Speaker 1: if you're healthy in many different ways. And you know, 123 00:07:17,600 --> 00:07:20,440 Speaker 1: it was then used as a tool to plan the 124 00:07:20,480 --> 00:07:24,000 Speaker 1: Second World War, once again not necessarily a time of 125 00:07:24,040 --> 00:07:27,720 Speaker 1: economic normality. Um So it may be very useful to 126 00:07:27,760 --> 00:07:32,600 Speaker 1: measure production regardless of its utility, because you're building bombs 127 00:07:32,600 --> 00:07:34,760 Speaker 1: and aircrafts and tags, and all you need to know 128 00:07:34,920 --> 00:07:36,880 Speaker 1: is how many you can build. The more you can build, 129 00:07:36,880 --> 00:07:39,559 Speaker 1: the better. But this is very different in normal times, 130 00:07:39,600 --> 00:07:41,360 Speaker 1: you know, normal times. You want to make sure that 131 00:07:41,400 --> 00:07:44,240 Speaker 1: you distinguish between the quantity of transactions and the quality 132 00:07:44,240 --> 00:07:48,600 Speaker 1: of transductions. Noble transactions are actually strengthening our economies. If 133 00:07:48,640 --> 00:07:50,840 Speaker 1: I get sick, GDP goes up because I have to 134 00:07:50,880 --> 00:07:52,720 Speaker 1: use medicines and I have to go to the hospital 135 00:07:52,760 --> 00:07:54,720 Speaker 1: and somebody has to be paid to look after me. 136 00:07:55,120 --> 00:07:57,480 Speaker 1: But if I stay healthy, GDP doesn't go up. So 137 00:07:57,520 --> 00:08:00,360 Speaker 1: in a sense, if we want GDP to grow, our 138 00:08:00,440 --> 00:08:03,360 Speaker 1: policies have to be designed to make people sick. And 139 00:08:03,720 --> 00:08:06,320 Speaker 1: if I get stuck in a traffic if I'm involved 140 00:08:06,320 --> 00:08:08,800 Speaker 1: in a car accidents, if I get killed. All these 141 00:08:08,800 --> 00:08:12,720 Speaker 1: transactions increase GDP create economic growth, but they did not 142 00:08:12,800 --> 00:08:18,560 Speaker 1: necessarily contribute positively to our economic performance. The problem is that, interestingly, 143 00:08:18,920 --> 00:08:22,240 Speaker 1: ever since the nineteen seventies, the late nineteen time and seventies, 144 00:08:22,240 --> 00:08:24,320 Speaker 1: we have done the study the studies in the book 145 00:08:24,360 --> 00:08:27,680 Speaker 1: as well, we showed that the so called negative transactions 146 00:08:27,720 --> 00:08:31,520 Speaker 1: that are counting the GDP far way the positive transactions. 147 00:08:31,920 --> 00:08:34,320 Speaker 1: So most of the growth of the nineteen eighties and 148 00:08:34,360 --> 00:08:40,960 Speaker 1: the nineteen nineties was due basically to pharmaceuticals, took accidents, 149 00:08:41,080 --> 00:08:46,160 Speaker 1: to divorces, to military expenditure, all expenses that GDP counts 150 00:08:46,160 --> 00:08:49,480 Speaker 1: as positive, but often they are not seen as positive 151 00:08:49,600 --> 00:08:52,920 Speaker 1: by economists or by citizens at large. So we were 152 00:08:52,960 --> 00:08:56,599 Speaker 1: celebrating an economic boom when it was in reality and 153 00:08:56,679 --> 00:08:59,760 Speaker 1: economic disaster. But GDP gave us the wrong information and 154 00:08:59,800 --> 00:09:03,320 Speaker 1: the policies. The wrong policies were decided upon because of 155 00:09:03,360 --> 00:09:06,920 Speaker 1: that system of perverse and centers that have mentioned. All right, well, 156 00:09:07,000 --> 00:09:09,720 Speaker 1: let's go to the South Pacific and the island nation 157 00:09:09,880 --> 00:09:13,480 Speaker 1: of Naru. You begin your book there almost as a 158 00:09:13,600 --> 00:09:17,960 Speaker 1: kind of morality tale. Now you even link GDP to 159 00:09:18,080 --> 00:09:23,960 Speaker 1: the island sinking literally prospects of survival as well as diabetes, drought, 160 00:09:24,480 --> 00:09:26,920 Speaker 1: and a bunch of other bad things. Talk about Nauru 161 00:09:27,040 --> 00:09:31,800 Speaker 1: and why you think this illustrates your point? Most authors 162 00:09:31,840 --> 00:09:35,320 Speaker 1: started books with celebrating empires and big countries, and I've 163 00:09:35,360 --> 00:09:38,840 Speaker 1: decided to the opposite, celebrating one of the smallest states 164 00:09:39,080 --> 00:09:42,160 Speaker 1: in in in our global economic community, and that's the 165 00:09:42,200 --> 00:09:45,320 Speaker 1: island of Nauru, which is the third smallest states in 166 00:09:45,360 --> 00:09:50,160 Speaker 1: the world after them, after Monaco and Vatican. So the 167 00:09:50,240 --> 00:09:53,560 Speaker 1: story of Nara is very important because Nara was in 168 00:09:53,600 --> 00:09:57,520 Speaker 1: the nineties had the highest GDP per capita in the world. 169 00:09:57,840 --> 00:10:00,160 Speaker 1: So in many ways, it was the perfect example of 170 00:10:00,200 --> 00:10:04,440 Speaker 1: what happens when you follow the GDP ideology blindly. So 171 00:10:04,520 --> 00:10:09,520 Speaker 1: this country invested massively in propping up economic growth by 172 00:10:09,679 --> 00:10:13,760 Speaker 1: exploiting the minds of phosphates that the country had. It 173 00:10:13,800 --> 00:10:16,839 Speaker 1: was a very small island but basically had a lot 174 00:10:16,840 --> 00:10:19,559 Speaker 1: of very good quality buzz bates that was used as 175 00:10:19,640 --> 00:10:22,720 Speaker 1: part of fertilizers and other agricultural products in many parts 176 00:10:22,720 --> 00:10:25,760 Speaker 1: of the world, especially in Southeast Asia and the Pacific. 177 00:10:26,240 --> 00:10:29,640 Speaker 1: Long story short, they basically exploited it to the point 178 00:10:30,160 --> 00:10:34,040 Speaker 1: of sitting with a huge environmental disaster that has been 179 00:10:34,080 --> 00:10:37,920 Speaker 1: threatening a cultural production, has been threatening the population. With 180 00:10:38,040 --> 00:10:40,760 Speaker 1: the money that they collected, because they had some money, 181 00:10:40,800 --> 00:10:43,280 Speaker 1: most of the money fled to Australia and New Zealand, 182 00:10:43,360 --> 00:10:46,160 Speaker 1: where it was captured by banks, as it happens often 183 00:10:46,240 --> 00:10:49,920 Speaker 1: with the vast GDP growth in many so called developing countries, 184 00:10:50,320 --> 00:10:52,360 Speaker 1: but some of the money stayed in the country. And 185 00:10:52,400 --> 00:10:56,200 Speaker 1: what happened is that with that cash, the governments decided 186 00:10:56,240 --> 00:11:00,400 Speaker 1: to listen to many economic advisors and invested in vanity objects, 187 00:11:00,440 --> 00:11:03,360 Speaker 1: as it happens in many countries, infrastructure that wasn't needed, 188 00:11:03,640 --> 00:11:06,480 Speaker 1: and in importing a lot of food because the culture 189 00:11:06,559 --> 00:11:09,200 Speaker 1: locally had been damaged to the point of being useless, 190 00:11:09,559 --> 00:11:12,880 Speaker 1: importing a lot of food that was very poor quality food. 191 00:11:13,240 --> 00:11:16,240 Speaker 1: And guess what. From the