WEBVTT - Why GDP Is a Dumb Way to Measure Economic Output 0:00:00.520 --> 0:00:05.120 A G, A D in a P three letters quite 0:00:05.120 --> 0:00:08.959 a lot of impact, formally standing for gross domestic product 0:00:09.400 --> 0:00:12.039 the sum value, and will get back to that word 0:00:12.119 --> 0:00:15.480 value in a second of all goods and services produced 0:00:15.480 --> 0:00:18.959 in an economy, usually a nation state like the US, 0:00:19.520 --> 0:00:22.520 Great Britain, China, and so on. It's been the yardstick 0:00:22.560 --> 0:00:26.920 by which we've measured what a country's economic output basically 0:00:27.160 --> 0:00:30.040 is ever since World War Two, and perhaps just a 0:00:30.040 --> 0:00:32.520 little before that. Our guest will give us a history 0:00:32.600 --> 0:00:37.519 lesson momentarily, but does it really deserve its pedestal Well not, 0:00:37.640 --> 0:00:40.479 According to our guest, it might as well stand for 0:00:40.600 --> 0:00:45.680 gross dumb product or grossest dumb product, responsible for all 0:00:45.760 --> 0:00:48.880 manner of sins, ranging from the pillaging of a South 0:00:48.960 --> 0:00:53.360 Pacific island paradise to an instrument of oppression used by 0:00:53.440 --> 0:00:58.680 austerity craven Northern Europeans to hammer poor, innocent little grease. 0:01:08.600 --> 0:01:11.880 This is Bloombook benchmark. I'm Daniel Moss, executive editor for 0:01:11.959 --> 0:01:15.000 Global Economics in New York, and I'm Scott Landman and 0:01:15.120 --> 0:01:20.319 Economics editor with Bloomberg in Washington. Today. Lorenzo Fiora Monty, 0:01:20.440 --> 0:01:24.080 a professor at the University of Pretoria in South Africa 0:01:24.640 --> 0:01:27.320 is joining us. He's the author of the World After 0:01:27.480 --> 0:01:32.000 g d P and before that, Gross Domestic Problem. He's 0:01:32.000 --> 0:01:34.480 calling for more than just taking down g d P. 0:01:35.280 --> 0:01:39.440 In the process, he's offering a revolution, not just in economics, 0:01:39.480 --> 0:01:43.479 but in how we determine our happiness or place in life, 0:01:43.520 --> 0:01:47.920 the universe and all that stuff. So Lorenzo, welcome to Benchmark. 0:01:48.400 --> 0:01:51.320 It's a pleasure to be with you. Now. You're not 0:01:51.440 --> 0:01:54.960 actually in South Africa right now? Where are you? And 0:01:55.360 --> 0:01:58.800 what are you doing on Skype? I am connecting from Italy. 0:01:58.880 --> 0:02:02.360 Were unpromoting the Italian edition of Gross Domestic Problem when 0:02:02.400 --> 0:02:05.800 my first book published in English in and I'll be 0:02:05.880 --> 0:02:08.359 soon traveling across Europe to promote the new book, The 0:02:08.400 --> 0:02:12.200 World After a GDP, which you have just mentioned. And 0:02:12.360 --> 0:02:16.720 does your travel budget include lots of austerity? My troubled 0:02:16.760 --> 0:02:19.480 budget includes a lot of meetings and meeting people and 0:02:19.560 --> 0:02:22.960 talking to communities, talking to students at universities, talking to 0:02:23.440 --> 0:02:25.679 small businesses and so on and so forth. I don't 0:02:25.680 --> 0:02:28.880 think that's austerity. That's actually a lot of flunt, although 0:02:29.080 --> 0:02:33.720 it may not necessarily reflecting our GDP accounts well. Federal 0:02:33.760 --> 0:02:37.919 Reserve Chair Janet Yellen this month called GDP a noisy number, 0:02:38.000 --> 0:02:41.080 But your concerns go way beyond that. What is it 0:02:41.120 --> 0:02:45.760 that bothers you most well? GDP has become much more 0:02:45.800 --> 0:02:49.920 than a statistic. It's become the benchmark of success across 0:02:50.000 --> 0:02:54.640 the world for economies, for companies, for societies at large. 