A G, A D in a P three letters quite a lot of impact, formally standing for gross domestic product the sum value, and will get back to that word value in a second of all goods and services produced in an economy, usually a nation state like the US, Great Britain, China, and so on. It's been the yardstick by which we've measured what a country's economic output basically is ever since World War Two, and perhaps just a little before that. Our guest will give us a history lesson momentarily, but does it really deserve its pedestal Well not, According to our guest, it might as well stand for gross dumb product or grossest dumb product, responsible for all manner of sins, ranging from the pillaging of a South Pacific island paradise to an instrument of oppression used by austerity craven Northern Europeans to hammer poor, innocent little grease. This is Bloombook benchmark. I'm Daniel Moss, executive editor for Global Economics in New York, and I'm Scott Landman and Economics editor with Bloomberg in Washington. Today. Lorenzo Fiora Monty, a professor at the University of Pretoria in South Africa is joining us. He's the author of the World After g d P and before that, Gross Domestic Problem. He's calling for more than just taking down g d P. In the process, he's offering a revolution, not just in economics, but in how we determine our happiness or place in life, the universe and all that stuff. So Lorenzo, welcome to Benchmark. It's a pleasure to be with you. Now. You're not actually in South Africa right now? Where are you? And what are you doing on Skype? I am connecting from Italy. Were unpromoting the Italian edition of Gross Domestic Problem when my first book published in English in and I'll be soon traveling across Europe to promote the new book, The World After a GDP, which you have just mentioned. And does your travel budget include lots of austerity? My troubled budget includes a lot of meetings and meeting people and talking to communities, talking to students at universities, talking to small businesses and so on and so forth. I don't think that's austerity. That's actually a lot of flunt, although it may not necessarily reflecting our GDP accounts well. Federal Reserve Chair Janet Yellen this month called GDP a noisy number, But your concerns go way beyond that. What is it that bothers you most well? GDP has become much more than a statistic. It's become the benchmark of success across the world for economies, for companies, for societies at large. And I wouldn't be too bothered if it was just a noisy number. What bothers me is the fact that it's a system of perverse incentives. It's it's become basically a guideline for policymaking, and that's very problematic because their politicians will take certain decisions because they increase GDP and they want to be you know, you know, like graded on their GDP credentials and economic growth, and there's going to be a skate effect, as we have seen in the past, you know, eighty years across society, everybody's playing a game to increase GDP and economic growth as a result, even though when those decisions are very detrimental to society. I was teasing you about the austerity on your travel budget, but you make a serious point in your book, which is that GDP and projections of GDP can be used as a political bludgeon in policy debates. Absolutely. I mean, like, you know, I want to make this point very strong. If GDP was just a flowed number or imperfect number, I wouldn't have written two books about it. I believe it's basically a skeleton of what soci I T really wants to achieve. And in a sense, you know, like it creates those incentives and rewards that you know, make people take the wrong decisions. And this is happening every day. I mean, governments around the world try whatever they can to increase GDP because this has a positive effect in terms of public image and probably may increase foreign direct investments, and it pleases the World Bank and the IMP and all of that, or the European Union if you're in Europe, even though these decisions may lead to cutting social welfare, may lead to destroying the environment and and creating social inequality, all the things that we prepared to care about when we talk about sustainable and equitable developments and the SDGs. So basically we are in this schizophrenic situation in which we follow certain rules to please the GDP ideology, but at the same time we seem to recognize that those decisions are wrong and we should do differently, and yet we can't because when we try to do differently, we get punished. So you mentioned Greece. I mean, I don't think the Greek you know, the Greek population is completely you know, like unguilty for for what they've done. They're not completely irresponsible for that, but at the same time, punishing the society because it has decided to develop itself in a different way. It's also a short sighted because that is part of you know, like a bigger process of creating creating economic interactions and by doing that, so you are destroying the future of Europe. And Greece is just the first step in a long in a long journey. Now let's go back in time for a second, take a step back. It's hard to believe in today's world, but there once was a time when there was when there was no such thing as GDP. Just under a hundred years ago. It actually grew out of the need to measure the U S economy during the Great Depression, even helped the United States calibrate economic policy to win World War Two. And now we're at a time when it's become a scorecard of economies against each other, a quarterly uh yardstick of how each economy is doing, a measure of a country's public