Recap of Nếp Mới #7 with Tashi

Our lives, in every aspect, are influenced by the economy. Whether we work in agriculture, education, or healthcare, everything is deeply connected to the economic system. However, many people feel overwhelmed, confused, or intimidated the moment they hear the word "economics." It often seems like an inaccessible subject, reserved only for experts with deep, specialized knowledge. Economics has become the exclusive domain of economists—the very people who run our lives. Consequently, economists are often viewed as the kings of this universe, seemingly possessing the power to dictate the entire economic and political system. To begin this conversation, Tashi will start with the fundamental basics of economics.

Our community is currently working across various fields, from organic farming to rethinking education. All of these areas are closely linked to economics. There are clear reasons why the work we do, despite its value and significance, remains a minority practice, often failing to become mainstream or widely adopted. The reason lies in how the current economy operates, and we must understand this system before we can appreciate the work Tashi has been doing for the past 30 years and why it is so essential.

We are gathered here to build a community that truly contributes to the survival of our species and our planet. We are living within a system that is leading us toward destruction—a path humanity is creating for itself. If we want to build a community that charts a different course, one that sustainably nurtures life and collective well-being, understanding the current system is vital. We need to know the principles and fundamental truths that drive our current socio-economic system.

To measure the size of an economy, economists use Gross Domestic Product (GDP), which is considered one of the most important indicators in human history. GDP is simply the total value of all goods produced, or alternatively, the total value of all goods consumed. Whether you calculate GDP based on production or consumption, the result is the same. In other words, GDP measures the size of a nation's market economy.

It is important to clarify from the start that there is nothing inherently wrong with GDP itself, provided it is used for its intended purpose: measuring the production and consumption of an economy. This indicator is very useful for providing a big-picture view of an economy by highlighting which sectors are growing and which are struggling. Based on this information, policymakers can devise appropriate strategies to regulate the economy.

Unfortunately, GDP is being used in ways its creators never intended. Originally, the indicator was designed to measure the size of an economy and became widely used after World War II to determine whether countries like the UK were producing enough to support the war effort.

The problem arose when policymakers and economists began to believe that the primary goal of the economy was to ensure GDP grows continuously. This belief—that constant growth is the only thing that matters—is what creates the real problem.

The primary creator of the GDP indicator was Simon Kuznets, who was awarded the Nobel Prize in Economics for his immense contributions to the field. As early as the 1930s, he warned against using this indicator to measure a nation's well-being. Instead, he argued that when assessing the health of an economy, one should look at the overall picture—which sectors are growing or declining—rather than just how much is being produced or consumed. Simon Kuznets gave this warning long ago, but no one listened.

I want to provide this overview and emphasize the role and significance of GDP, as you need to understand it clearly. Once we recognize the problem, we can identify the alternatives. We must understand what a growth-based economy means before we can determine what needs to be done.

Simon Kuznets issued his warning because he knew that almost anything can increase GDP. For example, the more war there is, the higher the GDP rises, leading people to believe the economy is doing well. Specifically, in October 2023, shares of companies like Lockheed Martin, General Motors, and General Electric surged because of a conflict in the Middle East, driving up their stock prices. Simply put, the demand for war leads to the production of more machinery and equipment, which in turn grows the economy. Then, after the war ends, war-torn regions must undergo reconstruction, which again boosts the economy. A similar story unfolds with natural disasters. When an area is hit by climate-related disasters, the cost of rebuilding everything also grows the economy, regardless of the fact that it is a process born of immense loss.

Similarly, an increase in smoking, the consumption of junk food leading to more illness, or a rise in disputes and lawsuits requiring more lawyers—all of these things cause GDP to grow.

The question here is: does an increase in GDP actually improve our lives?

The more crimes or illegal acts committed, the more people are arrested, the more prisons need to be built, the more courtrooms are established, and the more police personnel must be hired. Even this causes the economy to grow. The sicker people are, the more money is spent on building hospitals, manufacturing medicine, and paying doctors' salaries—again, causing the economy to grow. A country with healthy citizens does not help the economy grow.