0:02:54.760 --> 0:02:56.840 And I wouldn't be too bothered if it was just 0:02:56.880 --> 0:02:59.880 a noisy number. What bothers me is the fact that 0:03:00.120 --> 0:03:05.160 it's a system of perverse incentives. It's it's become basically 0:03:05.320 --> 0:03:09.400 a guideline for policymaking, and that's very problematic because their 0:03:09.480 --> 0:03:13.240 politicians will take certain decisions because they increase GDP and 0:03:13.280 --> 0:03:16.160 they want to be you know, you know, like graded 0:03:16.160 --> 0:03:18.800 on their GDP credentials and economic growth, and there's going 0:03:18.840 --> 0:03:20.800 to be a skate effect, as we have seen in 0:03:20.840 --> 0:03:24.800 the past, you know, eighty years across society, everybody's playing 0:03:24.800 --> 0:03:27.920 a game to increase GDP and economic growth as a result, 0:03:28.120 --> 0:03:31.640 even though when those decisions are very detrimental to society. 0:03:31.880 --> 0:03:35.080 I was teasing you about the austerity on your travel budget, 0:03:35.120 --> 0:03:37.840 but you make a serious point in your book, which 0:03:38.000 --> 0:03:42.160 is that GDP and projections of GDP can be used 0:03:42.240 --> 0:03:46.400 as a political bludgeon in policy debates. Absolutely. I mean, like, 0:03:46.960 --> 0:03:48.800 you know, I want to make this point very strong. 0:03:48.960 --> 0:03:53.040 If GDP was just a flowed number or imperfect number, 0:03:53.120 --> 0:03:55.840 I wouldn't have written two books about it. I believe 0:03:55.960 --> 0:04:01.120 it's basically a skeleton of what soci I T really 0:04:01.160 --> 0:04:03.200 wants to achieve. And in a sense, you know, like 0:04:03.320 --> 0:04:06.440 it creates those incentives and rewards that you know, make 0:04:06.480 --> 0:04:09.640 people take the wrong decisions. And this is happening every day. 0:04:09.640 --> 0:04:12.680 I mean, governments around the world try whatever they can 0:04:12.760 --> 0:04:16.080 to increase GDP because this has a positive effect in 0:04:16.200 --> 0:04:20.279 terms of public image and probably may increase foreign direct investments, 0:04:20.400 --> 0:04:22.440 and it pleases the World Bank and the IMP and 0:04:22.440 --> 0:04:24.960 all of that, or the European Union if you're in Europe, 0:04:25.320 --> 0:04:29.120 even though these decisions may lead to cutting social welfare, 0:04:29.520 --> 0:04:33.600 may lead to destroying the environment and and creating social inequality, 0:04:33.640 --> 0:04:36.120 all the things that we prepared to care about when 0:04:36.160 --> 0:04:40.000 we talk about sustainable and equitable developments and the SDGs. 0:04:40.160 --> 0:04:43.960 So basically we are in this schizophrenic situation in which 0:04:44.240 --> 0:04:47.960 we follow certain rules to please the GDP ideology, but 0:04:48.040 --> 0:04:50.320 at the same time we seem to recognize that those 0:04:50.360 --> 0:04:53.320 decisions are wrong and we should do differently, and yet 0:04:53.400 --> 0:04:55.560 we can't because when we try to do differently, we 0:04:55.640 --> 0:04:58.360 get punished. So you mentioned Greece. I mean, I don't 0:04:58.360 --> 0:05:01.320 think the Greek you know, the Greek population is completely 0:05:01.880 --> 0:05:04.960 you know, like unguilty for for what they've done. They're 0:05:05.000 --> 0:05:08.920 not completely irresponsible for that, but at the same time, 0:05:09.440 --> 0:05:13.320 punishing the society because it has decided to develop itself 0:05:13.360 --> 0:05:16.600 in a different way. It's also a short sighted because 0:05:16.680 --> 0:05:19.719 that is part of you know, like a bigger process 0:05:19.720 --> 0:05:23.719 of creating creating economic interactions and by doing that, so 0:05:23.880 --> 0:05:26.440 you are destroying the future of Europe. And Greece is 0:05:26.520 --> 0:05:28.520 just the first step in a long in a long journey. 0:05:29.480 --> 0:05:31.640 Now let's go back in time for a second, take 0:05:31.680 --> 0:05:35.520 a step back. It's hard to believe in today's world, 0:05:35.560 --> 0:05:38.680 but there once was a time when there was when 0:05:38.680 --> 0:05:41.120 there was no such thing as GDP. Just under a 0:05:41.200 --> 0:05:44.440 hundred years ago. It actually grew out of the need 0:05:44.480 --> 0:05:48.159 to measure the U S economy during the Great Depression, 0:05:48.279 --> 0:05:52.440 even helped the United States calibrate economic policy to win 0:05:52.800 --> 0:05:56.080 World War Two. And now we're at a time when 0:05:56.200 --> 0:05:59.359 it's become a scorecard of economies against each other, a 0:05:59.440 --> 0:06:04.560 quarterly uh yardstick of how each