image. As you just said, how did we get to this point from its origins? Well, initially, as you said, GDP was invented as an attempt as an attempt to deal with the Great Depression. Right at the time, government didn't really have any way, any reliable measurement of economic transactions in the market, and people were not being as as excited about economic transactions anymore. So they needed a bit of a thermometer, and they came up with the best they could get. Right. The team that invented GDP was not completely satisfied by what they had done, but they thought, you know, this is probably the best tool we can put together at this point in time, and and that's how it started. It's a sum of market transactions, and I think it was pretty okay at the time in which the government really wanted. All they wanted was to basically reactivate flows of money in the economy. But you know very well that what is good in a time of crisis may not necessarily be good in a time of you know, normalcy and normal economic activities. Just like you wouldn't give a patient was healthy medicines necessarily, medicines may be good if you're sick, but not if you're healthy. They can make you sick if you're healthy in many different ways. And you know, it was then used as a tool to plan the Second World War, once again not necessarily a time of economic normality. Um So it may be very useful to measure production regardless of its utility, because you're building bombs and aircrafts and tags, and all you need to know is how many you can build. The more you can build, the better. But this is very different in normal times, you know, normal times. You want to make sure that you distinguish between the quantity of transactions and the quality of transductions. Noble transactions are actually strengthening our economies. If I get sick, GDP goes up because I have to use medicines and I have to go to the hospital and somebody has to be paid to look after me. But if I stay healthy, GDP doesn't go up. So in a sense, if we want GDP to grow, our policies have to be designed to make people sick. And if I get stuck in a traffic if I'm involved in a car accidents, if I get killed. All these transactions increase GDP create economic growth, but they did not necessarily contribute positively to our economic performance. The problem is that, interestingly, ever since the nineteen seventies, the late nineteen time and seventies, we have done the study the studies in the book as well, we showed that the so called negative transactions that are counting the GDP far way the positive transactions. So most of the growth of the nineteen eighties and the nineteen nineties was due basically to pharmaceuticals, took accidents, to divorces, to military expenditure, all expenses that GDP counts as positive, but often they are not seen as positive by economists or by citizens at large. So we were celebrating an economic boom when it was in reality and economic disaster. But GDP gave us the wrong information and the policies. The wrong policies were decided upon because of that system of perverse and centers that have mentioned. All right, well, let's go to the South Pacific and the island nation of Naru. You begin your book there almost as a kind of morality tale. Now you even link GDP to the island sinking literally prospects of survival as well as diabetes, drought, and a bunch of other bad things. Talk about Nauru and why you think this illustrates your point? Most authors started books with celebrating empires and big countries, and I've decided to the opposite, celebrating one of the smallest states in in in our global economic community, and that's the island of Nauru, which is the third smallest states in the world after them, after Monaco and Vatican. So the story of Nara is very important because Nara was in the nineties had the highest GDP per capita in the world. So in many ways, it was the perfect example of what happens when you follow the GDP ideology blindly. So this country invested massively in propping up economic growth by exploiting the minds of phosphates that the country had. It was a very small island but basically had a lot of very good quality buzz bates that was used as part of fertilizers and other agricultural products in many parts of the world, especially in Southeast Asia and the Pacific. Long story short, they basically exploited it to the point of sitting with a huge environmental disaster that has been threatening a cultural production, has been threatening the population. With the money that they collected, because they had some money, most of the money fled to Australia and New Zealand, where it was captured by banks, as it happens often with the vast GDP growth in many so called developing countries, but some of the money stayed in the country. And what happened is that with that cash, the governments decided to listen to many economic advisors and invested in vanity objects, as it happens in many countries, infrastructure that wasn't needed, and in importing a lot of food because the culture locally had been damaged to the point of being useless, importing a lot of food that was very poor quality food. And guess what. From the environmental crisis, they moved on to a health crisis. They became the capital of the global capital of diabetes, with one of the largest the highest levels of obesity in the world, and and and and some of the health conditions related to death. And nowadays it's basically a failed economy of failed states, and the only option left to Nurans is migrating Caustralian needs and to get a better to get a better life. So this is in a nutshell, it's a concentrated metaphor of what