Simon Kuznets himself recognized the flaws in the GDP index, which is why he warned against using it for anything other than measuring the size of an economy. Fundamentally, GDP makes no distinction between building a school and manufacturing an atomic bomb.

The core issue is that we need to question what is actually growing, yet this is overlooked by policymakers and economists. It is baffling that they celebrate when the economy grows, and if it doesn't, they look for ways to force more growth.

In reality, the more fossil fuels we burn and the more greenhouse gases we emit, the higher the GDP rises. This is why actions to reduce greenhouse gas emissions or combat climate change are not very appealing to policymakers.

When it comes to ecological concerns, the problem is even more severe. Deforestation and the overexploitation of the oceans are "great" ways to increase GDP because GDP only counts what can be exchanged for money. When forests are turned into wood products and brought to market for trade, the economy grows. An intact forest means nothing to GDP.

Take Vietnam, for example, a country with a developed fishing industry thanks to its long coastline. The more fish Vietnam catches and sells, the more the economy continues to grow.

However, GDP does not account for the consequences of the unsustainable exploitation mentioned above. From any economic perspective, this is the least economical approach. It is like a factory owner selling off their entire production facility. After collecting the profit, they celebrate the money they just made, forgetting that the next day, they will have nothing left to generate income. That is how we are treating the forests and oceans around us. GDP only counts what we extract from nature; it does not account for the aftermath.

Once you understand these basics, you will see more clearly what the alternative index—the Genuine Progress Indicator (GPI)—is doing. We have seen the inadequacies of using GDP as a measure of progress, and the solutions that GPI offers to measure progress more comprehensively and accurately.

“Anyone who thinks that you can have infinite growth on a finite planet is either a madman or an economist.” - Sir David Attenborough

Everything mentioned here is common sense that anyone can understand. Anyone can see how flawed the foundation of our economic system is without needing a Harvard PhD.

Another problem with GDP is that it doesn't tell us who is driving economic growth. When the rich get richer, GDP increases, even if others are becoming poorer. Simply put, GDP is an average-based index. It is quite ridiculous that the top 10% of the wealthiest people can increase GDP through their wealth, regardless of whether the majority of the population is becoming poorer. Therefore, this average-based index is very misleading. A symbolic image for this is that you could put your head in a freezer and your feet in an oven, and your average temperature would remain unchanged. In that situation, the health of the person in that position is irrelevant to the metric. This is another problem with GDP.

Another shortcoming of GDP is that it does not count volunteer work. Therefore, service and volunteer work are completely worthless according to GDP, because GDP only counts what can be exchanged for money. This means that work performed without pay, even for noble purposes, is ignored by GDP. This system is therefore extremely unfair and discriminatory toward women, as they perform a great deal of unpaid labor—such as caring for and raising children—which is worthless to GDP. But when you hire a nanny and pay a salary, GDP increases. If you look after your own children, it has no (economic) value. And if you marry your housekeeper (and stop paying a salary), GDP goes down.

Another issue to consider is, for example, Apple making your phone perform worse, which prompts you to replace it sooner; GDP increases again. This means there is no point in investing in and creating a durable, long-lasting product, because it does not contribute as much to GDP growth as Apple's approach.

It is clear that GDP completely ignores human well-being, the sustainability and regeneration of nature, the future of the next generation, and overlooks service and volunteer work or unpaid labor, while fueling the exploitation of nature, unsustainable extraction, and fostering fast consumerism.

When you see the big picture of how the economy works, the need to find an alternative index to measure progress becomes very clear and necessary. And anyone can do this without needing a Harvard PhD. We simply measure what matters.

The GPI measures the things that matter in our lives: ecological health, air quality, water quality, greenhouse gas emissions, the state of forests, fishing levels, and so on. We also measure social well-being, the health of the entire population, and the safety of different communities. We also measure the health of the economy, but not through GDP. We measure the security of the economic system and the wealth gap. In short, the GPI has 20 indicators measuring economic, ecological, and social factors, with the goal of measuring progress in a comprehensive, easy-to-understand, and therefore more accurate way. This is why the GPI is called the Genuine Progress Indicator, as it truly provides an overview of economic, environmental, and social life.