environmental crisis, they moved on 192 00:11:16,280 --> 00:11:19,000 Speaker 1: to a health crisis. They became the capital of the 193 00:11:19,040 --> 00:11:23,960 Speaker 1: global capital of diabetes, with one of the largest the 194 00:11:24,080 --> 00:11:29,040 Speaker 1: highest levels of obesity in the world, and and and 195 00:11:28,960 --> 00:11:32,120 Speaker 1: and some of the health conditions related to death. And 196 00:11:32,160 --> 00:11:35,320 Speaker 1: nowadays it's basically a failed economy of failed states, and 197 00:11:35,360 --> 00:11:38,320 Speaker 1: the only option left to Nurans is migrating Caustralian needs 198 00:11:38,360 --> 00:11:40,760 Speaker 1: and to get a better to get a better life. 199 00:11:41,000 --> 00:11:44,800 Speaker 1: So this is in a nutshell, it's a concentrated metaphor 200 00:11:45,000 --> 00:11:47,360 Speaker 1: of what seems to be happening to the entire planet. 201 00:11:47,679 --> 00:11:50,840 Speaker 1: We have decided to embark on a production and consumption 202 00:11:51,480 --> 00:11:55,559 Speaker 1: process that is ultimately destroying us. But we celebrated as 203 00:11:55,600 --> 00:12:00,280 Speaker 1: if this was the beacon, the you know, like the 204 00:12:00,040 --> 00:12:03,800 Speaker 1: the pinnacle of civilization. Because GDP tells us that this 205 00:12:03,880 --> 00:12:06,640 Speaker 1: is what development is all about, and it's giving us 206 00:12:06,640 --> 00:12:09,280 Speaker 1: the wrong information it should go. We should be you know, 207 00:12:09,360 --> 00:12:11,720 Speaker 1: like doing deffe. We should be doing differently. We should 208 00:12:11,720 --> 00:12:15,560 Speaker 1: be distinguishing between transactions that we want, transactions we don't want, 209 00:12:15,600 --> 00:12:18,880 Speaker 1: production that is useful, production that is not useful, consumption 210 00:12:18,920 --> 00:12:22,200 Speaker 1: that is useful, and consumption that consumption that is not useful. 211 00:12:22,360 --> 00:12:24,640 Speaker 1: And GDP doesn't do that, and by not doing that, 212 00:12:24,760 --> 00:12:27,880 Speaker 1: it gives us a very very plot piece of information 213 00:12:27,960 --> 00:12:30,520 Speaker 1: which then imformed policy and say, you know, like has 214 00:12:30,679 --> 00:12:33,559 Speaker 1: you know impacts across society. Well, let's go to South 215 00:12:33,600 --> 00:12:37,280 Speaker 1: Africa where you spend most of your working year. Now 216 00:12:37,480 --> 00:12:41,880 Speaker 1: after immediately after the transition to democracy in the early nineties, 217 00:12:42,120 --> 00:12:45,319 Speaker 1: there was a surge in say, for example, foreign investment 218 00:12:45,720 --> 00:12:49,320 Speaker 1: GDP looked pretty good, but still huge sways of the 219 00:12:49,360 --> 00:12:53,960 Speaker 1: population had their aspirations un met. Now has that influenced 220 00:12:53,960 --> 00:12:58,920 Speaker 1: you're thinking as well terms of our GDP um curves 221 00:12:59,000 --> 00:13:01,920 Speaker 1: or GDP trands SI so worth. After the end of 222 00:13:01,920 --> 00:13:04,240 Speaker 1: apart type, there was a sense that the country could 223 00:13:04,280 --> 00:13:07,280 Speaker 1: have embarked on a social justice program. The idea was 224 00:13:07,360 --> 00:13:10,720 Speaker 1: about that time had come for a distribution of wealth 225 00:13:10,840 --> 00:13:14,440 Speaker 1: because of apartheide, because of the enormous inequality of the 226 00:13:14,440 --> 00:13:17,320 Speaker 1: country had