seems to be happening to the entire planet. We have decided to embark on a production and consumption process that is ultimately destroying us. But we celebrated as if this was the beacon, the you know, like the the pinnacle of civilization. Because GDP tells us that this is what development is all about, and it's giving us the wrong information it should go. We should be you know, like doing deffe. We should be doing differently. We should be distinguishing between transactions that we want, transactions we don't want, production that is useful, production that is not useful, consumption that is useful, and consumption that consumption that is not useful. And GDP doesn't do that, and by not doing that, it gives us a very very plot piece of information which then imformed policy and say, you know, like has you know impacts across society. Well, let's go to South Africa where you spend most of your working year. Now after immediately after the transition to democracy in the early nineties, there was a surge in say, for example, foreign investment GDP looked pretty good, but still huge sways of the population had their aspirations un met. Now has that influenced you're thinking as well terms of our GDP um curves or GDP trands SI so worth. After the end of apart type, there was a sense that the country could have embarked on a social justice program. The idea was about that time had come for a distribution of wealth because of apartheide, because of the enormous inequality of the country had experienced. None of that happened. You know why, because the government was told that the best way um to deal with such inequality wasn't about redistributing resources and promoting social offer. It was about growing. It was about embarking on a mass you know, a mass scale economic growth, accelerated growth that would have increased the pie. Everybody would have enjoyed a bigger share, and everybody would have been happy. Now, not only didn't it happen, it didn't happen at all. I mean like, we had significant growth, but most of the growth was captured by those that control the economic leverages. So the rich became richer in many cases, and many poor people may have become slightly less poor, but still significantly worse off than than than the elite. And at the same time, you know, the series interventions in in in adjusting those economic differentials were not We're not taken. In example, for many years the country delayed intervening in the HIV eighth pandemic, and the reason was that rather than spending money on healthcare in people's well being, that should have spent money in infrastructure and developments, because that would have then created all the positive uh IN effects that would have done propped up the economy and improved even the life of those living with HIV NAS. It was crazy. People were done only when in two dozen and four, two dozen and five the country decided to really intervene in social weapon because it was too much. We experienced a significant decrease in mortality rates, HIV AIDS infections went down dramatically. And guess what This happened at a time in which we had half the GDP growth of the previous decame. So this tells you that politicians that follow the GDP vision can take very wrong, the extremely wrong decisions when it comes to the welfare of There are people Lorenzo. Is that happening right now in the United States? We have a president here who has pledged to achieve four percent GDP growth, which is roughly double the pace that we've seen in recent years. Is the US headed for this kind of uh, these kind of difficulties if the Trump administration really pursues that kind of goal as hard as as maybe they're indicating, well, I think that, I think that there's a serious um level of confusion in the United States at the moment. I mean, like, in many ways, a lot of people are rightly upset at at least three decades of economic policies in the US that promoted UM, a kind of economic developments that increased inequality, that made the working class works off UM, that used glibalization to put a lot of people out of work UM and create kind of gaps. That's in many ways explained why somebody like Donald Trump, with an agenda of change, so to speak, won the elections. Now. What is being proposed, however, as a solution, is more of the same rutter than trying to tackle the inequalities, the suffering, and the low level of well being that many Americans experience. I mean, I still find it striking that America is number one in terms of GDP and in terms of all the things that really matter health, literacy, education, life expectancy, and so on and so forth. It's way beyond many countries that are much poorer in GDP terms. So I think America is a very very good case, Laurens. There have been countless attempts in recent years by various commissions and bodies and so forth to create other kinds of indexes of a country's well being. Uh. You know, many people have pointed out the problems in per actions with focusing on GDP as the end all be all of economic indicators. We can talk about this all we want. Is there any real chance of anything changing? Or are we just all tilting at windmills here? I think we're wasting our time with all these commissions. I think it's important to open the debate. That's what my book is supposed to do, to open the debate and have a public debate, and only a debate among experts. Um, we do already have tools that helped a great deal. As I said, if we were to use something as simple as the gen in Progress Indicator, which is nothing else, the GDP, but distinguishing the bat and the good transactions, and and that would be really useful because