Enlightened Economics

Economics for an Enlightened Age

Posts Tagged ‘gross domestic product’

• Retiring the GDP (Gross Domestic Product)

Posted by Ron Robins on May 8, 2008

The GDP statistic has to be retired. It is like an old shoe that no longer fits. GDP is fatally flawed as a measure of economic and societal well-being and economists know it. Yet it is universally used to compare living standards and economic growth like one compares sports scores. Furthermore, as each nation compiles it a little differently, especially regarding the inflation ‘deflator’ component, such comparisons are nonsensical. What is exciting is that there are some old and new indices getting attention that could replace the GDP. This is most welcome.

Alternatives to the GDP
Technically, GDP is the total market value of all final goods and services sold in an economy in any particular time period. As we progress in an era of Enlightened Economics, it is destined to be superseded by new indices geared to more accurately measure affluence, sustainability and quality of life, generally. Such indices include the Index of Sustainable Economic Welfare (ISEW), the Genuine Progress Indicator (GPI), and variants of them. Other intriguing indices include the Calvert-Henderson Quality of Life Indicators, the UN’s Human Development Index, and the Invincibility Index. The common thread in these indices is that as well as including economic activity, they also account for societal and environmental factors related to real human development – which the GDP does not.

The GDP statistic should be retired because…

  • According to economist Clifford Cobb and colleagues, “Much of what we now call the growth of GDP is really just one of three things in disguise: (1) fixing blunders and social decay from the past [paying for pollution, costs of crime, etc.]; (2) borrowing resources from the future [GDP excludes the costs related to farmland depletion, water, other resources]; or (3) shifting functions from the traditional realm of household and community to the realm of the monetised economy [i.e. eating out, rather than at home].” (Text in parenthesis has been added for additional clarity.) For a fuller explanation, see “What’s wrong with the GDP.”
  • Losses associated with natural and man-made disasters are not deducted from the GDP. For instance, Hurricane Katrina brought mass devastation. Yet the enormous economic losses were not deducted from GDP. But the clean-up costs were added though!
  • GDP does not account for the value of non-monetary, economic, transactions. Such activities would include elder care by family members, and volounteer activities. In 2002, the International Monetary Fund (IMF) found that such activities represented the following shares of economic output: up to 44% of GDP in developing nations, 30% in transition economies, and 16% in Organization for Economic Cooperation and Development (OECD) economies (Schneider and Enste, 2002). See The Genuine Progress Indicator 2006.
  • There is even evidence that a focus on GDP at the expense of other quality of life indicators can lead a society to a false sense of worth and even create unhappiness. In The Loss of Happiness in Market Democracies published in 2000, Emeritus Professor Robert Lane of Yale University compiled exhaustive research data showing the relationship of GDP to increasing unhappiness. He states, “Amidst the satisfaction people feel with their material progress, there is a spirit of unhappiness and depression haunting advanced market democracies throughout the world…” From his perspective, the rigors of modern market economies increasingly create family and relationship break-ups with subsequent loss of companionship and happiness.
  • GDP is short-sighted accounting. Things that bump-up GDP in the short-term often have harmful long-term human and financial consequences and costs.
  • From the foregoing it is clear that the GDP statistic has little relevance as a measure of our present day material and social well-being.

GDP provides a false sense of progress
Comparing the GDP to GPI (Genuine Progress Indicator) numbers illustrates how false is the sense of gain with the GDP in regard to our human condition. Look at this chart comparing the real (inflation adjusted) US per capita GDP and GPI growth between 1950 and 2004. Note how the GPI figure significantly lags GDP. It suggests that when items such as resource depletion, crime costs, and volounteer sector costs,’ etc., are accounted for, the per capita net benefit of a rising GDP is fully negated.

Source: (c) 2007 Redefining Progress

Retire the GDP now
Some of the ways social and non-market costs are included in the ISEW, GPI, etc., are definitely controversial. Perhaps for these reasons such indices have not as yet achieved common usage. But the GDP, created for the very reason of measuring WW11 wartime production, has been badly and wrongly used as a measure of our quality of life. Enlightened Economics demands the GDP be retired and replaced with more enlightened indices!


© Ron Robins, 2008.


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• The Missing Ingredient In Economics — Consciousness!

Posted by Ron Robins on December 3, 2007

Revised January 13, 2008

Lost to modern economics: Consciousness governs human economic behaviour. Enlightened Economics brings consciousness back.
Modern economics seems to have forgotten the obvious. The quality and actions of our individual and collective consciousness governs economic behaviour. For example, in the US it has become fashionable to believe that accumulating debt does not matter. That is fine until the bills mount, become unpaid, and causes debt defaults which then precipitate an economic crisis! Thus, the quality of our consciousness and thinking process profoundly impacts economics. Yet there is no discussion of this in economics today.