Once you understand the problem, you will understand the solutions.

It is evident that we have been using the GDP index incorrectly; it is not the right tool for measuring progress. Therefore, an alternative solution to measure progress comprehensively and accurately is essential. This is a key element of the new world we are all trying to build, and a world that must be created for all of humanity to exist in harmony with the Earth. Everything that members of the community care about is part of this big picture.

Nothing will change, and policymakers will continue down the wrong path if we do not measure progress accurately.

Due to differences in approach, mindset, and measurement, the work Tashi and his team are doing remains outside the mainstream. It is essential that we bring what truly matters to us to the center of economic discussions. By taking this foundational step, we can pave the way for a more favorable path forward.

Fundamentally, what gets measured gets attention, while what is ignored is overlooked by policy.

Tashi once conducted an experiment with his students to test this thesis. When he was a university lecturer, he told his students they needed to submit a research paper by the end of the term. The students were free to choose their own topics, conduct their own research, and manage the entire process themselves. He emphasized that this was a required research paper, but also noted that it was entirely voluntary. As a result, by the end of the term, no one had submitted the assignment.

The following semester, he tried a different approach. This time, he said nothing about a research paper. However, the course syllabus clearly stated that the research paper would account for 50% of the final grade. The result was that every single student submitted the paper.

This experiment led Tashi to conclude that what is discussed and what is measured receives attention (and can therefore be implemented).

Similarly, regarding environmental protection activities and requirements, if ecological factors are not counted as part of progress or used as metrics, they will not be taken seriously. Consequently, they will be ignored when policies are discussed.

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QUESTIONS FOR TASHI

1. Could you share your experiences working with governments?

Tashi has worked with the governments of three different countries to apply this new approach to measuring progress in practice. Through that experience, he gained a deep understanding of why he and his colleagues were unable to create any real change.

GPI is not the only alternative measurement index. There are many others developed independently by various people. However, in the end, none of us have truly succeeded in replacing GDP.

This reality is not because governments disagree with what is being proposed. When Tashi presents figures, data, statistics, and scientific calculations, all policymakers nod in agreement without any objection. Data is now available to calculate what we need—from greenhouse gas emissions and forest statistics to estimates of ocean fish stocks, and even epidemiological evidence linking external factors to human health. Much of this data did not exist 50 years ago. But now that it is available, we have sufficient scientific evidence to establish appropriate ways to measure progress.

He has also presented these figures and data to various political parties, from the left and the right to the "center." They all agree and offer no counterarguments to the scientific facts presented.

However, after listening to everything, they nod, and then everything continues as usual. Nothing happens. And Tashi asks: Why?

He worked with the Bhutanese government for 10 years. These are his experiences and observations.

Before coming to Bhutan, he was working on developing and applying the GPI in Canada. After the Bhutanese government learned of him, they invited him to Bhutan to design their own index, known as Gross National Happiness (GNH). The initial idea was quite similar to the GPI he had developed. Essentially, Bhutan wanted to combine ecological conservation, social welfare, cultural preservation, sustainable economic development, and effective governance. These are the four main pillars that form the foundational philosophy of Gross National Happiness.

While working with the government, Tashi noticed that the political will to implement and apply GNH was very strong. In 2008, the newly elected Prime Minister, Jigme Y. Thinley, decided to make Bhutan the first country in the world to use entirely organic food. This meant that everything grown in Bhutan would be cultivated using organic methods; if a product was produced in Bhutan, it would be produced organically.

In addition, the new Prime Minister also wanted to reform the entire education system. He wanted the principles of sustainability, respect for traditional culture, ecosystem protection, and the other pillars of GNH to be integrated into education.

Ultimately, after a period of implementation, Bhutan brought its changes to global forums, specifically the United Nations, to share them with the world. Naturally, the UN had never seen such remarkable initiatives. Consequently, Bhutan hosted a conference at the United Nations on April 2, 2012, to call for a shift toward a new economic paradigm.

