Green Party Leader Elizabeth May wants the government to say how happy we are. I’ll pass. But her private member’s Bill C-436 – the Canada Genuine Progress Measurement Act – is at least an interesting mistake, more than a lot of politicians ever manage.
For instance, she starts by being right that GDP is not a very useful measure of well-being. It’s a Keynesian kluge intended to measure national income, that is, the size of the economy, and can be calculated three ways that should all be equal: by adding up what everyone sells, what everyone spends or what everyone earns in a country.
Keynesians weren’t trying to measure happiness. They were worried about unemployment and thought government could create jobs by increasing spending, so they measured spending. Also, like the drunk who dropped his key by the door but looks for it under the lamppost because the light is better, Keynesians measured spending because they could. Mathematical economists say: "If it matters, measure it", but too often the real methodology is: "if it measures, matter it."
May is less right to say GDP does not measure happiness because commercial sales are not the purpose of life. If you think commerce doesn’t promote prosperity, spend a week in North Korea eating grass. And the notion that prosperity doesn’t matter – that GDP in particular and commerce generally favours door locks over art – is foolishness.
Suppose you reject the rat race and become a painter. You’re going to look silly without canvas, paint or brushes (unless you’re a modern ‘conceptual’ artist, in which case you’re going to look silly regardless). And you’re going to want a steady supply of good paint: the right colour, right consistency, and sticks to canvas. And a lock on your door so no one swipes your paint and hocks it to buy drugs. Likewise, a poet doesn’t want his audience dying of starvation during a performance unless he’s into Dada or something.
Still, GDP has two very real problems as a measure of wealth. First, commercial transactions are just one way of getting things. If you stop buying tomatoes and start growing them, GDP goes down. Or you work from home using e-mail, buy less gas and paper, and GDP goes down but wealth increases because you get more done, avoid cubicles, and play more with your kids.
Second, GDP treats the sale price as the "value" of a transaction to those concerned. But it’s not. It’s the price at which the last buyer and seller consider it just worth the hassle of making the exchange. That matters in the market, but not to overall well-being.
A cold beer costs the same whether you just played Frisbee football in 30-degree weather or let buddies talk you into one too many and went home drunk to an angry wife. GDP entirely fails to measure the difference in satisfaction.
So how would I measure it? I wouldn’t. I’m not some mathematics freak who needs a number on everything or it doesn’t exist. But May is. And that’s her most interesting mistake because it shows how thoroughly our culture is dominated by the Enlightenment fantasy that mathematics is the language in which all truth is written.
Thus she’s doubly wrong to complain that GDP doesn’t count harm to the environment. It would if secure property rights in air and water made polluters pay full price for their damage. But even then, the underlying obsession with mathematics would be misplaced.
Consider a woman offered the "going rate" for a grove of trees by loggers, firewood sellers or a Christmas tree company. If she says "No" it means she values them more than the market does. How much more? There’s no way of putting a number on it. But why do you have to? All you need to do is protect her right to value the trees deeply.
Instead, May wants the chief statistician and commissioner of the environment and sustainable development "to develop a set of indicators to measure the real health and well-being of people, communities and ecosystems in Canada" that Parliament can study.
In short, she wants the government pricing sunsets.