A new economics that accounts for changes in the quality and development of our individual and collective consciousness is needed. I call this new economics, Enlightened Economics! Here I examine what consciousness is, its underpinning in natural law, and how it functions. I emphasize that consciousness in its fulfilled, developed state, will bring the ‘dismal science’ of economics to an evolved and higher level — to the status of Enlightened Economics.

What is consciousness?
Human consciousness is defined in many ways. I find it preferable to understand it in an Indian Vedic, or Jungian, sense. That is, at its basis it is interconnected to everything else, is supremely intelligent, and infinitely dimensioned. In physics, it is represented as the ultimate field of super-unification in unified field theories. In Vedic terms, it is spoken of ‘Brahm’ or totality, the ultimate universal entity, and embodied as ‘atma’ in the individual.

For if our very own consciousness is at the basis of everything, it then also possesses the ability to be ‘all-knowing.’ From a ‘markets sense’ this infers the theoretical ability to be knowledgeable about all things at all times. Not that one is cognizant of all things simultaneously, but one has the ability to act from that level of all knowledge in a way that proves spontaneously in accord with the fundamental laws of nature. In this way, individuals with a developed consciousness think and act in accordance with natural law.

Consciousness, the basis of evolution
Nature is forever changing and evolving. However, when one looks back over millennia, for many of us it seems as if there is pattern, an underlying intelligence governing change and the evolution of the entire universe. For instance, the human embryo grows into a baby. It does not grow into an elephant! Natural laws exist governing the evolution of all life.

Consciousness the governor of individual activity
For individuals to fully engage this level of nature’s functioning requires transcending the surface levels of thought and mental functioning. Arriving at that source of thought, the fountainhead of consciousness, is the unified field of natural law. Here the individual experiences peace, silence and bliss. (Personally, I have found Transcendental Meditation to be the most effortless, practical and effective scientific technique to accomplish this. On a collective level, extraordinary research shows that it only takes a few individuals rising in higher consciousness to effect positive changes in collective consciousness. Another research project, among many, demonstrating the existence of a collective consciousness is based at Princeton University, and called the Global Consciousness Research Project.)

The quality of our consciousness governs what we buy as well as our ability to fulfill desires
I believe human evolution is all about the development of our consciousness and its alignment with natural law. And that this is where humanity is heading. Our desires, wants, actions and purchases will be reflective of what nature ‘itself” (us) wants and increasingly reflective of the higher aspirations of a more integrated collective consciousness. Since humans everywhere want very similar things – prosperity, happiness, health, safety, and higher consciousness – it will mean that as human consciousness evolves our needs will be more refined.

The goods and services purchased by people with stressed-out, unfulfilled minds – and likely the largest consumers of tobacco, gambling products, etc. – will be be very different from individuals who enjoy higher consciousness and fulfilled minds. As an example, the latter may well be greater consumers of ‘green’ products, educational services, etc. In addition, a fully-developed mind will have the ability, creativity, and capacity to much more easily fulfill desires.

Unevolved consciousness and its headlong pursuit of Gross Domestic Product (GDP), debt, and other sins
The maddening preoccupation with GDP today is typical of the stressed, unfulfilled, unenlightened mind. Without the experience of the profundity of the peace and bliss that characterizes the enlightened mind, individuals believe their desires and happiness can only be fulfilled in the material world. For such individuals, they are as if lost in a fog containing fleeting worldly pleasures. Driven like a drug addict they borrow (as mentioned earlier) far beyond their means to keep spending. Last year (2007), according to Stephen Roach of Morgan Stanley, consumption in the US was at an all time high of 72% of GDP. This is significantly beyond the range of other developed countries. It leaves a legacy of extraordinarily bloated trade and current account deficits and total credit market debt of over 350% of GDP.

There has never been a time in US history, nor in any modern developed country, where debt has grown to such a staggering proportion of its economy. The vast majority of Americans are unable to appreciate the formidable challenge this poses to its economic viability. (And, unfortunately, the prescription being advanced by economic elites and most of the American presidential hopefuls to heal this wound in US society is – more spending and debt!)

Consciousness is the missing ingredient to advancing economic understanding
No, the only way out for Americans to avoid an extraordinary economic decline in the years ahead is for them to experience that field of inner peace and intelligence within their own consciousness. It will create greater balance and creativity in their minds and eliminate their ‘drug dependent’ like attachment to the fog of only desiring material wants.

Thus the missing ingredient — the introduction of the role of consciousness (and the knowledge of natural law) — is what will bring fulfillment to economics, both in America and around the world. Enlightened Economics and its incorporation of consciousness will bring a new light to the dismal science.


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