experienced. None of that happened. You know why, 227 00:13:17,720 --> 00:13:21,640 Speaker 1: because the government was told that the best way um 228 00:13:21,760 --> 00:13:25,560 Speaker 1: to deal with such inequality wasn't about redistributing resources and 229 00:13:25,600 --> 00:13:28,439 Speaker 1: promoting social offer. It was about growing. It was about 230 00:13:28,640 --> 00:13:31,880 Speaker 1: embarking on a mass you know, a mass scale economic growth, 231 00:13:31,920 --> 00:13:35,320 Speaker 1: accelerated growth that would have increased the pie. Everybody would 232 00:13:35,360 --> 00:13:39,319 Speaker 1: have enjoyed a bigger share, and everybody would have been happy. Now, 233 00:13:39,559 --> 00:13:42,560 Speaker 1: not only didn't it happen, it didn't happen at all. 234 00:13:42,640 --> 00:13:44,680 Speaker 1: I mean like, we had significant growth, but most of 235 00:13:44,720 --> 00:13:48,040 Speaker 1: the growth was captured by those that control the economic leverages. 236 00:13:48,160 --> 00:13:50,959 Speaker 1: So the rich became richer in many cases, and many 237 00:13:51,240 --> 00:13:54,280 Speaker 1: poor people may have become slightly less poor, but still 238 00:13:54,480 --> 00:13:58,400 Speaker 1: significantly worse off than than than the elite. And at 239 00:13:58,400 --> 00:14:02,680 Speaker 1: the same time, you know, the series interventions in in 240 00:14:02,679 --> 00:14:06,360 Speaker 1: in adjusting those economic differentials were not We're not taken. 241 00:14:06,559 --> 00:14:10,440 Speaker 1: In example, for many years the country delayed intervening in 242 00:14:10,480 --> 00:14:13,880 Speaker 1: the HIV eighth pandemic, and the reason was that rather 243 00:14:13,920 --> 00:14:16,719 Speaker 1: than spending money on healthcare in people's well being, that 244 00:14:16,800 --> 00:14:19,960 Speaker 1: should have spent money in infrastructure and developments, because that 245 00:14:20,040 --> 00:14:23,880 Speaker 1: would have then created all the positive uh IN effects 246 00:14:23,960 --> 00:14:26,960 Speaker 1: that would have done propped up the economy and improved 247 00:14:27,040 --> 00:14:29,920 Speaker 1: even the life of those living with HIV NAS. It 248 00:14:30,080 --> 00:14:34,080 Speaker 1: was crazy. People were done only when in two dozen 249 00:14:34,160 --> 00:14:36,280 Speaker 1: and four, two dozen and five the country decided to 250 00:14:36,320 --> 00:14:38,920 Speaker 1: really intervene in social weapon because it was too much. 251 00:14:40,000 --> 00:14:45,240 Speaker 1: We experienced a significant decrease in mortality rates, HIV AIDS 252 00:14:45,280 --> 00:14:48,480 Speaker 1: infections went down dramatically. And guess what This happened at 253 00:14:48,480 --> 00:14:51,200 Speaker 1: a time in which we had half the GDP growth 254 00:14:51,200 --> 00:14:55,400 Speaker 1: of the previous decame. So this tells you that politicians 255 00:14:55,440 --> 00:14:58,960 Speaker 1: that follow the GDP vision can take very wrong, the 256 00:14:59,120 --> 00:15:02,480 Speaker 1: extremely wrong decisions when it comes to the welfare of 257 00:15:02,560 --> 00:15:06,520 Speaker 1: There are people Lorenzo. Is that happening right now in 258 00:15:06,560 --> 00:15:09,600 Speaker 1: the United States? We have a president here who has 259 00:15:10,040 --> 00:15:14,440 Speaker 1: pledged to achieve four percent GDP growth, which is roughly 260 00:15:14,560 --> 00:15:18,440 Speaker 1: double the pace that we've seen in recent years. Is 261 00:15:18,480 --> 00:15:22,800 Speaker 1: the US headed for this kind of uh, these kind 262 00:15:22,880 --> 00:15:26,920 Speaker 1: of difficulties if the Trump administration really pursues that kind 263 00:15:26,960 --> 00:15:31,080 Speaker 1: of goal as hard as as maybe they're indicating, well, 264 00:15:31,120 --> 00:15:34,920 Speaker 1: I think that, I think that there's a serious um 265 00:15:35,200 --> 00:15:37,360 Speaker 1: level of confusion in the United States at the moment. 