At that time, more than 800 people attended the conference, representing countries from all over the world. Attendees included the President of Costa Rica, the Secretary-General of the United Nations—who candidly acknowledged that "the old system is broken, we need a new one"—and Prince Charles of the United Kingdom (now King), who delivered the opening address. The event also brought together Nobel laureates, economists, and religious leaders from across the globe.

This conference is widely regarded as a "New Bretton Woods." It earned this name because it signaled a potential new economic paradigm that could replace the current system. The dominant economic system of today is considered to have been born in 1944 at the Bretton Woods Conference in New Hampshire, USA, following the end of World War II. That 1944 conference established global economic institutions such as the World Bank, the International Monetary Fund, and the United Nations; notably, the US dollar was chosen as the primary currency for international trade. From that point on, the globalized economic system began to operate and grow into what it is today.

At the "New Bretton Woods" conference, there was great hope that the world would turn a new page, moving toward a future driven by a more humane and sustainable economy—one that respects the Earth's limits and ensures resources are shared more equitably.

Vcil Community experiments such as the Gift Bank, Consumer Club, Offers and Needs Market, and the Pay-it-forward Fund all represent efforts to help establish the kind of new economy that Tashi describes—an economy that the world truly needs.

However, shortly after the phrase "New Bretton Woods" was mentioned by Bhutanese Prime Minister Jigme Thinley, three World Bank representatives approached him after his speech with a warning: "Bhutan is a country dependent on others, and you must not mention a 'New Bretton Woods.' This world operates on the old 'Bretton Woods.' You should abandon that terminology." From that moment on, instability began to affect Bhutan.

Essentially, Bhutan is in a complex geopolitical position. To the north, it borders China, and to the south, it borders India. Bhutan is like a piece of meat caught between two massive slices of bread. Furthermore, India funds many of Bhutan's key operations, particularly its five-year development plans, and maintains several military bases within the country. In short, Bhutan is entirely under India's thumb.

Naturally, India was displeased when the Bhutanese Prime Minister spoke of a "New Bretton Woods." They told Bhutan bluntly: "You can talk about happiness or whatever you like, but when you talk about a new economic system, you have gone too far."

The reason is simple: India's economy relies on fossil fuels, and Bhutan's declaration of a new economic paradigm implied that India would need to abandon them. At the same time, Bhutan was developing its own Gross National Happiness system and engaging with more countries, which made India feel it was losing its grip on Bhutan. Ultimately, under various pressures and influences, Bhutan was steered in a different direction. The phrase "new economic paradigm" was quickly diluted, and eventually, it lost its original meaning.

Parallel to these developments, Tashi and his associates had gathered about 70 leading experts to design the foundations for a new economic paradigm. They were dedicated and visionary economists, scientists, and scholars. However, the entire team was dissolved just one year later. Even Jigme Y. Thinley was pushed out of the cabinet after losing the 2013 general election, which occurred a year after the conference under highly unusual circumstances. These and other significant pressures in Bhutan left Tashi and other passionate advocates feeling saddened and disillusioned.

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2. Why aren't alternative metrics more popular, and why does capitalism remain dominant?

On the surface, the GPI approach is quite simple: it is just about measuring what matters. Everyone agrees on what is important: clean air, clean water, healthy citizens, genuine education, and poverty alleviation. However, we are operating within a global economic system, and this is precisely what prevents alternative approaches from gaining traction.

Capitalism thrives on infinite growth and competition. For example, a business owner might initially be satisfied with a modest income, but they are eventually pushed out of the economic race by larger corporations—entities that can produce the same goods and sell them at lower prices due to economies of scale.

Consequently, many business owners or capitalists, even if they want to pay higher wages or care for employee welfare, are eventually forced to move to regions with cheap labor. They do this simply to cut costs and produce more cheaply, thereby increasing their competitiveness in the market against rivals. This is the nature of the global economy.

When it comes to the global economy, all governments—whether they claim to be democratic, communist, or otherwise—focus on GDP growth. We see this whenever heads of state speak; whether it is Donald Trump, Xi Jinping, or Vladimir Putin, they all emphasize GDP growth. Thus, the entire world is locked into a global capitalist economy.