you would tell the government what are investing in certain areas makes sense. For instance, with with this kind of accounting, it's clear that many industries are not really producing anything valuable for society because the the negative impacts outweigh the gains of these companies. And this includes the fossil fuel industry, that the coal industry, mining and large, the distribution of food and so on and so forth. And I think in the US some states Maryland, Utah, Verymond have already introduced some of these tools at the local level. Um So there are tools that could be used tomorrow. The problem is that we need the political world to do so. And unless the GDP ideology is unmasked and unveiled as an ideology and people mobilize against this to to to code for a different approach, we're never gonna make significant hardware here. And I think in my book, I show how this could be done. I show the fact that GDP is extremely obsolete to be able to account for an economy which is increasingly digital. I'm calling you by a skype now, and I'm not paying anything, and yet we're having a very useful conversation which is not adding anything to GDP. GDP would have been much happier ten fifteen years ago if I was to call you by the phone, because the coal would have been very expensive, probably very low quality, and yet adding to the national accounts. So every time we use What's up to communicate, every time we use Spacebook to make you know to to to share information and some so forth, the Google maps which are for free, we're not adding to GDP, but actually we're strengthening the economy. Nevertheless, GDP is very anachronistic. It sees money flows as a sign of a good economy, but often money flows may indicate a very very sick of Conmy write it in a good one and I think ultimately my book shows that we could use this opportunity to have national conversations about what it means to be developed. In the twenty percent, GDP is no longer what we want. Then we can decide what we want to gether. And so maybe what's going to be decided by Americans or in a state in the US may be different from what's going to be done next door. So if one country Lorenzo. If one country tried to go it alone, and I don't mean a country like Naro, I mean a sort of a medium sized or even a large sized country said right, we're teaching it, We're gonna do something else. What are the risks if they acted alone? They would be crucified by markets and then forced to retreat. Absolutely, we believed exactly because of the power of GDP and its ideology and because it s used as a policy tool, that would be crucified, It would be punished, which is the reason why we're publicly advocating, as I do in the book, for an alliance of countries to go together. What are in Europe? What are around the world. We have also talked about a in alliance of all being economies will call the we seven countries that have done extremely well at building an alternative way of doing the economy that is beyond GDP. And these countries include New Zealand, Costa Rica, Sweden, very good examples of countries that have achieved high levels of well being with a minor ecological footprint and very low and equality. If these countries were too good together and show to the rest of the world that change is possible that we can do it collectively in collaboration. There would really help the entire world wake up, and they may be a positive ripple effect across society. A country shouldn't do this change on its own because GDP has an extremely significant impact of policy decisions and they may be easily critcified. But going together as an alliance regionally or globally would make a big difference, and it is necessary if we want to achieve the Sustainable Development Goals. We have a twenty thirty Agenda which is being ratified by the u N and unless we change away from GDP, we're never going to get there. Well, look, this conversation could go on for a while, and I can tell you're only just getting started. We'll have to have you back on the show. To Lorenzo, thank you for joining us. It's been a pleasure. So Dan, do you think we're ever going to get to a point where we're not focusing on GDP as our end all, be all economic indicator. As Lorenzo was saying towards the end, it really can't be one or two nations, certainly one or two nations that don't have major economic heft being out from the pack and saying we're going to chot our own course with economat tricks. They really would be killed. It really needs to be wanting all in and that's tough to say. Yeah, you'd really have to have something like the I m F or similar body organizing a global conference where you know they'd actually moved towards UH an agreement on which statistics would would would be highlighted because the IMF actually uses a country's UH production of GDP statistics as a measure of their quality of development as a nation. So in any change to that would obviously be highly political. Something for the next Briton Woods for sure. Alright, Well, Benchmark will be back next week and until then, you can find us on the Bloomberg terminal, Bloomberg dot com, the Bloomberg App, as well as iTunes, pocket cast, Stitcher, or wherever you prefer to find your podcast. While you're there, take a minute to rate and review the show so more listeners can find us and let us know what you thought of the show. You can follow me on Twitter at at Scott Landman Dan. You're at moss under School Eco and our guest is at at l O f I O r A m O n t I l O fiora. Monty Benchmark is produced by Sarah Patterson and the head of Bloomberg Podcast is Alec McCabe. Thanks for listening, to see you next time.

