The unpaid work that GDP ignores -- and why it really counts

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As you've heard, when I was very young,

I was elected to
the New Zealand Parliament.

And, at that age,

you learn mostly by listening
to others' stories.

I remember a woman
who'd been injured in a farm accident,

and it was coming up to shearing time

on the farm,

and she had to be replaced by a shepherd,

by a rousie in the wool shed,

and of course there was still someone
needed to manage the household

and to prepare the food
for the shearing gangs.

And her mother came to help with that.

But the family got
no compensation for the mother,

because that's what mothers
and family members are supposed to do.

One year, a company called
Gold Mines New Zealand

applied for a prospecting license
on our beautiful Mt. Pirongia.

It is a mountain

full of extraordinary ecosystems,

of verdant, verdant native forests.

It produced oxygen, it was a carbon sink,

it was a home for endangered species
and for pollinating species

in the farmland around.

And the mining company put up
this great economy prospectus

that was about how much money

could be made from mining our mountain,

about all the growth and development

that would show in New Zealand's
budgetary forecasts,

and we were just left with the language

of all that we valued about our mountain.

Fortunately, we stopped,

and then I remembered

a woman who had three children under five,

who was caring for her elderly parents,

and nobody seemed to think
that at some stage

she might actually need
some assistance with childcare,

because she wasn't in the paid workforce.

And there began to be a pattern

in all of these stories I was being told,

and I started to ask enough questions

to try and track to the core
of this pattern of values

that was part of all of these stories.

And I found it

in an economic formula

called the Gross Domestic Product,

or the GDP.

Most of you will have heard of it.

Many of you won't have any idea
what it actually means.

The rules were drawn up
by Western-educated men in 1953.

They established a boundary of production

in drawing up these rules.

What they were keen to measure

was everything that involved
a market transaction.

So on one side of the boundary,

everything where there was
a market exchange was counted.

It doesn't matter whether
the exchange is legal or illegal.

Market exchange in the illegal trade
in armaments, musicians,

drugs, endangered species,

trafficking of people,

all of this is great for growth

and it all counts.

On the other side

of the boundary of production,

there was this extraordinary
phrase in the rules

that the work done by the people
they called "non-primary producers"

was "of little or no value."

So I thought, let's see how many
non-primary producers we have here today.

So in the last week or so,

how many of you have transported
members of your household or their goods

without payment?

How many of you have done
a bit of cleaning, a bit of vacuuming,

a bit of sweeping,
a bit of tidying up the kitchen?

Yeah?

How about going shopping
for members of the household?

Preparing food? Cleaning up afterwards?

Laundry? Ironing?

(Laughter)

Well, as far as economics is concerned,

you were at leisure.

(Laughter)

(Applause)

Now, how about the women

who have been pregnant
and who have had children?

Yes.

Now, I really hate to tell you this,

because it might well
have been hard labor,

but at that moment you were unproductive.

(Laughter)

And some of you may
have breastfed your infant.

Now, in the New Zealand
national accounts --

that's what the figures are called,
that's where we get the GDP --

in the New Zealand national accounts,

the milk of buffalo, goats, sheep and cows

is of value,

but not human breast milk.

(Laughter)

It is the very best food on the planet.

It is the very best investment
that we can make in the future health

and education of their child.

It doesn't count at all.

All of those activities are on
the wrong side of the production boundary.

And something that's very important

to know about this accounting framework,

they call it accounts,

but there's no debit side.

We just keep market exchanges going

and it's all good for growth.

We're in Christchurch,

where people have lived through
a devastating natural disaster

and recovered,

and ever since that time,

New Zealand has been told

our growth figures are great
because we're rebuilding Christchurch.

Nothing was ever lost

from the national accounting framework

because of the loss of lives,

the loss of land,

the loss of buildings,

the loss of special spaces.

Now it might also
be becoming obvious to you

that this boundary of production works
in terms of our environment.

When we're mining it,

when we're deforesting,

when we're deleting our environment,

when we're fishing out
our marine resources,

legal or illegal,

as long as market is exchanged,
it's all good for growth.

To leave our natural environment alone,

to sustain it, to protect it,

is apparently worth nothing.

Now, how and what can we do about this?

Well, I wrote first about it 30 years ago.

Then in 2008, after
the Global Financial Crisis,

President Sarkozy of France,

asked three men who had all
won Nobel Prizes in Economics,

Sen, Fitoussi, and Stiglitz,

to discover what I'd written about

30 years ago.

(Applause)

Relying on per capita GDP, relying
on these growth figures, they said,

doesn't appear to be
the best way to proceed

to make public policy,

and I totally agree with them.

