Talking Points by
Global furturist, author and Partner,
Calvert-Henderson Quality of Life Indicators
Calvert Group Press Briefing
National Press Club
May 14, 2002
- The mega issues of economic and technological globalization are now a focus of policy debates in the USA and most other countries. These globalization processes are accelerating changes in geo-political alignments; social and industrial re-structuring and in our life-supporting eco-systems, locally and globally.
- It is now clear, especially since 9/11, that current globalization processes bring both good and bad news. Along with increased trade, spreading democracy, inter-cultural communication and new economic opportunities, we humans have also globalized crime, terrorism, money laundering, drugs and arms trading, prostitution, child labor and ecological degradation.
- To me the issues concern how to optimize and spread the benefits of globalization to reach the 2 billion members of the human family still living in deprivation, ill health, ignorance and despair.
- This means globalizing human rights, social justice, opportunities for human development and a new Earth ethics, as symbolized by the 16 principles of The Earth Charter at www.earthcharter.org, which is widely viewed by international lawyers as the companion “peoples treaty” to the Universal Declaration of Human Rights.
- All this has led to vigorous debates within and outside the economics profession about the fundamental processes of human development, national progress and the nature of “wealth” itself. Clearly, the traditional scorecards of “progress”, Gross National Product (GNP) and its narrower version, Gross Domestic Product (GDP) no longer adequately measure aspects of society and quality of life that lie beyond purely economic and money measurements. My own view is summarized in Figure 1.
- The “Washington Consensus” model of economic development is now under serious question from insiders at the IMF and World Bank no less than by hundreds of scientists from other disciplines (from thermodynamics and ecology to psychology, game theory and anthropology), as well as by the suffering citizens of Argentina and the former “tiger” economies of Southeast Asia.
- Clearly, broader scorecards of “wealth” and “progress” are needed and now available. Pre-eminent is the Human Development Index (HDI), pioneered by the United Nations Development Program annually since 1990, which was developed by two of my esteemed colleagues, the late Mahbub ul Haq and the very much alive Dr. Inge Kaul, editor of the groundbreaking Global Public Goods (Oxford University Press, 1999). The HDI covers poverty gaps, relative budget priorities between military spending and education, health, gender, environment and other aspects of government performance in over 180 countries. The World Bank’s Wealth Index (1995) added to the debate about “development” by assessing 60% of national wealth as “human capital,” 20% as “environmental capital” and only 20% as the “capital” traditionally measured by economists (plant, equipment, infrastructure and financial assets).
- This quiet revolution in theories and assumptions about development has yet to hit the mainstream. But the revelations stemming from the Enron and Arthur Andersen scandals and the recent charges leveled at Wall Street and accounting firms have now opened up the entire issue of how we measure not only national wealth and progress, but also the assets, revenues, profits and debts of corporations. For example, measuring knowledge assets and other important intangibles are key – but contentious. At least, we recognize “trust” as a bedrock of markets – even if we can’t measure it.
- In this new global context of re-engineering our models of development, progress, wealth, profits and debt – all our statistical tools and the assumptions behind them are under new and necessary scrutiny. From assumptions underlying GNP, GDP, the Consumer Price Index (CPI) unemployment and all the rest of the macro-statistics we faithfully report each quarter – to the new models of corporate “triple bottom line” performance pioneered 25 years ago by my partner, The Calvert Group – the statistical and accounting revolution is well underway.
- The Calvert-Henderson Quality of Life Indicators are Calvert’s and my pro bono contribution to this re-assessment of national “wealth” and “progress” – beyond the macro-economic view and GNP measurements. Calvert and I have developed our Quality of Life Indicators over the past several years as a new tool for assessing national trends. My two closest collaborators in the project have been Jon Lickerman, Calvert’s Director of Social Research from 1992 to 2001, and now Chair of our Quality of Life Indicators Advisory Board, and Patrice Flynn, who directs our research and is CEO of Flynn Research, which manages our Calvert-Henderson.com website.
