Who decides what’s “genuine progress”

by Robert Maynard

On Wednesday and Thursday of this week the House Commerce and Economic Development Committee held hearings on S.237, An act relating to the Genuine Progress Indicator, introduced by Senators Anthony Pollina (D-Washington), Dick McCormack (D-Windsor) and Jeanette White (D-Windham), arguably some of the most far left members of the legislature. As passed the senate, the bill proposes to:

1) require a genuine progress indicator committee to develop an economic indicator, to be named “the genuine progress indicator,” to replace the gross domestic product as a measure of Vermont’s economic health; and 2) require the governor to use the genuine progress indicator developed by the committee as a factor in preparing the state budget.

According to testimony from Senator Anthony Pollina (D-Washington) and Jon Erickson, Managing Director of the Gund Institute for Ecological Economics, the bill will be amended to “supplement” rather than “replace” the “gross domestic product” as a measurement and the Governor would not be “required” to use the indicator in preparing his budget.

During the hearing, committee members raised the question of who would decide the parameters of the index and make changes to them over time. The representative of the Gund Institute answered that the indicator would be created by a committee working with the Institute composed of sixteen members, mostly secretaries and commissioners of various departments or their designees, plus a representative designated by the Gund Institute for Ecological Economics of the University of Vermont, and a representative designated by the Vermont Community Foundation. The setup would follow a model of the Maryland project known as “Smart, Green and Growing,” which the Gund Institute had a hand in developing.

However, the intention here is to make the Vermont model even more comprehensive than the one in Maryland. The twenty-nine parameters listed in the bill as factors in creating the Vermont indicator encompass everything from a livable wage to income distribution to leisure time to household pollution abatement, loss of farmland, wetlands, ozone depletion, non-renewable resources… etc.

The central argument put forward for using this approach that both Senator Pollina and the representative from the Gund Institute gave was that the traditional gross state product was only a quantitative measurement. The intent behind the GPI approach is to make qualitative measurements so that policy reflects our values. Herein lies the problem. Such “qualitative” measurements are necessarily subject and more likely to reflect the values of those who create the index rather than the people as a whole. A close look at the website for the Maryland project, the Gund Institute’s own website, as well as the public statements of support from groups like the Vermont Workers Center surrounding the introduction of S.237, indicates an ideological slant in favor of an overreaching government. This is true not only in factors that are not included, but the spin on those that are.

Each year groups like the Heritage Foundation and the Cato Institute put out indexes on economic freedom where the nations of the world are rated according to the degree of economic freedom. Here in Vermont, the Ethan Allen Institute puts out policy work that differs greatly in its basic perspective from those who have been tasked to create this indicator. I can easily imagine a “genuine progress indicator” that would look a lot different if it was created by the Cato Institute or even the Ethan Allen Institute. Those of us who value individual liberty, independence and opportunity may prefer the product of such groups as opposed to the ones who have been tasked to create the proposed GPI.

There is a reason why measurements like gross domestic product are more prominent. They are far more objective indicators that make it harder for those doing the measuring to impose their subjective value judgments on the public as whole. Qualitative measurements are important, but it matters greatly who is doing the measuring. The representative from the Gund Institute correctly pointed out that the data which would go into such an indicator is already out there, it is just a matter of collecting it and analyzing it. I would suggest that we leave it that way and let different groups representing various ideological perspectives create their own indicators and make the case for state policy reflecting their work. It is highly unwise to give a monopoly on creating an indicator guiding public policy to a single ideological perspective.

One thought on “Who decides what’s “genuine progress”

  1. The report here begins to go astray with “herein lies the problem.” I too am at the Gund Institute and am involved in this work and would like to clarify a few points.

    Use of the GDP as our overarching indicator is not “value neutral.” GDP measures the sum total of commercial transactions in the economy–the commotion of money–nothing more. Relying on it as a measure of progress or well-being is in effect a value judgment, one that says “maximizing commercial transactions is more important than anything else–a clean environment, good schools, livable wages, healthy people in healthy communities.”

    The old argument is that maximizing GDP serves all of those ends, so there’s no need to measure progress toward them separately. But as more and more of us are coming to recognize, there is no longer a good connection between making the money go around faster and improving our collective well-being. Our well-being relies on quite a bit that money can’t buy: good neighbors, strong families, strong communities, a healthy environment that can sustainably deliver clean air, clean water, and the whole range of resources that we rely on.

    If the point of commercial transactions is to have commercial transactions, then GDP is a fine measure of progress. If the point of commercial transactions is to improve the quality of our lives–our sustainable well-being–then it’s short-sighted, even foolish, to measure anything other than this ultimate goal.

    Any good measure of the standard of living Vermonters enjoy will look at many different metrics, and those indicators will reflect Vermonters’ values. Yes, interest groups and ideologues have different opinions about what the values of Vermonters are or should be. This is why a comprehensive indicator set needs to be based not on what ideologues say, but on solid, quantified data–including data about what Vermonters say they value, and including what Vermonters say about the levels of life-satisfaction and well-being they’ve achieved.

    Valuation is an inherent part of gauging progress and development; it can’t be avoided. The best way to determine those values is to do it democratically– one person, one say.

    To argue “well, the commotion of money is the only relevant thing that can be measured objectively, so that’s the best indicator of well-being” seems to avoid valuation (it doesn’t, as I pointed out above), and is wrong in a couple of other ways. The dollar value of commercial transactions is not the only relevant thing that can be measured objectively. And even if it were, that’s not a good reason to ignore the other elements of well-being in favor of reliance on it. If you need to get to Boston, but the route is a little sketchy, the fact that you know how to drive to New York isn’t a good reason to drive there instead. If you need to get to Boston, you’ve got to go to Boston, even if there’s disagreement about where, exactly, Boston is or what the best way of getting there is.

    An integrated indicator set that is built on and reflects Vermonters’ values will make it easier to assess the performance of governmental programs that are intended to secure the things Vermonters value. It will allow us to compare the costs of policies and programs to their production of effect. This is bottom-line thinking: “show me the bang I got for my buck.” This is the kind of cost-benefit analysis that companies have to do to stay competitive. Why should we not implement the same thinking for government? Doing so would help Vermonters get more value per tax dollar spent. An effective and efficient government is a smaller government; this is why alternative indicators have gained broad, bi-partisan support.

    Any indicator set will still leave plenty of room for political wrangling over how much or how little to spend; and it won’t set priorities, because there will still be plenty of room for wrangling (and for expression of ideological belief) about what measures are corollated with each other and which ones are antagonistic. By collating information that is (mostly) currently available, it will show Vermonters what “sustainable well-being” currently means to them, and it will show where this valued goal is secure and where it isn’t. What is done with that information politically is up to Vermonters themselves.

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