(Laughter)

One of the things that you notice
about these rules,

they are revised --

1968 they were revised, 1993, 2008 --

is that the revisions
are mostly done by statisticians,

and the statisticians do know
what is wrong with the data,

but hardly any of the economists
ever stop to ask that same question.

So, in 2019,

the GDP is in even worse shape.

You see, to measure GDP,

you have to assume
that some kind of production

or service delivery or consumption

occurs inside a nation-state,

and you know where that is.

But trillions of dollars
are circling the globe

in mini-parts from our Googles,
our Facebooks, our Twitters,

siphoned through a number of tax shelters,

so that when we click on our computer

and go to download some software,

we don't know where it was produced,

and frankly no one knows where we are

as we're consuming it either.

These tax-free havens

distort the GDP to such an extent

that about three years ago,

Europe looked askance at Ireland

and said, "We don't think
you're reporting correctly,"

and in the next year their GDP
went up 35 percent.

Now, all that work that you're doing

when you were at leisure and unproductive,

we can measure this

and we can measure this
in time use surveys.

When we look at the amount
of time that's taken

in the unpaid sector,

what we find is that in almost every
country where I've ever seen the data,

it is the single largest sector
of the nation's economy.

In the last three years, for example,

the UK statistician has declared

that all of that unpaid work

is the equivalent of all manufacturing

and all retailing in the UK.

In Australia, the single largest sector

of Australia's economy
is unpaid childcare,

and the second largest sector
is all the rest of the unpaid work,

before banking and insurance

and financial intermediation services

clock in at the largest part
of the market sector.

Just last year, the Premier
of the Victoria state of Australia

declared that half of that state's GDP

was in fact the value
of all the unpaid work.

Now, as a policy maker,

you cannot make good policy

if the single largest sector
of your nation's economy

is not visible.

You can't presume to know

where the needs are.

You can't locate time poverty.

You can't address
the most critical issues of need.

So what can go in the place of GDP?

Well, GDP has got many other problems, OK?

We don't behave in a way that assists GDP.

Large numbers of people around the planet

are now using household assets,

their cars, their homes themselves,

for Uber, for Airbnb.

And no, we're not supposed to use
assets from the unpaid sector

to make money in the market sector.

This is confusing!

(Laughter)

And very difficult to measure.

So economists don't want to know

what's wrong with their
most important GDP,

and I think they've got so many problems
they can just move off to a quiet corner

and continue to publish that

and not come anywhere near the rest of us

with this talk of capitals

and natural assets

and other ways in which to colonize
the rest of our lives.

I think time use is the most important
indicator going forward.

Every one of us has
exactly the same amount of it.

If there are going to be critical issues

as we move forward,

we need a solid database,

because whatever we change
away from the GDP,

we're going to be stuck with it
for about 50 years,

and we need something
that's solid and immutable

and that everybody understands,

because if I put
time use data in front of you,

you'll immediately start nodding.

You'll immediately start
recognizing what it means.

And, honestly,

if I put the GDP data in front of you,

a lot of you would prefer
to leave for morning tea.

(Laughter)

We also need to be looking
at the quality of our environment.

As every year goes past,

we get much better

at measuring the devastation of it,

of measuring how little
we protect anymore.

And yet, with climate change,

we don't all have to be scientists

to see, to feel, to know
what is happening to our beautiful planet.

We need, in this country,

the paramountcy of what we can learn
from ??, from ??,

from what Maori who have been here
for centuries can teach us.

When you're in parliament,

and you're not in
an economist's frame of mind,

you make decisions across a range of data.

You look at the tradeoffs.

You think deeply about implications

way beyond whether or not
GDP is up or down.

Economists want to turn everything

into a monetary exchange,

even time use data,

so that they can carry on

trying to decide

whether GDP is up or down.

That's not a great way to go.

And others have said to me,

"Marilyn, why don't you just work
on a system that includes

all the unpaid work,

and the pregnancy and the birth

and the lactation in the GDP?"

There's a very important
moral and ethical answer to that,

and it is that I do not want
the most valuable things on earth,

the things I treasure,

sitting in an accounting framework
that things that war is great for growth.

(Applause)

So from now on,

whenever you listen to the news,

you're not going to go blank
when they say GDP.

You're going to think,

I know what they're talking about,
and it's not good.

(Laughter)

I know that there are alternatives,

and I'm going to spend my time

correcting people,

talking to them about this value base,

and talking to them about
what the alternatives can be,

because humankind

and our planet

need another way.

Thank you.

(Applause)