266 00:15:37,480 --> 00:15:40,480 Speaker 1: I mean, like, in many ways, a lot of people 267 00:15:40,560 --> 00:15:45,600 Speaker 1: are rightly upset at at least three decades of economic 268 00:15:45,640 --> 00:15:49,600 Speaker 1: policies in the US that promoted UM, a kind of 269 00:15:49,640 --> 00:15:54,120 Speaker 1: economic developments that increased inequality, that made the working class 270 00:15:54,120 --> 00:15:57,600 Speaker 1: works off UM, that used glibalization to put a lot 271 00:15:57,640 --> 00:16:00,760 Speaker 1: of people out of work UM and create kind of gaps. 272 00:16:00,840 --> 00:16:05,400 Speaker 1: That's in many ways explained why somebody like Donald Trump, 273 00:16:05,440 --> 00:16:11,000 Speaker 1: with an agenda of change, so to speak, won the elections. Now. 274 00:16:11,120 --> 00:16:13,840 Speaker 1: What is being proposed, however, as a solution, is more 275 00:16:13,880 --> 00:16:18,920 Speaker 1: of the same rutter than trying to tackle the inequalities, 276 00:16:19,000 --> 00:16:21,680 Speaker 1: the suffering, and the low level of well being that 277 00:16:21,760 --> 00:16:24,440 Speaker 1: many Americans experience. I mean, I still find it striking 278 00:16:24,440 --> 00:16:28,800 Speaker 1: that America is number one in terms of GDP and 279 00:16:29,240 --> 00:16:35,040 Speaker 1: in terms of all the things that really matter health, literacy, education, 280 00:16:35,520 --> 00:16:37,960 Speaker 1: life expectancy, and so on and so forth. It's way 281 00:16:38,040 --> 00:16:42,720 Speaker 1: beyond many countries that are much poorer in GDP terms. 282 00:16:42,800 --> 00:16:45,840 Speaker 1: So I think America is a very very good case, Laurens. 283 00:16:45,960 --> 00:16:49,520 Speaker 1: There have been countless attempts in recent years by various 284 00:16:49,520 --> 00:16:52,800 Speaker 1: commissions and bodies and so forth to create other kinds 285 00:16:52,800 --> 00:16:57,240 Speaker 1: of indexes of a country's well being. Uh. You know, 286 00:16:57,640 --> 00:17:00,480 Speaker 1: many people have pointed out the problems in per actions 287 00:17:01,040 --> 00:17:04,119 Speaker 1: with focusing on GDP as the end all be all 288 00:17:04,280 --> 00:17:08,639 Speaker 1: of economic indicators. We can talk about this all we want. 289 00:17:08,920 --> 00:17:12,439 Speaker 1: Is there any real chance of anything changing? Or are 290 00:17:12,440 --> 00:17:15,120 Speaker 1: we just all tilting at windmills here? I think we're 291 00:17:15,119 --> 00:17:17,240 Speaker 1: wasting our time with all these commissions. I think it's 292 00:17:17,240 --> 00:17:19,639 Speaker 1: important to open the debate. That's what my book is 293 00:17:19,680 --> 00:17:21,760 Speaker 1: supposed to do, to open the debate and have a 294 00:17:21,800 --> 00:17:25,040 Speaker 1: public debate, and only a debate among experts. Um, we 295 00:17:25,119 --> 00:17:28,240 Speaker 1: do already have tools that helped a great deal. As 296 00:17:28,280 --> 00:17:31,119 Speaker 1: I said, if we were to use something as simple 297 00:17:31,160 --> 00:17:33,960 Speaker 1: as the gen in Progress Indicator, which is nothing else, 298 00:17:34,000 --> 00:17:37,520 Speaker 1: the GDP, but distinguishing the bat and the good transactions, 299 00:17:37,640 --> 00:17:39,640 Speaker 1: and and that would be really useful because you would 300 00:17:39,680 --> 00:17:43,280 Speaker 1: tell the government what are investing in certain areas makes sense. 