Tue Nov 20th, 2007 at 08:38:42 AM EST
A few days ago, Bruno-Ken posted a brief write-up of the Beyond GDP conference, which takes place this Monday and Tuesday. Saving on my carbon budget, I was able to follow the first day of the conference over the live stream. Though of course this offers no replacement for networking with assorted officials of international institutions, etcetera. Here's a run-down of Mondays proceedings:
The conference is about "measuring progress, true wealth and the well-being of nations". There is a growing realisation that the current set of macro-economic indicators that dominate decision-making are no longer adequate for the policy challenges that the world faces today. This theme is by now so familiar that when Barroso, in the opening address, stated that "to deal with the challenges of the future, we can't use the measures of the past", it sounded like a platitude.
Maybe that was because Barroso said it, though it certainly didn't sound any more meaningful when Almunia repeated it in similar words.
As this is not going to be chronological, taking a glance at the programme might be of help.
The main point of the first day was to provide the political backdrop. Why do politicians slash policy makers need new tools to measure progress? How should the tools be presented to them? Which tools are the best? Who benefits, and who loses? What can we, in this conference, mean?
A short list of the speakers as a guide:
José Manuel Barroso (President of the European Commission); Joaquín Almunia (Commissioner for Economic and Monetary Affairs); Rui Baleiras (Secretary of State for Regional Development, Portugal, EU Presidency); Bruno S. Frey (Professor of Economic Policy and Non-Market Economics, University of Zurich); Hans Rosling (Professor of International Health, Karolinska Institute, Sweden); HE Chief Emeka Anyaoku (President, WWF); Pervenche Berès (Chair EP ECON committee); Pier Carlo Padoan (Deputy Secretary-General, OECD); Giulio Santagata (Minister for the Implementation of the Government Programme, Italy).
To the last question, what the conference can mean, the political figures from the Commission, Barroso and Almunia, expressed the hope that this conference would produce an end-product that would be as significant as the development of GDP in the 1930s. Both also referenced Kuznets and his quote that GDP could scarcely be used to infer the welfare of a nation. Symbolically, Adam Smith (the received Adam Smith) played a role on the background as per the title of the conference, repeated by Barroso as a question.
In the 1930s, GDP was developed as part of the Keynesian programme to revive the economy of the USA. It provided a measurement the government could use to assess its economic programmes. But where the 1930s were a time of economic crisis where reviving the economy was the paramount goal, today we have a great variety of issues to deal with (global warming, energy security of supply, poverty and fair trade, terrorism). That, at least, was the account given by Barroso and Almunia. Though I really don't know if terrorism is an issue we could catch in any measure of progress...
Nearly all contributors preferred to talk about supplementing GDP rather than replacing it as a measure. There are several virtues of GDP that were widely praised and mentioned as benchmarks for these supplementary measures: GDP is simple, it is clear, it is objective, it is scaleable, it is comparable. I'd guess some people here could break out into a bout of violent, uncontrollable laughter upon reading that, but that is how all the political figures and officials from the Commission and other institutions view the matter.
There was also consensus on the view that no single measure for progress could be followed. Barroso mentioned a 'multi-dimensional' picture of well-being and name-dropped Amartya Sen. Almunia said that there was some room for 'composite measures' (like the HDI) as publicity tools, but that they were controversial as the components would have to be 'weighted', which makes them susceptible to political decisions and makes them less transparant. Baleiras stated that using to many indicators would cloud the picture; make the reporting incomprehensible to politicians and the public, who need to see the broader view. Nonetheless, he saw a single measure as being both theoretically and practically impossible, and advocated a small set of 'high level indicators'. Padoan similarly advocated a set of 'key indicators'.
Indicators of well-being and sustainability are seen to be needed to fulfil several objectives. One of these is 'internal' to government: government needs to be able to assess the success of its efforts. To do so it requires measures that are scaleable and that are comparable across time, between different regions, and with regard to other countries. Preferably the measurement, at least, should be objective. That internal measure has an external counterpart in government accountability, a theme raised towards the end by Santagata and Padoan. Somewhat related, Padoan also thought that civil participation would increase if the people have a better view of the goals their society wants to achieve and can track results that measure progress towards those goals.
The process by which the society sets goals, then, also becomes an issue. Baleiras conceived this process as taking place within a 'policy cycle', in which the policy makers would set the goals at the start of the process, measures would be produced on the basis of these goals, indicators would be defined on the basis of the measures, and policy-makers would continuously update the goals on the basis of feedback from the reporting at the end of the process. Padoan's conception of the formulation of goals was more oriented towards civil society, he hoped that each country would create an institution for assessing progress, much like a central bank for assessing the money supply. The government, unions, business, NGOs and citizens could then participate through this institution to define what progress means to them.
Frey detracted from the mainline opinion that a concise but multidimensional set of indicators is the best way forward by spreading the gospel of Richard Layard: claiming that happiness could be measured accurately and should replace other measures. Leaving the scientific argument on the table (read Layard's book), Frey's argument was a bit frustrating. First, he argued that happiness could be used as a measure to replace GDP, the HDI, etcetera. Then, he argued that the government should not seek to maximise happiness, but instead create the preconditions for happiness. I agree with the latter, but his reasons, that government would cook the books and that other values such as responsibility, honour, etc. also matter, are not those I'd use. Government can also cook the books on the preconditions, and if you think that other values than happiness also matter, then what about measuring them? Anyway, the main argument I can see why government should not try to maximise happiness directly, or indeed any other value, is Soma. That is why we need a 'capabilities approach', but that approach should not focus solely on happiness, instead it should focus on all values.
There was little in-depth discussion of indicators. Anyaoko mentioned the WWFs 'living planet index', which tracks 1,300 vertrebrate species (and recorded a 30% decline in overall population since the 1970s), and a composite index the WWF is developing by combining the HDI and the ecological footprint. Anyaoko represented the viewpoint that we are in a state of 'ecological overshoot' and had a couple of good one-liners, like "Societies cannot continue to operate as if the planet was a business in liquidation". The need to be able to zoom in and out and provide precise sectoral as well as high-level indicators was emphasised by Baleiras and Santagata. Santagata further stressed the need to develop innovative measures and indicators, and mentioned the use of 'social capital' in Italy as an example.
Some here expressed a kind of fear that the European Union would use these new measures of progress as a way to hide the supposed failure of its Lisbon strategy. I don't think that is the case, but there was a discussion on this point between a member of the audience and Berès at the end of the first day, where Berès mentioned that if you used GDP to measure the success of Lisbon, you would not take into account issues such as sustainability. Decisions recently taken by the EU on emission reductions and targets for renewable energy underscored this point. Externalities would at least have to be taken into account when we want to measure progress.
Rosling's speech was quite similar to the ones he gave at TED and this is really one speech you're much better off watching than reading about, it's about visualisation of statistics, after all. It's available on TED. One element of his speech in this conference may be worth raising, and that is that he stressed 'database hugging disorder' and the need for governments to proactively open up information.