A G, A D in a P three letters quite a lot of impact, formally standing for gross domestic product the sum value, and will get back to that word value in a second of all goods and services produced in an economy, usually a nation state like the US, Great Britain, China, and so on. It's been the yardstick by which we've measured what a country's economic output basically is ever since World War Two, and perhaps just a little before that. Our guest will give us a history lesson momentarily, but does it really deserve its pedestal Well not, According to our guest, it might as well stand for gross dumb product or grossest dumb product, responsible for all manner of sins, ranging from the pillaging of a South Pacific island paradise to an instrument of oppression used by austerity craven Northern Europeans to hammer poor, innocent little grease. This is Bloombook benchmark. I'm Daniel Moss, executive editor for Global Economics in New York, and I'm Scott Landman and Economics editor with Bloomberg in Washington. Today. Lorenzo Fiora Monty, a professor at the University of Pretoria in South Africa is joining us. He's the author of the World After g d P and before that, Gross Domestic Problem. He's calling for more than just taking down g d P. In the process, he's offering a revolution, not just in economics, but in how we determine our happiness or place in life, the universe and all that stuff. So Lorenzo, welcome to Benchmark. It's a pleasure to be with you. Now. You're not actually in South Africa right now? Where are you? And what are you doing on Skype? I am connecting from Italy. Were unpromoting the Italian edition of Gross Domestic Problem when my first book published in English in and I'll be soon traveling across Europe to promote the new book, The World After a GDP, which you have just mentioned. And does your travel budget include lots of austerity? My troubled budget includes a lot of meetings and meeting people and talking to communities, talking to students at universities, talking to small businesses and so on and so forth. I don't think that's austerity. That's actually a lot of flunt, although it may not necessarily reflecting our GDP accounts well. Federal Reserve Chair Janet Yellen this month called GDP a noisy number, But your concerns go way beyond that. What is it that bothers you most well? GDP has become much more than a statistic. It's become the benchmark of success across the world for economies, for companies, for societies at large. And I wouldn't be too bothered if it was just a noisy number. What bothers me is the fact that it's a system of perverse incentives. It's it's become basically a guideline for policymaking, and that's very problematic because their politicians will take certain decisions because they increase GDP and they want to be you know, you know, like graded on their GDP credentials and economic growth, and there's going to be a skate effect, as we have seen in the past, you know, eighty years across society, everybody's playing a game to increase GDP and economic growth as a result, even though when those decisions are very detrimental to society. I was teasing you about the austerity on your travel budget, but you make a serious point in your book, which is that GDP and projections of GDP can be used as a political bludgeon in policy debates. Absolutely. I mean, like, you know, I want to make this point very strong. If GDP was just a flowed number or imperfect number, I wouldn't have written two books about it. I believe it's basically a skeleton of what soci I T really wants to achieve. And in a sense, you know, like it creates those incentives and rewards that you know, make people take the wrong decisions. And this is happening every day. I mean, governments around the world try whatever they can to increase GDP because this has a positive effect in terms of public image and probably may increase foreign direct investments, and it pleases the World Bank and the IMP and all of that, or the European Union if you're in Europe, even though these decisions may lead to cutting social welfare, may lead to destroying the environment and and creating social inequality, all the things that we prepared to care about when we talk about sustainable and equitable developments and the SDGs. So basically we are in this schizophrenic situation in which we follow certain rules to please the GDP ideology, but at the same time we seem to recognize that those decisions are wrong and we should do differently, and yet we can't because when we try to do differently, we get punished. So you mentioned Greece. I mean, I don't think the Greek you know, the Greek population is completely you know, like unguilty for for what they've done. They're not completely irresponsible for that, but at the same time, punishing the society because it has decided to develop itself in a different way. It's also a short sighted because that is part of you know, like a bigger process of creating creating economic interactions and by doing that, so you are destroying the future of Europe. And Greece is just the first step in a long in a long journey. Now let's go back in time for a second, take a step back. It's hard to believe in today's world, but there once was a time when there was when there was no such thing as GDP. Just under a hundred years ago. It actually grew out of the need to measure the U S economy during the Great Depression, even helped the United States calibrate economic policy to win World War Two. And now we're at a time when it's become a scorecard of economies against each other, a quarterly uh yardstick of how each economy is doing, a measure of a country's public