301 00:17:43,359 --> 00:17:46,600 Speaker 1: For instance, with with this kind of accounting, it's clear 302 00:17:46,720 --> 00:17:49,919 Speaker 1: that many industries are not really producing anything valuable for 303 00:17:50,000 --> 00:17:54,159 Speaker 1: society because the the negative impacts outweigh the gains of 304 00:17:54,200 --> 00:17:56,720 Speaker 1: these companies. And this includes the fossil fuel industry, that 305 00:17:57,040 --> 00:18:00,840 Speaker 1: the coal industry, mining and large, the distribution of food 306 00:18:00,840 --> 00:18:02,639 Speaker 1: and so on and so forth. And I think in 307 00:18:02,640 --> 00:18:06,520 Speaker 1: the US some states Maryland, Utah, Verymond have already introduced 308 00:18:06,520 --> 00:18:09,760 Speaker 1: some of these tools at the local level. Um So 309 00:18:09,920 --> 00:18:12,399 Speaker 1: there are tools that could be used tomorrow. The problem 310 00:18:12,440 --> 00:18:14,359 Speaker 1: is that we need the political world to do so. 311 00:18:14,560 --> 00:18:19,760 Speaker 1: And unless the GDP ideology is unmasked and unveiled as 312 00:18:19,840 --> 00:18:23,879 Speaker 1: an ideology and people mobilize against this to to to 313 00:18:24,040 --> 00:18:27,439 Speaker 1: code for a different approach, we're never gonna make significant 314 00:18:27,520 --> 00:18:30,440 Speaker 1: hardware here. And I think in my book, I show 315 00:18:30,480 --> 00:18:32,439 Speaker 1: how this could be done. I show the fact that 316 00:18:32,840 --> 00:18:35,639 Speaker 1: GDP is extremely obsolete to be able to account for 317 00:18:35,680 --> 00:18:38,480 Speaker 1: an economy which is increasingly digital. I'm calling you by 318 00:18:38,480 --> 00:18:40,600 Speaker 1: a skype now, and I'm not paying anything, and yet 319 00:18:40,600 --> 00:18:43,119 Speaker 1: we're having a very useful conversation which is not adding 320 00:18:43,119 --> 00:18:46,240 Speaker 1: anything to GDP. GDP would have been much happier ten 321 00:18:46,280 --> 00:18:48,119 Speaker 1: fifteen years ago if I was to call you by 322 00:18:48,160 --> 00:18:50,720 Speaker 1: the phone, because the coal would have been very expensive, 323 00:18:50,800 --> 00:18:54,600 Speaker 1: probably very low quality, and yet adding to the national accounts. 324 00:18:54,640 --> 00:18:57,280 Speaker 1: So every time we use What's up to communicate, every 325 00:18:57,320 --> 00:19:00,359 Speaker 1: time we use Spacebook to make you know to to 326 00:19:00,359 --> 00:19:03,000 Speaker 1: to share information and some so forth, the Google maps 327 00:19:03,040 --> 00:19:05,720 Speaker 1: which are for free, we're not adding to GDP, but 328 00:19:05,760 --> 00:19:09,880 Speaker 1: actually we're strengthening the economy. Nevertheless, GDP is very anachronistic. 