economy is doing, a 0:06:04.640 --> 0:06:08.599 measure of a country's public image. As you just said, 0:06:08.760 --> 0:06:12.839 how did we get to this point from its origins? Well, initially, 0:06:12.880 --> 0:06:17.240 as you said, GDP was invented as an attempt as 0:06:17.240 --> 0:06:20.240 an attempt to deal with the Great Depression. Right at 0:06:20.240 --> 0:06:23.760 the time, government didn't really have any way, any reliable 0:06:23.920 --> 0:06:27.400 measurement of economic transactions in the market, and people were 0:06:27.520 --> 0:06:31.440 not being as as excited about economic transactions anymore. So 0:06:31.480 --> 0:06:33.880 they needed a bit of a thermometer, and they came 0:06:33.960 --> 0:06:36.560 up with the best they could get. Right. The team 0:06:36.600 --> 0:06:40.000 that invented GDP was not completely satisfied by what they 0:06:40.000 --> 0:06:41.880 had done, but they thought, you know, this is probably 0:06:41.920 --> 0:06:44.160 the best tool we can put together at this point 0:06:44.160 --> 0:06:46.719 in time, and and that's how it started. It's a 0:06:46.720 --> 0:06:49.119 sum of market transactions, and I think it was pretty 0:06:49.160 --> 0:06:52.479 okay at the time in which the government really wanted. 0:06:52.600 --> 0:06:56.800 All they wanted was to basically reactivate flows of money 0:06:56.920 --> 0:06:59.719 in the economy. But you know very well that what 0:06:59.880 --> 0:07:02.080 is good in a time of crisis may not necessarily 0:07:02.120 --> 0:07:04.359 be good in a time of you know, normalcy and 0:07:04.360 --> 0:07:08.200 normal economic activities. Just like you wouldn't give a patient 0:07:08.360 --> 0:07:12.040 was healthy medicines necessarily, medicines may be good if you're sick, 0:07:12.400 --> 0:07:14.280 but not if you're healthy. They can make you sick 0:07:14.320 --> 0:07:17.360 if you're healthy in many different ways. And you know, 0:07:17.600 --> 0:07:20.440 it was then used as a tool to plan the 0:07:20.480 --> 0:07:24.000 Second World War, once again not necessarily a time of 0:07:24.040 --> 0:07:27.720 economic normality. Um So it may be very useful to 0:07:27.760 --> 0:07:32.600 measure production regardless of its utility, because you're building bombs 0:07:32.600 --> 0:07:34.760 and aircrafts and tags, and all you need to know 0:07:34.920 --> 0:07:36.880 is how many you can build. The more you can build, 0:07:36.880 --> 0:07:39.559 the better. But this is very different in normal times, 0:07:39.600 --> 0:07:41.360 you know, normal times. You want to make sure that 0:07:41.400 --> 0:07:44.240 you distinguish between the quantity of transactions and the quality 0:07:44.240 --> 0:07:48.600 of transductions. Noble transactions are actually strengthening our economies. If 0:07:48.640 --> 0:07:50.840 I get sick, GDP goes up because I have to 0:07:50.880 --> 0:07:52.720 use medicines and I have to go to the hospital 0:07:52.760 --> 0:07:54.720 and somebody has to be paid to look after me. 0:07:55.120 --> 0:07:57.480 But if I stay healthy, GDP doesn't go up. So 0:07:57.520 --> 0:08:00.360 in a sense, if we want GDP to grow, our 0:08:00.440 --> 0:08:03.360 policies have to be designed to make people sick. And 0:08:03.720 --> 0:08:06.320 if I get stuck in a traffic if I'm involved 0:08:06.320 --> 0:08:08.800 in a car accidents, if I get killed. All these 0:08:08.800 --> 0:08:12.720 transactions increase GDP create economic growth, but they did not 0:08:12.800 --> 0:08:18.560 necessarily contribute positively to our economic performance. The problem is that, interestingly, 0:08:18.920 --> 0:08:22.240 ever since the nineteen seventies, the late nineteen time and seventies, 0:08:22.240 --> 0:08:24.320 we have done the study the studies in the book 0:08:24.360 --> 0:08:27.680 as well, we showed that the so called negative transactions 0:08:27.720 --> 0:08:31.520 that are counting the GDP far way the positive transactions. 