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Economists do like counting stuff – consumption, investment, debt, credit, wages, profits, exports, imports, and so on. As long as the items counted fall within the categories decreed as the right ones to count, they will fall within the national (or State) accounts, and accumulate under the broad rubric of Gross Domestic Product (GDP) or Gross National Product (GNP). It matters little whether the activity or products counted include socially or environmentally harmful or destructive activities. It all counts. It all fits within the famed 'economic growth.' In Australia, we use GDP in conformity with international standards on national accounts. It's an administrative convention.

It's a crude measure and in certain jurisdictions legislators have cottoned on to that fact. So, for instance, the US States of Vermont and Maryland have passed measures to require development or use of alternative ways of measuring economic activity, and these focus on environmental, social and economic well-being indicators. This system of alternative economic measurement is called the 'Genuine Progress Indicator.'

Vermont has passed legislation to require development of measure of economic, enviornmental and social well-being to 'supplement … gross state product and other existing statistical measurements'.  These are crucial 'adjustments' to the ordinary system of accounts. They take into account the costs of things like income inequality, pollution, the costs of climate change, the costs of biodiversity loss, and depletion of non-renewable resources. So this scheme is not just about counting everything that is transacted but how those transactions impact on people. The GPI is intended as a parallel measure to inform budgetary decision-making.

On these figures, since 1980, Vermont's GPI has grown well above the US national average, especially because of that State's strong environmental record and performance.

Given the wrecking ball of our most recent Federal budget, moving toward GPI-framed decision-making might be a good move in Australia too.

Image: Yarra River Wonga Park by Melbournian