image. As you just said, how did we get to this point from its origins? Well, initially, as you said, GDP was invented as an attempt as an attempt to deal with the Great Depression. Right at the time, government didn't really have any way, any reliable measurement of economic transactions in the market, and people were not being as as excited about economic transactions anymore. So they needed a bit of a thermometer, and they came up with the best they could get. Right. The team that invented GDP was not completely satisfied by what they had done, but they thought, you know, this is probably the best tool we can put together at this point in time, and and that's how it started. It's a sum of market transactions, and I think it was pretty okay at the time in which the government really wanted. All they wanted was to basically reactivate flows of money in the economy. But you know very well that what is good in a time of crisis may not necessarily be good in a time of you know, normalcy and normal economic activities. Just like you wouldn't give a patient was healthy medicines necessarily, medicines may be good if you're sick, but not if you're healthy. They can make you sick if you're healthy in many different ways. And you know, it was then used as a tool to plan the Second World War, once again not necessarily a time of economic normality. Um So it may be very useful to measure production regardless of its utility, because you're building bombs and aircrafts and tags, and all you need to know is how many you can build. The more you can build, the better. But this is very different in normal times, you know, normal times. You want to make sure that you distinguish between the quantity of transactions and the quality of transductions. Noble transactions are actually strengthening our economies. If I get sick, GDP goes up because I have to use medicines and I have to go to the hospital and somebody has to be paid to look after me. But if I stay healthy, GDP doesn't go up. So in a sense, if we want GDP to grow, our policies have to be designed to make people sick. And if I get stuck in a traffic if I'm involved in a car accidents, if I get killed. All these transactions increase GDP create economic growth, but they did not necessarily contribute positively to our economic performance. The problem is that, interestingly, ever since the nineteen seventies, the late nineteen time and seventies, we have done the study the studies in the book as well, we showed that the so called negative transactions that are counting the GDP far way the positive transactions. So most of the growth of the nineteen eighties and the nineteen nineties was due basically to pharmaceuticals, took accidents, to divorces, to military expenditure, all expenses that GDP counts as positive, but often they are not seen as positive by economists or by citizens at large. So we were celebrating an economic boom when it was in reality and economic disaster. But GDP gave us the wrong information and the policies. The wrong policies were decided upon because of that system of perverse and centers that have mentioned. All right, well, let's go to the South Pacific and the island nation of Naru. You begin your book there almost as a kind of morality tale. Now you even link GDP to the island sinking literally prospects of survival as well as diabetes, drought, and a bunch of other bad things. Talk about Nauru and why you think this illustrates your point? Most authors started books with celebrating empires and big countries, and I've decided to the opposite, celebrating one of the smallest states in in in our global economic community, and that's the island of Nauru, which is the third smallest states in the world after them, after Monaco and Vatican. So the story of Nara is very important because Nara was in the nineties had the highest GDP per capita in the world. So in many ways, it was the perfect example of what happens when you follow the GDP ideology blindly. So this country invested massively in propping up economic growth by exploiting the minds of phosphates that the country had. It was a very small island but basically had a lot of very good quality buzz bates that was used as part of fertilizers and other agricultural products in many parts of the world, especially in Southeast Asia and the Pacific. Long story short, they basically exploited it to the point of sitting with a huge environmental disaster that has been threatening a cultural production, has been threatening the population. With the money that they collected, because they had some money, most of the money fled to Australia and New Zealand, where it was captured by banks, as it happens often with the vast GDP growth in many so called developing countries, but some of the money stayed in the country. And what happened is that with that cash, the governments decided to listen to many economic advisors and invested in vanity objects, as it happens in many countries, infrastructure that wasn't needed, and in importing a lot of food because the culture locally had been damaged to the point of being useless, importing a lot of food that was very poor quality food. And guess what. From the environmental crisis, they moved on to a health crisis. They became the capital of the global capital of diabetes, with one of the largest the highest levels of obesity in the world, and and and and some of the health conditions related to death. And nowadays it's basically a failed economy of failed states, and the only option left to Nurans is migrating Caustralian needs and to get a better to get a better life. So this is in a nutshell, it's a concentrated metaphor of what