0:08:31.920 --> 0:08:34.320 So most of the growth of the nineteen eighties and 0:08:34.360 --> 0:08:40.960 the nineteen nineties was due basically to pharmaceuticals, took accidents, 0:08:41.080 --> 0:08:46.160 to divorces, to military expenditure, all expenses that GDP counts 0:08:46.160 --> 0:08:49.480 as positive, but often they are not seen as positive 0:08:49.600 --> 0:08:52.920 by economists or by citizens at large. So we were 0:08:52.960 --> 0:08:56.599 celebrating an economic boom when it was in reality and 0:08:56.679 --> 0:08:59.760 economic disaster. But GDP gave us the wrong information and 0:08:59.800 --> 0:09:03.320 the policies. The wrong policies were decided upon because of 0:09:03.360 --> 0:09:06.920 that system of perverse and centers that have mentioned. All right, well, 0:09:07.000 --> 0:09:09.720 let's go to the South Pacific and the island nation 0:09:09.880 --> 0:09:13.480 of Naru. You begin your book there almost as a 0:09:13.600 --> 0:09:17.960 kind of morality tale. Now you even link GDP to 0:09:18.080 --> 0:09:23.960 the island sinking literally prospects of survival as well as diabetes, drought, 0:09:24.480 --> 0:09:26.920 and a bunch of other bad things. Talk about Nauru 0:09:27.040 --> 0:09:31.800 and why you think this illustrates your point? Most authors 0:09:31.840 --> 0:09:35.320 started books with celebrating empires and big countries, and I've 0:09:35.360 --> 0:09:38.840 decided to the opposite, celebrating one of the smallest states 0:09:39.080 --> 0:09:42.160 in in in our global economic community, and that's the 0:09:42.200 --> 0:09:45.320 island of Nauru, which is the third smallest states in 0:09:45.360 --> 0:09:50.160 the world after them, after Monaco and Vatican. So the 0:09:50.240 --> 0:09:53.560 story of Nara is very important because Nara was in 0:09:53.600 --> 0:09:57.520 the nineties had the highest GDP per capita in the world. 0:09:57.840 --> 0:10:00.160 So in many ways, it was the perfect example of 0:10:00.200 --> 0:10:04.440 what happens when you follow the GDP ideology blindly. So 0:10:04.520 --> 0:10:09.520 this country invested massively in propping up economic growth by 0:10:09.679 --> 0:10:13.760 exploiting the minds of phosphates that the country had. It 0:10:13.800 --> 0:10:16.839 was a very small island but basically had a lot 0:10:16.840 --> 0:10:19.559 of very good quality buzz bates that was used as 0:10:19.640 --> 0:10:22.720 part of fertilizers and other agricultural products in many parts 0:10:22.720 --> 0:10:25.760 of the world, especially in Southeast Asia and the Pacific. 0:10:26.240 --> 0:10:29.640 Long story short, they basically exploited it to the point 0:10:30.160 --> 0:10:34.040 of sitting with a huge environmental disaster that has been 0:10:34.080 --> 0:10:37.920 threatening a cultural production, has been threatening the population. With 0:10:38.040 --> 0:10:40.760 the money that they collected, because they had some money, 0:10:40.800 --> 0:10:43.280 most of the money fled to Australia and New Zealand, 0:10:43.360 --> 0:10:46.160 where it was captured by banks, as it happens often 0:10:46.240 --> 0:10:49.920 with the vast GDP growth in many so called developing countries, 0:10:50.320 --> 0:10:52.360 but some of the money stayed in the country. And 0:10:52.400 --> 0:10:56.200 what happened is that with that cash, the governments decided 0:10:56.240 --> 0:11:00.400 to listen to many economic advisors and invested in vanity objects, 0:11:00.440 --> 0:11:03.360 as it happens in many countries, infrastructure that wasn't needed, 0:11:03.640 --> 0:11:06.480 and in importing a lot of food because the culture 0:11:06.559 --> 0:11:09.200 locally had been damaged to the point of being useless, 0:11:09.559 --> 0:11:12.880 importing a lot of food that was very poor quality food. 0:11:13.240 --> 0:11:16.240 And guess what. From the environmental crisis, they moved on 0:11:16.280 --> 0:11:19.000 to a health crisis. They became the capital of the 0:11:19.040 --> 0:11:23.960 global capital of diabetes, with one of the largest the 0:11:24.080 --> 0:11:29.040 highest levels of obesity in the world, and and and 0:11:28.960 --> 0:11:32.120 and some of the health conditions related to death. And 0:11:32.160 --> 0:11:35.320 nowadays it's basically a failed economy of failed states, and 0:11:35.360 --> 0:11:38.320 the only option left to Nurans is migrating Caustralian needs 0:11:38.360 --> 0:11:40.760 and to get a better to get a better life. 0:11:41.000 --> 0:11:44.800 So this is in a nutshell, it's a concentrated metaphor 0:11:45.000 --> 0:11:47.360 of what seems to be happening to the entire planet. 