329 00:19:10,000 --> 00:19:12,760 Speaker 1: It sees money flows as a sign of a good economy, 330 00:19:12,920 --> 00:19:15,920 Speaker 1: but often money flows may indicate a very very sick 331 00:19:15,920 --> 00:19:17,840 Speaker 1: of Conmy write it in a good one and I 332 00:19:17,880 --> 00:19:21,520 Speaker 1: think ultimately my book shows that we could use this 333 00:19:21,600 --> 00:19:25,600 Speaker 1: opportunity to have national conversations about what it means to 334 00:19:25,600 --> 00:19:28,760 Speaker 1: be developed. In the twenty percent, GDP is no longer 335 00:19:28,880 --> 00:19:31,760 Speaker 1: what we want. Then we can decide what we want 336 00:19:31,800 --> 00:19:34,480 Speaker 1: to gether. And so maybe what's going to be decided 337 00:19:34,480 --> 00:19:37,000 Speaker 1: by Americans or in a state in the US may 338 00:19:37,000 --> 00:19:38,960 Speaker 1: be different from what's going to be done next door. 339 00:19:39,720 --> 00:19:43,399 Speaker 1: So if one country Lorenzo. If one country tried to 340 00:19:43,440 --> 00:19:46,679 Speaker 1: go it alone, and I don't mean a country like Naro, 341 00:19:46,720 --> 00:19:49,359 Speaker 1: I mean a sort of a medium sized or even 342 00:19:49,400 --> 00:19:53,480 Speaker 1: a large sized country said right, we're teaching it, We're 343 00:19:53,480 --> 00:19:57,160 Speaker 1: gonna do something else. What are the risks if they 344 00:19:57,160 --> 00:20:01,840 Speaker 1: acted alone? They would be crucified by markets and then 345 00:20:01,880 --> 00:20:05,520 Speaker 1: forced to retreat. Absolutely, we believed exactly because of the 346 00:20:05,560 --> 00:20:07,840 Speaker 1: power of GDP and its ideology and because it s 347 00:20:07,960 --> 00:20:10,080 Speaker 1: used as a policy tool, that would be crucified, It 348 00:20:10,119 --> 00:20:13,719 Speaker 1: would be punished, which is the reason why we're publicly advocating, 349 00:20:13,720 --> 00:20:16,000 Speaker 1: as I do in the book, for an alliance of 350 00:20:16,080 --> 00:20:19,159 Speaker 1: countries to go together. What are in Europe? What are 351 00:20:19,200 --> 00:20:21,679 Speaker 1: around the world. We have also talked about a in 352 00:20:21,760 --> 00:20:24,760 Speaker 1: alliance of all being economies will call the we seven 353 00:20:24,800 --> 00:20:28,240 Speaker 1: countries that have done extremely well at building an alternative 354 00:20:28,400 --> 00:20:32,359 Speaker 1: way of doing the economy that is beyond GDP. And 355 00:20:32,400 --> 00:20:36,440 Speaker 1: these countries include New Zealand, Costa Rica, Sweden, very good 356 00:20:36,440 --> 00:20:38,960 Speaker 1: examples of countries that have achieved high levels of well 357 00:20:39,000 --> 00:20:42,920 Speaker 1: being with a minor ecological footprint and very low and equality. 358 00:20:43,080 --> 00:20:45,280 Speaker 1: If these countries were too good together and show to 359 00:20:45,359 --> 00:20:47,880 Speaker 1: the rest of the world that change is possible that 360 00:20:47,920 --> 00:20:51,679 Speaker 1: we can do it collectively in collaboration. There would really 361 00:20:51,720 --> 00:20:55,000 Speaker 1: help the entire world wake up, and they may be 362 00:20:55,040 --> 00:20:58,679 Speaker 1: a positive ripple effect across society. A country shouldn't do 363 00:20:58,800 --> 00:21:02,000 Speaker 1: this change on its own because GDP has an extremely 364 00:21:02,040 --> 00:21:06,160 Speaker 1: significant impact of policy decisions and they may be easily critcified. 