On the surface, indicators like the GPI seem "harmless," so policymakers often nod enthusiastically when they first encounter them. It is only when they delve deeper that they realize the GPI actually challenges the fundamental ideas of the current global economic system. Consequently, they abandon these indicators immediately.

According to Tashi, this is why ideas and initiatives that are easy to understand, simple, and universally agreed upon often go nowhere in practice. The GPI is simply a thorn in the side of the current global economic system, especially for large corporations, and therefore it is never given the chance to become widely adopted.

3. If the capitalist system is so powerful, is there any way to replace it?

Tashi answers this question with two points, which can be seen as good news.

First, throughout human history, many different economic systems have been created and have eventually collapsed. The slavery-based economic system was once dominant, but it has disappeared. Feudalism was also once the dominant political-economic system, and it, too, has vanished. Therefore, there is no reason why this capitalist economic system must last forever.

To be fair, capitalism has its merits to a certain extent. We should be grateful for anesthesia during surgery. We wouldn't easily reach remote places like the Himalayas without airplanes. But beyond a certain point, its harms outweigh its benefits. And we have crossed that safety threshold.

The damage caused by capitalism is now so severe and widespread that we need to completely replace the current global economic system. There is no reason for capitalism to continue when its harms clearly outweigh its benefits.

Second, the world has witnessed that halting capitalism is entirely possible. During the COVID-19 pandemic, the whole world recognized the dangers and collectively agreed to pause the economy. Overnight, we recorded the largest reduction in greenhouse gas emissions since the Industrial Revolution. This is considered the greatest collective action against climate change.

Before that, decades of efforts to clean up the Ganges River had failed. Until COVID happened, the Ganges suddenly became clearer. Simply because there was no economic activity, no more waste and toxic chemicals were being dumped directly into the river. And for the first time, people in Punjab, India, could see the Himalayas from their windows; the sources of air pollution were simply gone. And this was also the first time New Delhi, the most polluted city in the world, had clean air.

So, history has proven that we can stop the capitalist economy. We have been shown that it is entirely feasible to steer the economy away from destruction and create space for nature to recover; it is even possible to replace it with a more suitable, sustainable system that exists within planetary boundaries.

We already have the tools, knowledge, and methods to implement this. What the Vcil community is doing is also helping to sow the seeds for creating a new society. We know what needs to be done and how to do it. And this is also good news.

4. So, must we wait for another crisis or a catastrophic disaster for humanity to wake up and change?

I used to think so too. I used to believe that crises and problems would make everyone change. I was even certain it would happen.

For example, in 1992, I was living in Nova Scotia, Canada. At that time, suddenly, everyone noticed a severe decline in fish and seafood populations in the Atlantic. People had overfished and exploited marine resources. Many groundfish species were gone. Overnight, 40,000 people lost their jobs. The fishing industry collapsed unexpectedly.

At that time, I was convinced that "eventually, everyone will realize that there is no separation between the economy and ecology. They will realize that if they don't take careful care of the ecosystem, everyone will be unemployed. People will stop arguing about choosing between the environment or the economy, because everything is too clear: the health of the economy depends on a healthy environment."

Yet, people remained oblivious. They continued to destroy forests with the same destructive extraction methods.

Then another catastrophic natural disaster occurred in the US in 2005, when a hurricane named Katrina devastated New Orleans. At that time, I hoped that everyone would see the consequences of climate change and change.

However, disasters come and go, only human ignorance remains. They still do not understand and refuse to change. This is truly a sad thing.

However, we still have many choices. The important thing is that we know what needs to be done and how to do it. We can do it. In the journey of creating necessary changes, we also contribute to soothing and alleviating the pain that must be endured. And we can promote change gradually, without forcing massive societal shifts immediately. Therefore, in my view, the idea that we must wait for crises or disasters, along with the accompanying pain and loss, is unrealistic and unwise.

Therefore, I emphasize that we do not need to wait for anything; it is not that we do not know what to do, or lack the resources to implement them, or do not know how to reduce suffering on this journey. We do not need a super-crisis for change to happen.

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