0:11:47.679 --> 0:11:50.840 We have decided to embark on a production and consumption 0:11:51.480 --> 0:11:55.559 process that is ultimately destroying us. But we celebrated as 0:11:55.600 --> 0:12:00.280 if this was the beacon, the you know, like the 0:12:00.040 --> 0:12:03.800 the pinnacle of civilization. Because GDP tells us that this 0:12:03.880 --> 0:12:06.640 is what development is all about, and it's giving us 0:12:06.640 --> 0:12:09.280 the wrong information it should go. We should be you know, 0:12:09.360 --> 0:12:11.720 like doing deffe. We should be doing differently. We should 0:12:11.720 --> 0:12:15.560 be distinguishing between transactions that we want, transactions we don't want, 0:12:15.600 --> 0:12:18.880 production that is useful, production that is not useful, consumption 0:12:18.920 --> 0:12:22.200 that is useful, and consumption that consumption that is not useful. 0:12:22.360 --> 0:12:24.640 And GDP doesn't do that, and by not doing that, 0:12:24.760 --> 0:12:27.880 it gives us a very very plot piece of information 0:12:27.960 --> 0:12:30.520 which then imformed policy and say, you know, like has 0:12:30.679 --> 0:12:33.559 you know impacts across society. Well, let's go to South 0:12:33.600 --> 0:12:37.280 Africa where you spend most of your working year. Now 0:12:37.480 --> 0:12:41.880 after immediately after the transition to democracy in the early nineties, 0:12:42.120 --> 0:12:45.319 there was a surge in say, for example, foreign investment 0:12:45.720 --> 0:12:49.320 GDP looked pretty good, but still huge sways of the 0:12:49.360 --> 0:12:53.960 population had their aspirations un met. Now has that influenced 0:12:53.960 --> 0:12:58.920 you're thinking as well terms of our GDP um curves 0:12:59.000 --> 0:13:01.920 or GDP trands SI so worth. After the end of 0:13:01.920 --> 0:13:04.240 apart type, there was a sense that the country could 0:13:04.280 --> 0:13:07.280 have embarked on a social justice program. The idea was 0:13:07.360 --> 0:13:10.720 about that time had come for a distribution of wealth 0:13:10.840 --> 0:13:14.440 because of apartheide, because of the enormous inequality of the 0:13:14.440 --> 0:13:17.320 country had experienced. None of that happened. You know why, 0:13:17.720 --> 0:13:21.640 because the government was told that the best way um 0:13:21.760 --> 0:13:25.560 to deal with such inequality wasn't about redistributing resources and 0:13:25.600 --> 0:13:28.439 promoting social offer. It was about growing. It was about 0:13:28.640 --> 0:13:31.880 embarking on a mass you know, a mass scale economic growth, 0:13:31.920 --> 0:13:35.320 accelerated growth that would have increased the pie. Everybody would 0:13:35.360 --> 0:13:39.319 have enjoyed a bigger share, and everybody would have been happy. Now, 0:13:39.559 --> 0:13:42.560 not only didn't it happen, it didn't happen at all. 0:13:42.640 --> 0:13:44.680 I mean like, we had significant growth, but most of 0:13:44.720 --> 0:13:48.040 the growth was captured by those that control the economic leverages. 0:13:48.160 --> 0:13:50.959 So the rich became richer in many cases, and many 0:13:51.240 --> 0:13:54.280 poor people may have become slightly less poor, but still 0:13:54.480 --> 0:13:58.400 significantly worse off than than than the elite. And at 0:13:58.400 --> 0:14:02.680 the same time, you know, the series interventions in in 0:14:02.679 --> 0:14:06.360 in adjusting those economic differentials were not We're not taken. 