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Economics 101

Economic Measures
Related section >> Alternative Economic Measures

The state of our economy is a major concern for Canadians. Listen to any news report or pick up any newspaper or news periodical and you'll see and hear phrases like the 'Dow Jones Industrial average,' the 'NASDAQ,' and 'economic climate' used frequently. Since the terrorist attacks of September 11, 2001 and the more recent global financial crisis, North Americans have been even more concerned about the state of the economy. When we hear that things are going well, we breathe a collective sigh of relief; when there's a downturn, we feel nervous. Somehow economics has come to take a much larger place in the life of our society than many other aspects of life. It has also become the supposed indicator of the health and wealth of the planet and its inhabitants.

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Metal rods and polesWays of Counting - GDP and the UNSNA
Many people have heard the terms GDP and GNP thrown around by political leaders and economists, and perhaps even people we relate to in our daily lives. Some of us may even use those words ourselves. GDP (or Gross Domestic Product) is probably the most commonly used economic indicator in our society. However, few of us know where this system originated. Feminist economist Marilyn Waring tells us that GDP and GNP come from a small calculation in the UN System of National Accounts (UNSNA). Waring's ground-breaking book Counting for Nothing: What Men Value and What Women are Worth, first published in 1988, is devoted to demystifying the UNSNA. Why does Waring believe the structure of the UNSNA is so important to understand? She explains:

When international reports and writers refer to women as statistically or economically invisible, it is the UNSNA that has made it so. When it dawns on you that militarism and the destruction of the environment are recorded as growth, it is the UNSNA that has made it so. When you are seeking out the most vicious tools of colonisation, those that can obliterate a culture and a nation, a tribe or a people's value system, then rank the UNSNA among those tools. When you yearn for a breath of nature's fresh air or a glass of radioactive-free water, remember that the UNSNA says that both are worthless.1

The UNSNA is the mechanism that has allowed women's work and much of the rest of life to be made invisible and subsequently ignored and deemed unimportant in measures of economic progress. In order to change this, women need to know how the system works.

What is the UNSNA?
Developed by economists in the United Kingdom and the United States and revised in 1953 and 1968, the UNSNA is described by its proponents as:

a coherent, consistent and integrated set of macroeconomic accounts, balance sheets and tables based on a set of internationally agreed concepts, definitions, classifications and accounting rules. It provides a comprehensive accounting framework within which economic data can be compiled and presented in a format that is designed for purposes of economic analysis, decision-making and policy-making.2

FactoryJudging from that description, it's almost as if this tool was designed to intimidate people. Waring gives a more straight-forward description: "the internationally recognised system for measuring and recording the values that economic theorists have observed." It is used by politicians, bankers, and economists as a way of comparing the supposed economic well-being of countries. However, the UNSNA ensures that certain factors of economic life appear far more important than others. It is a way of counting money, but not human and environmental cost, not unpaid work, not time, and certainly not health and happiness.

Here's how the UNSNA divides life:

Things that have economic value Things without economic value
  • trees when they're cut down
  • the tobacco industry
  • arms and missile production
  • the weight loss industry
  • crime, the court system, and imprisonment
  • prostitution
  • illness, clinics, and hospitals
  • death and the funeral business
  • rebuilding countries after natural disasters or terrorist attacks
  • war
  • oil spills
  • women's bodies used in media advertising
  • rivers and forests (when they're not being harnassed for economic gain)
  • health
  • caring for your own children
  • vegetables grown in your own garden and eaten by your family
  • caring for the earth
  • a mother's contribution to the birthing process
  • beauty (except if it's for sale in an art piece)
  • doing your own dishes and laundry
  • hunting, fishing, and trapping your own food

Production and consumption
The UNSNA is meant to be a tool that countries all over the world can use to record their nation's economic activities, a grand measuring stick by which to measure global 'progress.' The UNSNA uses two columns to measure the economic activity of a nation. The first is expenditures or expenses - how much money the citizens of a country spend buying things. The second column is the cost of production, also called income, which is what the citizens of a country receive for the work they did to produce these goods and services. Government expenditures and income are also included but consumer purchases and consumer wages are the highest numbers in each column. The UNSNA assumes that these two columns will be equal, that the cost of production will be the same as the amount spent. The number both columns arrive at becomes the GDP.

To see the numbers in Canada's national accounts visit Statistics Canada System of National Accounts. For more information on how these numbers are calculated, visit Canada's National Income and Expenditure Accounts. Canada’s GDP in 2010 is $1.556 trillion which works out to $45,657 per person, a healthy GDP indeed. But, is this accurate?

When looking at the columns listing economic activity in Canada in a given year, it becomes clear that the numbers say very little about the well-being of the citizens of Canada. The numbers also say little about the range of activities that make up the daily lives of Canadians. While many of us spend eight hours of each day engaged in work for pay, a large number of Canadians do not. In fact, the Canadian labour force is made up of only 52% of the population. The rest of the population includes:

  • children
  • retired people
  • people living with disabilities who are not able to work for pay
  • parents who stay at home to raise children
  • those who are unemployed
  • sick people
  • students and people in training programs
  • unpaid caregivers
  • volunteers
Only a terribly limited view of Canadian life fails to account for the many activities of these people. (For more on this exclusion see The Economics of Ability.) Not only that, those of us who do happen to spend some of the hours in a day working for wages, know that there are 16 other hours in a day during which many of us are also working. Our workdays are not confined to the eight or so hours for which we are paid. Women know this most clearly - many 'working' mothers feel they work two jobs, one at home and one in the office. The activities that we perform during our unpaid hours are as much a part of national production as the activities that we happen to be paid for. The production boundary defined by the UNSNA allows that only paid hours are part of the economy, leaving out huge parts of our lives.

