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About Gross National Happiness and Gross National Product — 5 (end)

By Matthieu Ricard on March 21, 2012

Excerpts from a statement from the Prime Minister of Bhutan, H.E. Jigmi Y. Thinley, in preparation to the 2nd of April debate on GNH at the United Nations, to which I shall participate

Some will undoubtedly ask: Why is all this number crunching necessary? And others might also ask — aren't our GNH indicators enough? Well first, the new measures matter simply because what we count and what we measure is what gets attention […]

As simple examples, crime rates are an indicator (i.e. are they going up or down), but accounts assess the economic costs of crime to society — money we'd save if we had no crime. Smoking rates are an indicator, while accounts assess the economic costs of smoking to our health care system due to higher rates of lung cancer, heart disease, and respiratory ailments — money we'd save if no Bhutanese smoked. Greenhouse gas emissions are an indicator of whether we are emitting more or less GHGs this year than last, while accounts assess the costs of climate change attributable to these emissions.

In other words, our new GNH Accounts will add a vital economic valuation dimension to our current indicator information. And that is essential for the simple reason that GDP is not an indicator but an accounting system. If we are really to challenge the dominance (even stranglehold) of GDP-based thinking over our thinking and policy formation, then it is completely necessary to construct a broader and more accurate and comprehensive accounting system that properly accounts for the value of our natural, human, and cultural wealth.

So long as budgets make the world go round, and so long as we ignore the true benefits and costs of our economic activity, indicators alone will not unseat the GDP from its present dominant role. And if we are to realize His Majesty's [the 4th King of Bhutan] profound understanding that GNH is more important than GNP, then we have to take the next step in creating a true GNH society by building on our excellent indicator system to construct now a new set of GNH Accounts.

What does this new accounting system mean in practice? Let me give just a couple of examples. When we present our annual budgets, it means we will also start accounting for the health of our forests and other natural resources like water. And if we've had a bad year of forest fires, for example, then we'll need to count the consequent forest loss as a depreciation of our natural wealth, just as we presently figure depreciation when we account for the value of our built and manufactured capital. And if we plant trees, we'll count that as an investment in natural capital, just as we presently account for investments in our built capital.

Or to take a human capital example, we will start figuring preventable illnesses as costs to the economy rather than misleadingly accounting for such expenditures as economic gain. We have started, for example, to calculate the costs of alcoholism to the economy, and therefore to see preventive expenditures designed to reduce alcohol abuse as worthwhile investments in our human capital (rather than simply as costs, as in our present flawed accounting system.) […]
Perhaps most importantly, our new national accounts will finally reflect all the key pillars of Gross National Happiness, so that we can truly chart a balanced path forward for the benefit of all our people. And in so doing, the new accounts will certainly be a gift to the world from which many other countries can learn.