0:14:06.559 --> 0:14:10.440 In example, for many years the country delayed intervening in 0:14:10.480 --> 0:14:13.880 the HIV eighth pandemic, and the reason was that rather 0:14:13.920 --> 0:14:16.719 than spending money on healthcare in people's well being, that 0:14:16.800 --> 0:14:19.960 should have spent money in infrastructure and developments, because that 0:14:20.040 --> 0:14:23.880 would have then created all the positive uh IN effects 0:14:23.960 --> 0:14:26.960 that would have done propped up the economy and improved 0:14:27.040 --> 0:14:29.920 even the life of those living with HIV NAS. It 0:14:30.080 --> 0:14:34.080 was crazy. People were done only when in two dozen 0:14:34.160 --> 0:14:36.280 and four, two dozen and five the country decided to 0:14:36.320 --> 0:14:38.920 really intervene in social weapon because it was too much. 0:14:40.000 --> 0:14:45.240 We experienced a significant decrease in mortality rates, HIV AIDS 0:14:45.280 --> 0:14:48.480 infections went down dramatically. And guess what This happened at 0:14:48.480 --> 0:14:51.200 a time in which we had half the GDP growth 0:14:51.200 --> 0:14:55.400 of the previous decame. So this tells you that politicians 0:14:55.440 --> 0:14:58.960 that follow the GDP vision can take very wrong, the 0:14:59.120 --> 0:15:02.480 extremely wrong decisions when it comes to the welfare of 0:15:02.560 --> 0:15:06.520 There are people Lorenzo. Is that happening right now in 0:15:06.560 --> 0:15:09.600 the United States? We have a president here who has 0:15:10.040 --> 0:15:14.440 pledged to achieve four percent GDP growth, which is roughly 0:15:14.560 --> 0:15:18.440 double the pace that we've seen in recent years. Is 0:15:18.480 --> 0:15:22.800 the US headed for this kind of uh, these kind 0:15:22.880 --> 0:15:26.920 of difficulties if the Trump administration really pursues that kind 0:15:26.960 --> 0:15:31.080 of goal as hard as as maybe they're indicating, well, 0:15:31.120 --> 0:15:34.920 I think that, I think that there's a serious um 0:15:35.200 --> 0:15:37.360 level of confusion in the United States at the moment. 0:15:37.480 --> 0:15:40.480 I mean, like, in many ways, a lot of people 0:15:40.560 --> 0:15:45.600 are rightly upset at at least three decades of economic 0:15:45.640 --> 0:15:49.600 policies in the US that promoted UM, a kind of 0:15:49.640 --> 0:15:54.120 economic developments that increased inequality, that made the working class 0:15:54.120 --> 0:15:57.600 works off UM, that used glibalization to put a lot 0:15:57.640 --> 0:16:00.760 of people out of work UM and create kind of gaps. 0:16:00.840 --> 0:16:05.400 That's in many ways explained why somebody like Donald Trump, 0:16:05.440 --> 0:16:11.000 with an agenda of change, so to speak, won the elections. Now. 0:16:11.120 --> 0:16:13.840 What is being proposed, however, as a solution, is more 0:16:13.880 --> 0:16:18.920 of the same rutter than trying to tackle the inequalities, 0:16:19.000 --> 0:16:21.680 the suffering, and the low level of well being that 0:16:21.760 --> 0:16:24.440 many Americans experience. I mean, I still find it striking 0:16:24.440 --> 0:16:28.800 that America is number one in terms of GDP and 0:16:29.240 --> 0:16:35.040 in terms of all the things that really matter health, literacy, education, 0:16:35.520 --> 0:16:37.960 life expectancy, and so on and so forth. It's way 0:16:38.040 --> 0:16:42.720 beyond many countries that are much poorer in GDP terms. 0:16:42.800 --> 0:16:45.840 So I think America is a very very good case, Laurens. 0:16:45.960 --> 0:16:49.520 There have been countless attempts in recent years by various 0:16:49.520 --> 0:16:52.800 commissions and bodies and so forth to create other kinds 0:16:52.800 --> 0:16:57.240 of indexes of a country's well being. Uh. You know, 0:16:57.640 --> 0:17:00.480 many people have pointed out the problems in per actions 0:17:01.040 --> 0:17:04.119 with focusing on GDP as the end all be all 0:17:04.280 --> 0:17:08.639 of economic indicators. We can talk about this all we want. 0:17:08.920 --> 0:17:12.439 Is there any real chance of anything changing? Or are 0:17:12.440 --> 0:17:15.120 we just all tilting at windmills here? I think we're 0:17:15.119 --> 0:17:17.240 wasting our time with all these commissions. I think it's 0:17:17.240 --> 0:17:19.639 important to open the debate. That's what my book is 0:17:19.680 --> 0:17:21.760 supposed to do, to open the debate and have a 0:17:21.800 --> 0:17:25.040 public debate, and only a debate among experts. Um, we 0:17:25.119 --> 0:17:28.240 do already have tools that helped a great deal. As 0:17:28.280 --> 0:17:31.119 I said, if we were to use something as simple 0:17:31.160 --> 0:17:33.960 as the gen in Progress Indicator, which is nothing else, 0:17:34.000 --> 0:17:37.520 the GDP, but distinguishing the bat and the good transactions, 0:17:37.640 --> 0:17:39.640 and and that would be really useful because you would 0:17:39.680 --> 0:17:43.280 tell the government what are investing in certain areas makes sense. 