seems to be happening to the entire planet. We have decided to embark on a production and consumption process that is ultimately destroying us. But we celebrated as if this was the beacon, the you know, like the the pinnacle of civilization. Because GDP tells us that this is what development is all about, and it's giving us the wrong information it should go. We should be you know, like doing deffe. We should be doing differently. We should be distinguishing between transactions that we want, transactions we don't want, production that is useful, production that is not useful, consumption that is useful, and consumption that consumption that is not useful. And GDP doesn't do that, and by not doing that, it gives us a very very plot piece of information which then imformed policy and say, you know, like has you know impacts across society. Well, let's go to South Africa where you spend most of your working year. Now after immediately after the transition to democracy in the early nineties, there was a surge in say, for example, foreign investment GDP looked pretty good, but still huge sways of the population had their aspirations un met. Now has that influenced you're thinking as well terms of our GDP um curves or GDP trands SI so worth. After the end of apart type, there was a sense that the country could have embarked on a social justice program. The idea was about that time had come for a distribution of wealth because of apartheide, because of the enormous inequality of the country had experienced. None of that happened. You know why, because the government was told that the best way um to deal with such inequality wasn't about redistributing resources and promoting social offer. It was about growing. It was about embarking on a mass you know, a mass scale economic growth, accelerated growth that would have increased the pie. Everybody would have enjoyed a bigger share, and everybody would have been happy. Now, not only didn't it happen, it didn't happen at all. I mean like, we had significant growth, but most of the growth was captured by those that control the economic leverages. So the rich became richer in many cases, and many poor people may have become slightly less poor, but still significantly worse off than than than the elite. And at the same time, you know, the series interventions in in in adjusting those economic differentials were not We're not taken. In example, for many years the country delayed intervening in the HIV eighth pandemic, and the reason was that rather than spending money on healthcare in people's well being, that should have spent money in infrastructure and developments, because that would have then created all the positive uh IN effects that would have done propped up the economy and improved even the life of those living with HIV NAS. It was crazy. People were done only when in two dozen and four, two dozen and five the country decided to really intervene in social weapon because it was too much. We experienced a significant decrease in mortality rates, HIV AIDS infections went down dramatically. And guess what This happened at a time in which we had half the GDP growth of the previous decame. So this tells you that politicians that follow the GDP vision can take very wrong, the extremely wrong decisions when it comes to the welfare of There are people Lorenzo. Is that happening right now in the United States? We have a president here who has pledged to achieve four percent GDP growth, which is roughly double the pace that we've seen in recent years. Is the US headed for this kind of uh, these kind of difficulties if the Trump administration really pursues that kind of goal as hard as as maybe they're indicating, well, I think that, I think that there's a serious um level of confusion in the United States at the moment. I mean, like, in many ways, a lot of people are rightly upset at at least three decades of economic policies in the US that promoted UM, a kind of economic developments that increased inequality, that made the working class works off UM, that used glibalization to put a lot of people out of work UM and create kind of gaps. That's in many ways explained why somebody like Donald Trump, with an agenda of change, so to speak, won the elections. Now. What is being proposed, however, as a solution, is more of the same rutter than trying to tackle the inequalities, the suffering, and the low level of well being that many Americans experience. I mean, I still find it striking that America is number one in terms of GDP and in terms of all the things that really matter health, literacy, education, life expectancy, and so on and so forth. It's way beyond many countries that are much poorer in GDP terms. So I think America is a very very good case, Laurens. There have been countless attempts in recent years by various commissions and bodies and so forth to create other kinds of indexes of a country's well being. Uh. You know, many people have pointed out the problems in per actions with focusing on GDP as the end all be all of economic indicators. We can talk about this all we want. Is there any real chance of anything changing? Or are we just all tilting at windmills here? I think we're wasting our time with all these commissions. I think it's important to open the debate. That's what my book is supposed to do, to open the debate and have a public debate, and only a debate among experts. Um, we do already have tools that helped a great deal. As I said, if we were to use something as simple as the gen in Progress Indicator, which is nothing else, the GDP, but distinguishing the bat and the good transactions, and and that would be really useful