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Fossil Fuel Capitalism

GDP is a fatally flawed measure of economic health

by Joe Romm

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The former U.S. Treasury Secretary Robert Rubin recently wrote a must-read piece in the Washington Post called How ignoring climate change could sink the U.S. economy. The centrist economic panjandrum's main point is that the notion that tackling climate change will harm the economy is the exact opposite of the truth.

In this regard Rubin is making a similar point to the one that Senator Robert F. Kennedy made so powerfully on the presidential campaign trail nearly half a century ago (see below) — the GDP is a deeply flawed measure of the economy’s health.

Rubin is a member of the bipartisan committee that oversaw the recent analysis, RISKY BUSINESS: The Economic Risks of Climate Change in the United States. That committee included Republicans like former Secretary of the Treasury (and of State) George P. Shultz, former Sen. Olympia Snowe, and former Bush Treasury Secretary Henry Paulson. Paulson you may recall had an op-ed in the New York Times recently arguing that a carbon tax is needed to help avert “The Coming Climate Crash.”

Rubin’s point is that we need a new GDP “that incorporates the impact of greenhouse gas emissions.” Instead of simply tallying up “the goods and services produced by our economy” we need a GDP that can “account for the present and future damage resulting from the emissions involved in producing those goods and services.” His bottom line:

"We do not face a choice between protecting our environment or protecting our economy. We face a choice between protecting our economy by protecting our environment — or allowing environmental havoc to create economic havoc. And a major step toward changing the debate is to change the way we measure the health of our economy, our fiscal conditions, and the health of individual companies and businesses to better reflect the world as it will be".

Several months before he was assassinated, Robert F. Kennedy also challenged our monomaniacal pursuit of GDP in “one of the most beautiful of his speeches,” as Obama described it an August 2008 New York Times profile. Here is the transcript:

We will find neither national purpose nor personal satisfaction in a mere continuation of economic progress, in an endless amassing of worldly goods. We cannot measure national spirit by the Dow Jones Average, nor national achievement by the Gross National Product. For the Gross National Product includes air pollution, and ambulances to clear our highways from carnage. It counts special locks for our doors and jails for the people who break them. The Gross National Product includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm and missiles and nuclear warheads…. It includes… the broadcasting of television programs which glorify violence to sell goods to our children.

And if the Gross National Product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials… The Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile, and it can tell us everything about America — except whether we are proud to be Americans.

And this was a campaign speech! RFK believed that it was a politically winning viewpoint.

The Bottom Line: Unsustainable pursuit of short-term “wealth” at the expense of sustainable prosperity — growth for the sake of growth — is both the cause of our recent economic collapse and the fatal misconception at the heart of our “Ponzi scheme” global economy.

◊ Joe Romm is the founding editor of Climate Progress, the most important science-based blog in its field.  Publ. here 4.8.2014.


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