Measuring Real Wealth: Beyond GDP by Riane Eisler

The U.S. Commerce Department recently announced a growth in Gross Domestic Product of 5.7 % for the last quarter of 2009 — the fastest growth in six years. This sounds like great news. But it's only a small part of the economic story, which is why GDP is so misleading.

Besides the fact that GDP doesn't measure unemployment or other dire realities facing businesses, workers, and families in the U.S. today, GDP fails to measure what really counts. It tells us nothing about the degree to which a nation invests in its real wealth: people and nature.

Investing in what economists call "high-quality human capital" is essential as we shift to the post-industrial knowledge/service economy. Yet here are some statistics, from even before the "Great Recession," showing how the U.S. has actually been neglecting its most important resource: its people, starting in childhood.

• Infant mortality: The United States ranks 44th, behind every industrialized nation, and behind much poorer nations, according to the 2008 CIA Fact Book.
• Childhood Development: The Save the Children "report card" comparing 25 wealthy nations on 10 key benchmarks of early childhood development shows that Sweden meets all ten, Finland, Denmark, France, and Norway meet eight, and the United States only meets three.
• Child and overall poverty levels: The U.S. had the highest child poverty rate (21.9%) of industrial nations and the highest overall poverty rate (17.0%) of the 17 OECD countries, according to the International Comparisons chapter of The State of Working America 2004/2005. Finland (5.4%), Norway (6.4%), and Sweden (6.5%) had the lowest overall poverty rates.
• Maternal mortality: The United States ranks 41st according to a UN analysis of 171 countries.

None of this information is shown by GDP, or even by the World Economic Forum's Global Competitiveness index. Nor does GDP reflect whether or not a nation is investing in caring for nature – even in face of mounting environmental threats

Because government and business leaders urgently need more accurate and inclusive economic measures, the Center for Partnership Studies (CPS) has commissioned the Urban Institute in Washington, D.C., to survey the current movement toward measures that go beyond GDP – from the earlier United Nations Development reports and the recent Sarkozy report by noted economists such as Joseph Stiglitz and Amartya Sen to less – publicized environmental, gender, and children’s well-being indicators – and to make specific recommendations.

One of the concerns of CPS is to ensure that new economic indicators are inclusive, and particularly that the majority – women and children – are not again forgotten. This is not only for their sake, but because data about children and women is essential for any accurate assessment of global economic and social conditions. As was recently posted on this blog, "A healthy global economy needs a strong societal foundation and this cannot be achieved without the contributions and participation of 51 percent of the global population."

There is strong evidence of this. Studies (including the CPS "Women, Men, and the Global Quality of Life” report and the World Economic Forum's Global Gender Gap reports) show a strong correlation between a nation’s general quality of life and the status of women. Similarly, Canadian and other studies show that national investment in children, such as in high-quality childhood education, is key to success in the post-industrial economy.

I urge all policy makers and developers of new economic measurements to consider these correlations. Only by taking them into account will business and government leaders have the inclusive and accurate economic indicators they need to develop more effective and humane economic and social policies.

Riane Eisler wrote this post as a guest of The She Change. She is a systems scientist and cultural historian, president of the Center for Partnership Studies, and author of the international bestsellers The Chalice and the Blade and The Real Wealth of Nations.

Working Women

The New York Times today ran a piece about how large Indian financial institutions have increasingly adjusted employment policies to make room at the leadership table for women. You can read the story here.

This reminds me of a report CBS did last fall when they interviewed the Vice Chair of our Board, Jacki Zehner, about research she recently collaborated on showing the difference between women's leadership and men's leadership. There is a difference and part of creating space for women in leadership positions is acknowledging the unique perspectives and talents women bring to the table. You can read more about Jacki's work and the CBS report on her blog, Purse Pundit, which you should definitely bookmark.

Anyways, the New York Times story, when read together with the report about Jacki, adds a nice context to the blog posting below about all the talk in Davos this week.

Regarding the photo choice, I cannot help but think about Melanie Griffith's role in "Working Girl" back in the '80s. Putting aside the seriousness for a moment, I think she rocked it. She also did a good job representing real women in "Cherry 2000," another '80s KlassiK.

Open Letter to the World Economic Forum: Women Key to Long-Term Growth

This week, world leaders and the world's largest corporations will be gathering at the World Economic Forum in Davos, Switzerland, to discuss, in the words of the summit's theme, how to "Rethink, Redesign and Rebuild" the global economy. It is our hope leaders take time to consider that women - more than half the population - contribute to global economic stability and security and must be fully integrated into any recovery plans.

As a growing number of thought leaders and world bodies - including corporate initiatives like Goldman Sachs' $100 million investment in training 10,000 women business leaders -herald the pivotal and transformative role of women and girls to enrich societies everywhere, we must adopt strategies to achieve gender equality not only because it's just and moral but because without it, no country will achieve solid prosperity. According to a recent study by Boston Consulting Group, women workers will be driving the post-recession world economy, representing a massive emerging market more than twice the size of India and China combined. The World Economic Forum's own Global Gender Gap report shows when countries decrease the gender gap they increase development.

However, the most recent report also describes "significant" gaps in job opportunities for and wages paid to women as well as continuing inequality in women's political participation. A report in The Economist earlier this month echoed these findings:
"Only 2% of the bosses of Fortune 500 companies and five of those in the FTSE 100 stockmarket index are women. Women make up less than 13% of board members in America."
In this same environment, the U.S. government last fall released data showed the number of women in the workforce is on the verge of surpassing men for the first time, albeit women still earn an average of 78 cents to every dollar a man earns. Increasing women's participation alone will not fix the economy, as the U.S. can attest.

Tapping into the potential of economic growth women hold means providing them a space at the leadership table and creating new solutions and approaches to challenges that keep women and girls from realizing their full potential. Some of this is already taking place through partnerships and discussions between large foundations like Kellogg and Ford, women's funds worldwide, corporations like Ernst & Young and national governments. This year the fifth anniversary annual meeting of the Clinton Global Initiative included discussion of investing in girls and women, with sessions focused on the different ways women strengthen societies and grow economies and the need to eliminate gender inequity. The event sparked enlightened conversations and renewed commitments for cross-sector investment in women and girls, including a $5 million partnership between the World Bank, the Government of Liberia and the Nike Foundation to improve economic opportunities for adolescent girls in post-conflict Liberia by linking skills training to labor demands.

We strongly encourage the delegates at Davos to continue discussions such as these and to make actively solving gender equity a central strategy to create global economic growth. As a pall of uncertainty hangs over the start of 2010 - continuing global terrorism, climate problems, continuing job losses, ongoing wars - there should be one sure strategy world leaders, corporations and global citizens alike should agree on: investing meaningfully in women and girls.

In the past there have been missteps in actions by all sectors that have led to women being relegated to the sidelines of major efforts to create growth. A healthy global economy needs a strong societal foundation and this cannot be achieved without the contributions and participation of 51 percent of the global population. While most of us can agree on this, the next step is to make bold financial commitments that will create a noticeable difference in the future. Let's get to work!