because you would tell the government what are investing in certain areas makes sense. For instance, with with this kind of accounting, it's clear that many industries are not really producing anything valuable for society because the the negative impacts outweigh the gains of these companies. And this includes the fossil fuel industry, that the coal industry, mining and large, the distribution of food and so on and so forth. And I think in the US some states Maryland, Utah, Verymond have already introduced some of these tools at the local level. Um So there are tools that could be used tomorrow. The problem is that we need the political world to do so. And unless the GDP ideology is unmasked and unveiled as an ideology and people mobilize against this to to to code for a different approach, we're never gonna make significant hardware here. And I think in my book, I show how this could be done. I show the fact that GDP is extremely obsolete to be able to account for an economy which is increasingly digital. I'm calling you by a skype now, and I'm not paying anything, and yet we're having a very useful conversation which is not adding anything to GDP. GDP would have been much happier ten fifteen years ago if I was to call you by the phone, because the coal would have been very expensive, probably very low quality, and yet adding to the national accounts. So every time we use What's up to communicate, every time we use Spacebook to make you know to to to share information and some so forth, the Google maps which are for free, we're not adding to GDP, but actually we're strengthening the economy. Nevertheless, GDP is very anachronistic. It sees money flows as a sign of a good economy, but often money flows may indicate a very very sick of Conmy write it in a good one and I think ultimately my book shows that we could use this opportunity to have national conversations about what it means to be developed. In the twenty percent, GDP is no longer what we want. Then we can decide what we want to gether. And so maybe what's going to be decided by Americans or in a state in the US may be different from what's going to be done next door. So if one country Lorenzo. If one country tried to go it alone, and I don't mean a country like Naro, I mean a sort of a medium sized or even a large sized country said right, we're teaching it, We're gonna do something else. What are the risks if they acted alone? They would be crucified by markets and then forced to retreat. Absolutely, we believed exactly because of the power of GDP and its ideology and because it s used as a policy tool, that would be crucified, It would be punished, which is the reason why we're publicly advocating, as I do in the book, for an alliance of countries to go together. What are in Europe? What are around the world. We have also talked about a in alliance of all being economies will call the we seven countries that have done extremely well at building an alternative way of doing the economy that is beyond GDP. And these countries include New Zealand, Costa Rica, Sweden, very good examples of countries that have achieved high levels of well being with a minor ecological footprint and very low and equality. If these countries were too good together and show to the rest of the world that change is possible that we can do it collectively in collaboration. There would really help the entire world wake up, and they may be a positive ripple effect across society. A country shouldn't do this change on its own because GDP has an extremely significant impact of policy decisions and they may be easily critcified. But going together as an alliance regionally or globally would make a big difference, and it is necessary if we want to achieve the Sustainable Development Goals. We have a twenty thirty Agenda which is being ratified by the u N and unless we change away from GDP, we're never going to get there. Well, look, this conversation could go on for a while, and I can tell you're only just getting started. We'll have to have you back on the show. To Lorenzo, thank you for joining us. It's been a pleasure. So Dan, do you think we're ever going to get to a point where we're not focusing on GDP as our end all, be all economic indicator. As Lorenzo was saying towards the end, it really can't be one or two nations, certainly one or two nations that don't have major economic heft being out from the pack and saying we're going to chot our own course with economat tricks. They really would be killed. It really needs to be wanting all in and that's tough to say. Yeah, you'd really have to have something like the I m F or similar body organizing a global conference where you know they'd actually moved towards UH an agreement on which statistics would would would be highlighted because the IMF actually uses a country's UH production of GDP statistics as a measure of their quality of development as a nation. So in any change to that would obviously be highly political. Something for the next Briton Woods for sure. Alright, Well, Benchmark will be back next week and until then, you can find us on the Bloomberg terminal, Bloomberg dot com, the Bloomberg App, as well as iTunes, pocket cast, Stitcher, or wherever you prefer to find your podcast. While you're there, take a minute to rate and review the show so more listeners can find us and let us know what you thought of the show. You can follow me on Twitter at at Scott Landman Dan. You're at moss under School Eco and our guest is at at l O f I O r A m O n t I l O fiora. Monty Benchmark is produced by Sarah Patterson and the head of Bloomberg Podcast is Alec McCabe. Thanks for listening, to see you next time.