Jon Lickerman and Patrice Flynn were my co-editors of our technical manual, released to the professional economics and statistical community in 2000. As you see from the handouts, we have received many favorable reviews of our systems approach to Quality of Life from our presentations in many countries: Canada, Brazil, Chile, Venezuela and Mexico; EU members, Britain, Germany, France, the Netherlands, Sweden and Denmark; the Czech Republic, Poland; also Japan, China, Korea, Taiwan, India, Malaysia, Australia and New Zealand.
- Why have our Calvert-Henderson Quality of Life Indicators for the US struck such a chord in so many municipalities, as well as worldwide? The answer lies in the changing debate about development and how to measure human progress. During the US boom years of the late 1990s, many countries were challenged, even shamed by constantly rising economic indicators in the US. They endured patronizing advice by US economists and officials about following the US model, deregulating their markets, opening their capital accounts, increasing exports, floating their currencies and generally following the “one size fits all” model of the Washington Consensus.
- The dangers of unregulated global $1.5 trillion daily currency trading were exposed after the Asian crises of 1997 and the “contagion” that followed – where millions were plunged back into poverty. I predicted in the 1980s that taking down all the “firewalls” between the world’s economies would lead to excessive and volatile financial flows.
- In 2000 after our Calvert-Henderson technical manual was released to the professional community, the US stock markets peaked, the “tech bubble” burst and the US slid into recession in March 2001. As our global professional colleagues sought to understand what had happened to the much-vaunted US “New Economy,” our Quality of Life Indicators gave them a broader view of trends in the USA-beyond the GDP and macro-economic statistics. This new questioning was exemplified during my presentation to the 1000 delegates at the Parliament of Latin America in July 2001.
- Our 12 Indicators of Quality of Life in the USA: Education, Employment, Energy, Environment, Health, Human Rights, Infrastructure, Income, National Security, Public Safety, Re-creation and Shelter gave them the rest of the story. Many of our multi-disciplinary statistics probed deeper : from the crises in US health care (with over 40 million people without insurance); the misaligned military and defense priorities that warned of new vulnerabilities including terrorism; the dis-investment in public infrastructure; the continuing lag in energy efficiency vis-à-vis Europe and Japan and consequent vulnerability to rising oil prices or production cuts.
- Some Indicators such as Shelter told a happier story of unprecedented home-ownership of over 67%. Re-creation showed a still booming services sector of our economy – exemplified in the astonishing statistics on all the ways US citizens use their recreation opportunities. (This Indicator provided evidence for the rise of what I identified as The Attention Economy (Building a Win-Win World, Chapter 5 1996), where time and human attention became as valuable as money – a new limiting factor in consumption of goods and a key to the shift towards experience and services.
- Our Calvert-Henderson.com website is where our 12 Indicators are regularly updated, along with my quarterly Perspective on Quality of Life Indicators. As I mentioned, we use many statistics – beyond economic and monetary measures – and do not attempt to weight or aggregate these statistical “apples and oranges” into a meaningless “sound bite” number – however media-friendly and demanded such numbers may be!
- Instead, all our Indicators are related to each other in this pioneering systems approach. Strong and weak interactions between Indicators are noted and also expressed symbolically in our pinwheel logo. We urge you to explore these 12 Indicators as you report stories on any of these interlinked areas of our society. They highlight statistical “blind spots” and changing assumptions as our economy continues its transition from goods to services.
- I will end by drawing your attention to our Energy Indicator since energy issues will continue to top both our domestic and international policy agendas for the foreseeable future. Our Energy expert is one of the most-highly regarded in the world, Dr. Skip Laitner, who helped pioneer measures of the energy-efficiency of economies. His current data is on our website, as well as his groundbreaking analysis of US energy trends. Lastly, there are copies of the technical manual available, as well as other handouts on the Calvert-Henderson Indicators and copies of two of my most recent books. And, please visit our website calvert-henderson.com!
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Hazel Henderson’s latest books are Building a Win-Win World (1996) and Beyond Globalization (1999). She can be reached at www.hazelhenderson.com.