0:17:43.359 --> 0:17:46.600 For instance, with with this kind of accounting, it's clear 0:17:46.720 --> 0:17:49.919 that many industries are not really producing anything valuable for 0:17:50.000 --> 0:17:54.159 society because the the negative impacts outweigh the gains of 0:17:54.200 --> 0:17:56.720 these companies. And this includes the fossil fuel industry, that 0:17:57.040 --> 0:18:00.840 the coal industry, mining and large, the distribution of food 0:18:00.840 --> 0:18:02.639 and so on and so forth. And I think in 0:18:02.640 --> 0:18:06.520 the US some states Maryland, Utah, Verymond have already introduced 0:18:06.520 --> 0:18:09.760 some of these tools at the local level. Um So 0:18:09.920 --> 0:18:12.399 there are tools that could be used tomorrow. The problem 0:18:12.440 --> 0:18:14.359 is that we need the political world to do so. 0:18:14.560 --> 0:18:19.760 And unless the GDP ideology is unmasked and unveiled as 0:18:19.840 --> 0:18:23.879 an ideology and people mobilize against this to to to 0:18:24.040 --> 0:18:27.439 code for a different approach, we're never gonna make significant 0:18:27.520 --> 0:18:30.440 hardware here. And I think in my book, I show 0:18:30.480 --> 0:18:32.439 how this could be done. I show the fact that 0:18:32.840 --> 0:18:35.639 GDP is extremely obsolete to be able to account for 0:18:35.680 --> 0:18:38.480 an economy which is increasingly digital. I'm calling you by 0:18:38.480 --> 0:18:40.600 a skype now, and I'm not paying anything, and yet 0:18:40.600 --> 0:18:43.119 we're having a very useful conversation which is not adding 0:18:43.119 --> 0:18:46.240 anything to GDP. GDP would have been much happier ten 0:18:46.280 --> 0:18:48.119 fifteen years ago if I was to call you by 0:18:48.160 --> 0:18:50.720 the phone, because the coal would have been very expensive, 0:18:50.800 --> 0:18:54.600 probably very low quality, and yet adding to the national accounts. 0:18:54.640 --> 0:18:57.280 So every time we use What's up to communicate, every 0:18:57.320 --> 0:19:00.359 time we use Spacebook to make you know to to 0:19:00.359 --> 0:19:03.000 to share information and some so forth, the Google maps 0:19:03.040 --> 0:19:05.720 which are for free, we're not adding to GDP, but 0:19:05.760 --> 0:19:09.880 actually we're strengthening the economy. Nevertheless, GDP is very anachronistic. 0:19:10.000 --> 0:19:12.760 It sees money flows as a sign of a good economy, 0:19:12.920 --> 0:19:15.920 but often money flows may indicate a very very sick 0:19:15.920 --> 0:19:17.840 of Conmy write it in a good one and I 0:19:17.880 --> 0:19:21.520 think ultimately my book shows that we could use this 0:19:21.600 --> 0:19:25.600 opportunity to have national conversations about what it means to 0:19:25.600 --> 0:19:28.760 be developed. In the twenty percent, GDP is no longer 0:19:28.880 --> 0:19:31.760 what we want. Then we can decide what we want 0:19:31.800 --> 0:19:34.480 to gether. And so maybe what's going to be decided 0:19:34.480 --> 0:19:37.000 by Americans or in a state in the US may 0:19:37.000 --> 0:19:38.960 be different from what's going to be done next door. 0:19:39.720 --> 0:19:43.399 So if one country Lorenzo. If one country tried to 0:19:43.440 --> 0:19:46.679 go it alone, and I don't mean a country like Naro, 0:19:46.720 --> 0:19:49.359 I mean a sort of a medium sized or even 0:19:49.400 --> 0:19:53.480 a large sized country said right, we're teaching it, We're 0:19:53.480 --> 0:19:57.160 gonna do something else. What are the risks if they 0:19:57.160 --> 0:20:01.840 acted alone? They would be crucified by markets and then 0:20:01.880 --> 0:20:05.520 forced to retreat. Absolutely, we believed exactly because of the 0:20:05.560 --> 0:20:07.840 power of GDP and its ideology and because it s 0:20:07.960 --> 0:20:10.080 used as a policy tool, that would be crucified, It 0:20:10.119 --> 0:20:13.719 would be punished, which is the reason why we're publicly advocating, 0:20:13.720 --> 0:20:16.000 as I do in the book, for an alliance of 0:20:16.080 --> 0:20:19.159 countries to go together. What are in Europe? What are 0:20:19.200 --> 0:20:21.679 around the world. We have also talked about a in 0:20:21.760 --> 0:20:24.760 alliance of all being economies will call the we seven 0:20:24.800 --> 0:20:28.240 countries that have done extremely well at building an alternative 0:20:28.400 --> 0:20:32.359 way of doing the economy that is beyond GDP. And 0:20:32.400 --> 0:20:36.440 these countries include New Zealand, Costa Rica, Sweden, very good 0:20:36.440 --> 0:20:38.960 examples of countries that have achieved high levels of well 0:20:39.000 --> 0:20:42.920 being with a minor ecological footprint and very low and equality. 0:20:43.080 --> 0:20:45.280 If these countries were too good together and show to 0:20:45.359 --> 0:20:47.880 the rest of the world that change is possible that 0:20:47.920 --> 0:20:51.679 we can do it collectively in collaboration. There would really 0:20:51.720 --> 0:20:55.000 help the entire world wake up, and they may be 0:20:55.040 --> 0:20:58.679 a positive ripple effect across society. A country shouldn't do 0:20:58.800 --> 0:21:02.000 this change on its own because GDP has an extremely 0:21:02.040 --> 0:21:06.160 significant impact of policy decisions and they may be easily critcified. 0:21:06.240 --> 0:21:10.600 But going together as an alliance regionally or globally would 0:21:10.600 --> 0:21:13.280 make a big difference, and it is necessary if we 0:21:13.320 --> 0:21:15.879 want to achieve the Sustainable Development Goals. We have a 0:21:15.920 --> 0:21:18.600 twenty thirty Agenda which is being ratified by the u 0:21:18.800 --> 0:21:22.160 N and unless we change away from GDP, we're never 0:21:22.200 --> 0:21:25.879 going to get there. Well, look, this conversation could go 0:21:25.960 --> 0:21:28.040 on for a while, and I can tell you're only 0:21:28.240 --> 0:21:30.560 just getting started. We'll have to have you back on 0:21:30.600 --> 0:21:33.240 the show. To Lorenzo, thank you for joining us. It's 0:21:33.280 --> 0:21:41.600 been a pleasure. So Dan, do you think we're ever 0:21:41.640 --> 0:21:44.119 going to get to a point where we're not focusing 0:21:44.119 --> 0:21:47.680 on GDP as our end all, be all economic indicator. 0:21:48.520 --> 0:21:51.800 As Lorenzo was saying towards the end, it really can't 0:21:51.920 --> 0:21:57.520 be one or two nations, certainly one or two nations 0:21:57.520 --> 0:22:00.720 that don't have major economic heft being out from the 0:22:00.760 --> 0:22:03.119 pack and saying we're going to chot our own course 0:22:03.160 --> 0:22:07.639 with economat tricks. They really would be killed. It really 0:22:07.680 --> 0:22:12.680 needs to be wanting all in and that's tough to say. Yeah, 0:22:12.800 --> 0:22:15.119 you'd really have to have something like the I m 0:22:15.200 --> 0:22:21.119 F or similar body organizing a global conference where you 0:22:21.119 --> 0:22:24.880 know they'd actually moved towards UH an agreement on which 0:22:24.920 --> 0:22:28.320 statistics would would would be highlighted because the IMF actually 0:22:28.400 --> 0:22:33.760 uses a country's UH production of GDP statistics as a 0:22:33.760 --> 0:22:37.760 measure of their quality of development as a nation. So 0:22:37.960 --> 0:22:42.040 in any change to that would obviously be highly political. 0:22:43.119 --> 0:22:47.480 Something for the next Briton Woods for sure. Alright, Well, 0:22:47.560 --> 0:22:50.040 Benchmark will be back next week and until then, you 0:22:50.080 --> 0:22:53.040 can find us on the Bloomberg terminal, Bloomberg dot com, 0:22:53.160 --> 0:22:57.160 the Bloomberg App, as well as iTunes, pocket cast, Stitcher, 0:22:57.400 --> 0:23:01.000 or wherever you prefer to find your podcast. While you're there, 0:23:01.040 --> 0:23:03.119 take a minute to rate and review the show so 0:23:03.240 --> 0:23:05.919 more listeners can find us and let us know what 0:23:05.920 --> 0:23:08.120 you thought of the show. You can follow me on 0:23:08.160 --> 0:23:13.320 Twitter at at Scott Landman Dan. You're at moss under 0:23:13.400 --> 0:23:17.000 School Eco and our guest is at at l O 0:23:17.440 --> 0:23:21.080 f I O r A m O n t I 0:23:21.359 --> 0:23:25.359