Enfalac formulaIn the category of consumption the same is true. While we all purchase things to sustain our lives, the exchange of goods for money is only one part of caring for our needs. None of us paid for our mother's breast milk, nor do we pay for the food we harvest from our own gardens. Most of us have at least one sweater or scarf that was knitted for us by a grandmother, aunt, or mother. And of course, we all know that love and caring and community are not commodities to be purchased in the market. The well-being and happiness of residents has little relationship to how much purchasing and selling of goods and services is occurring in our country. GDP also says very little about how wealth is distributed in our country. While Canada's per capita GDP may be a healthy
$45,657, this number does not do justice to the deep financial poverty experienced by many Canadians.

GDP's emphasis on consumption leads to such arguments as the recent 'Fight terrorism through shopping' campaign. Since September 11, 2001, politicians and leaders have been telling us that it's our patriotic and moral duty to shop. We are told that we all need to take part in strengthening our country's economy because if our country's economy is strong, then the country is strong. The boundaries of the UNSNA create barriers to our being able to care for each other in ways that really matter.

The severe limitations of the GDP as a measure of well-being in our country leads Waring to ask who the UNSNA is meant to benefit. If it is to be used as a tool, "As a tool for whom? The tool is certainly not meant to be used for women, the environment, or the poor?"3 For although the UNSNA claims to be 'consistent' and 'integrated' in its measurement of economic production, it turns out that only a certain group of people are counted as producers and consumers in this system.

Impact on Women
Many of the activities that are excluded by the UNSNA are those that make up the lives of women. Caring for children, giving birth, volunteering, unpaid caregiving of humans and the earth, housework, many of these things make up the bulk of women's time. In this way women are 'invisibilized.' (See Lynn's Story for more on the invisibility of women in the economy.) What is strangest of all about their exclusion from national accounts is that they are absolutely necessary for the continuation of human life and economic activity. Without women's work as reproducers, there would be no future economy because without regeneration, our economy would soon be without a workforce. Without the work of cooking meals, feeding children, cleaning houses, supporting friends, taking care of the earth, recycling, holding birthday parties for kids, baking cookies for neighbours, and the many other activities that make up our lives, the economy simply would not be.

At the same time, the UNSNA measures economic activity regardless of how healthy it is. This means that economic activities that are non life-giving, in fact harmful to people, are given value by the UNSNA. Women have experienced this first-hand - there are many occasions in which the exploitation of women generates economic activity. Women's bodies are used to sell everything from cars to menstrual products to cleaning supplies - the female body is advertising's greatest resource. Prostitution and sex trafficking of women generates the exchange of billions of dollars each year. According to Marilyn Waring, the sex industry accounted for about 14 per cent of the GDP of Indonesia, Malaysia, the Philippines, and Thailand in 1998. Domestic violence is also economically productive: providing jobs for counsellors and shelter workers, researchers, and police officers. Not all activities that are good for the economy are good for people. See what one young woman has to say about this in Kim's story.

Huge mass of logsImpact on the earth
The UNSNA does not value care of the earth. This becomes obvious when listening to the politicians debate the ratification of the Kyoto Accord with cries of, "But it will hurt the economy." Our society does not measure the cost incurred as a result of using up non-renewable resources. Instead we measure the economic growth produced by employing people to cut down trees or sell more gas. The UNSNA values exploitation of the earth with no value placed on sustaining the earth over the long-term.

Another world
By using the UNSNA and GDP as our primary tool by which to measure economic progress, we have created a world in which it is quite all right to exploit the lands of Aboriginal peoples, to work on free trade deals despite the fact that people are starving, to build casinos and strip clubs with no consideration as to their effects on communities and individuals, to build super prisons instead of reducing the incarceration rate, and to make social assistance rates so low that people on income assistance are unable to eat nutritionally. This is a scary world indeed. Luckily it's not the only world we're faced with. People around the world are joining together and talking about alternative economic measures, such as Nova Scotia's Genuine Progress Index, a system which measures true and healthy progress. To find out more about this initiative and others visit Alternative Economic Measures.

1 Marilyn Waring. Counting for Nothing: What Men Value and What Women are Worth. Toronto: University of Toronto Press. 1999. Second Edition.
2 The UN Department of Economic and Social Affairs Statistics Division. Available here. Downloaded April 1, 2002.
3 Marilyn Waring. Counting for Nothing: What Men Value and What Women are Worth. Toronto: University of Toronto Press. 1999. Second Edition.
  • Economics Glossary

    "Not everything that can be counted counts, and not everything that counts can be counted."

    Albert Einstein

    "In August 1998 the International Labour Organization estimated that the sex industry now accounted for up to 14 per cent of the GDP of Indonesia, Malaysia, the Philippines and Thailand. Women who lost their jobs in manufacturing and services were increasingly drawn to prostitution."

    Marilyn Waring

    "Not only is women's economic contributions ignored but the omission leads to the assumption that only a small portion of the population has contributed to economic production."

    Marilyn Waring

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