365 00:21:06,240 --> 00:21:10,600 Speaker 1: But going together as an alliance regionally or globally would 366 00:21:10,600 --> 00:21:13,280 Speaker 1: make a big difference, and it is necessary if we 367 00:21:13,320 --> 00:21:15,879 Speaker 1: want to achieve the Sustainable Development Goals. We have a 368 00:21:15,920 --> 00:21:18,600 Speaker 1: twenty thirty Agenda which is being ratified by the u 369 00:21:18,800 --> 00:21:22,160 Speaker 1: N and unless we change away from GDP, we're never 370 00:21:22,200 --> 00:21:25,879 Speaker 1: going to get there. Well, look, this conversation could go 371 00:21:25,960 --> 00:21:28,040 Speaker 1: on for a while, and I can tell you're only 372 00:21:28,240 --> 00:21:30,560 Speaker 1: just getting started. We'll have to have you back on 373 00:21:30,600 --> 00:21:33,240 Speaker 1: the show. To Lorenzo, thank you for joining us. It's 374 00:21:33,280 --> 00:21:41,600 Speaker 1: been a pleasure. So Dan, do you think we're ever 375 00:21:41,640 --> 00:21:44,119 Speaker 1: going to get to a point where we're not focusing 376 00:21:44,119 --> 00:21:47,680 Speaker 1: on GDP as our end all, be all economic indicator. 377 00:21:48,520 --> 00:21:51,800 Speaker 1: As Lorenzo was saying towards the end, it really can't 378 00:21:51,920 --> 00:21:57,520 Speaker 1: be one or two nations, certainly one or two nations 379 00:21:57,520 --> 00:22:00,720 Speaker 1: that don't have major economic heft being out from the 380 00:22:00,760 --> 00:22:03,119 Speaker 1: pack and saying we're going to chot our own course 381 00:22:03,160 --> 00:22:07,639 Speaker 1: with economat tricks. They really would be killed. It really 382 00:22:07,680 --> 00:22:12,680 Speaker 1: needs to be wanting all in and that's tough to say. Yeah, 383 00:22:12,800 --> 00:22:15,119 Speaker 1: you'd really have to have something like the I m 384 00:22:15,200 --> 00:22:21,119 Speaker 1: F or similar body organizing a global conference where you 385 00:22:21,119 --> 00:22:24,880 Speaker 1: know they'd actually moved towards UH an agreement on which 386 00:22:24,920 --> 00:22:28,320 Speaker 1: statistics would would would be highlighted because the IMF actually 387 00:22:28,400 --> 00:22:33,760 Speaker 1: uses a country's UH production of GDP statistics as a 388 00:22:33,760 --> 00:22:37,760 Speaker 1: measure of their quality of development as a nation. So 389 00:22:37,960 --> 00:22:42,040 Speaker 1: in any change to that would obviously be highly political. 390 00:22:43,119 --> 00:22:47,480 Speaker 1: Something for the next Briton Woods for sure. Alright, Well, 391 00:22:47,560 --> 00:22:50,040 Speaker 1: Benchmark will be back next week and until then, you 392 00:22:50,080 --> 00:22:53,040 Speaker 1: can find us on the Bloomberg terminal, Bloomberg dot com, 393 00:22:53,160 --> 00:22:57,160 Speaker 1: the Bloomberg App, as well as iTunes, pocket cast, Stitcher, 394 00:22:57,400 --> 00:23:01,000 Speaker 1: or wherever you prefer to find your podcast. While you're there, 395 00:23:01,040 --> 00:23:03,119 Speaker 1: take a minute to rate and review the show so 396 00:23:03,240 --> 00:23:05,919 Speaker 1: more listeners can find us and let us know what 397 00:23:05,920 --> 00:23:08,120 Speaker 1: you thought of the show. You can follow me on 398 00:23:08,160 --> 00:23:13,320 Speaker 1: Twitter at at Scott Landman Dan. You're at moss under 399 00:23:13,400 --> 00:23:17,000 Speaker 1: School Eco and our guest is at at l O 400 00:23:17,440 --> 00:23:21,080 Speaker 1: f I O r A m O n t I 401 00:23:21,359 --> 00:23:25,359 Speaker 1: l O fiora. Monty Benchmark is produced by Sarah Patterson 402 00:23:25,480 --> 00:23:29,160 Speaker 1: and the head of Bloomberg Podcast is Alec McCabe. Thanks 403 00:23:29,160 --> 00:23:30,560 Speaker 1: for listening, to see you next time.