It is around 50 years since Simon Kuznets and Robert Kennedy were critical of GDP as a meaningful measure of socio-economic performance. This series of slides is a brief presentation about the problems with GDP. Some of these issues are addressed by the MDIA system. Tags:

1. 02:26 PM
peterbnyc@gmail.com
www.truevaluemetrics.org
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
GDP
A Wrong Measure
of Performance
@truevaluemetric

2. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
GDP was introduced as a proxy measure for
economic activity in the 1930s. GDP as a
proxy for improved quality of life and standard
of living in may have been realistic in a world
where labor was a critical constraint … but
that ended somewhere around the 1970s.
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

3. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
GDP was introduced as a proxy measure for
economic activity in the 1930s. GDP as a
proxy for improved quality of life and standard
of living in may have been realistic in a world
where labor was a critical constraint … but
that ended somewhere around the 1970s.
GDP growth is even worse as a measure of
socio-economic performance.
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

4. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
GDP was introduced as a proxy measure for
economic activity in the 1930s. GDP as a
proxy for improved quality of life and standard
of living in may have been realistic in a world
where labor was a critical constraint … but
that ended somewhere around the 1970s.
GDP growth is even worse as a measure of
socio-economic performance.
Simon Kuznets (1901-1985) helped develop the
system of economic measurement that is GDP
In the late 1940s, however, he broke with the US Commerce Department
over its refusal to use GNP as a measure of economic well-being. He
had wanted the department to measure the value of unpaid housework
because this is an important component of production. The department
refused, and still does.
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

5. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
Robert Kennedy made a speech at the University
of Kansas in March 1968 in which he highlighted
issues with GDP. Here is a quote:
'Too much and too long, we seem to have surrendered community
excellence and community values in the mere accumulation of
material things. Our gross national product … if we should judge
America by that – counts air pollution and cigarette advertising,
and ambulances to clear our highways of carnage. It counts special
locks for our doors and the jails for those who break them.(…)
Yet the gross national product does not allow for the health of our
children, the quality of their education, or the joy of their play. 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. It 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 tells us everything about America
except why we are proud that we are Americans.'
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

6. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
These are better metrics:
GPI … Genuine Progress Indicator
GNH … Gross National Happiness
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

7. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
These are better metrics:
GPI … Genuine Progress Indicator
GNH … Gross National Happiness
MDIA is a better metric … but it is different
from GDP and these indicators.
These are macro indicators, while MDIA is
a management type metric.
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

8. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
GPI … Genuine Progress Indicator
+ Personal consumption weighted by income distribution index
+ Value of household work and parenting
+ Value of higher education
+ Value of volunteer work
+ Services of consumer durables
+ Services of highways and streets
- Cost of crime
- Loss of leisure time
- Cost of unemployment
- Cost of consumer durables
- Cost of commuting
- Cost of household pollution abatement
- Cost of automobile accidents
- Cost of water pollution
- Cost of air pollution
- Cost of noise pollution
- Loss of wetlands
- Loss of farmland
-/+ Loss of forest area and damage from logging roads
- Depletion of nonrenewable energy resources
- Carbon dioxide emissions damage
- Cost of ozone depletion
+/- Net capital investment
+/- Net foreign borrowing
= GPI
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

9. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
GNH … Gross National Happiness
The term "gross national happiness" was coined in
1972 by Bhutan's King, Jigme Singye Wangchuck.
About 40 countries have embraced the idea, but it
remains too subjective for universal use.
GDP is a wrong measure of performance
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp

10. 02:26 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
May 2014
QUESTIONS? FEEDBACK?
peterbnyc@gmail.com
www.truevaluemetrics.org
@truevaluemetric
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-GDP-is-wrong-measure-of-performance-140517.odp