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  • On January 4, 1934,

  • a young man delivered a report

  • to the United States Congress

  • that 80 years on,

  • still shapes the lives of everyone in this room today,

  • still shapes the lives of everyone on this planet.

  • That young man wasn't a politician,

  • he wasn't a businessman,

  • a civil rights activist

  • or a faith leader.

  • He was that most unlikely of heroes,

  • an economist.

  • His name was Simon Kuznets

  • and the report that he delivered was called

  • "National Income, 1929-1932."

  • Now, you might think

  • this is a rather dry and dull report.

  • And you're absolutely right.

  • It's dry as a bone.

  • But this report is the foundation

  • of how, today, we judge the success of countries:

  • what we know best as Gross Domestic Product,

  • GDP.

  • GDP has defined and shaped our lives

  • for the last 80 years.

  • And today I want to talk about

  • a different way to measure the success of countries,

  • a different way to define and shape our lives

  • for the next 80 years.

  • But first, we have to understand

  • how GDP came to dominate our lives.

  • Kuznets' report was delivered

  • at a moment of crisis.

  • The U.S. economy was plummeting

  • into the Great Depression

  • and policy makers were struggling to respond.

  • Struggling because they didn't know what was going on.

  • They didn't have data and statistics.

  • So what Kuznet's report gave them

  • was reliable data on what the U.S. economy

  • was producing,

  • updated year by year.

  • And armed with this information,

  • policy makers were, eventually,

  • able to find a way out of the slump.

  • And because Kuznets' invention

  • was found to be so useful,

  • it spread around the world.

  • And now today, every country

  • produces GDP statistics.

  • But, in that first report,

  • Kuznets himself delivered a warning.

  • It's in the introductory chapter.

  • On page seven he says,

  • "The welfare of a nation can, therefore,

  • scarcely be inferred

  • from a measurement of national income

  • as defined above."

  • It's not the greatest sound bite in the world,

  • and it's dressed up in the cautious language of the economist.

  • But his message was clear:

  • GDP is a tool

  • to help us measure economic performance.

  • It's not a measure of our well-being.

  • And it shouldn't be a guide to all decision making.

  • But we have ignored Kuznets' warning.

  • We live in a world where

  • GDP is the benchmark of success

  • in a global economy.

  • Our politicians boast when GDP goes up.

  • Markets move

  • and trillions of dollars of capital

  • move around the world

  • based on which countries are going up

  • and which countries are going down,

  • all measured in GDP.

  • Our societies have become

  • engines to create more GDP.

  • But we know that GDP is flawed.

  • It ignores the environment.

  • It counts bombs and prisons as progress.

  • It can't count happiness or community.

  • And it has nothing to say about fairness or justice.

  • Is it any surprise that our world,

  • marching to the drumbeat of GDP,

  • is teetering on the brink of environmental disaster

  • and filled with anger and conflict?

  • We need a better way to measure our societies,

  • a measure based on the real things that matter to real people.

  • Do I have enough to eat?

  • Can I read and write?

  • Am I safe?

  • Do I have rights?

  • Do I live in a society where I'm not discriminated against?

  • Is my future and the future of my children prevented from environmental destruction?

  • These are questions that GDP

  • does not and cannot answer.

  • There have, of course,

  • been efforts in the past

  • to move beyond GDP.

  • But I believe that we're living

  • in a moment when we

  • are ready for a measurement revolution.

  • We're ready because we've seen,

  • in the financial crisis of 2008,

  • how our fetish for economic growth

  • led us so far astray.

  • We've seen, in the Arab Spring,

  • how countries like Tunisia

  • were supposedly economic superstars,

  • but they were societies

  • that were seething with discontentment.

  • We're ready, because today we have the technology

  • to gather and analyze data

  • in ways that would have been unimaginable to Kuznets.

  • Today, I'd like to introduce you to the Social Progress Index.

  • It's a measure of the well-being of society,

  • completely separate from GDP.

  • It's a whole new way of looking at the world.

  • The Social Progress Index

  • begins by defining what it

  • means to be a good society

  • based around three dimensions.

  • The first is, does everyone have the basic needs for survival:

  • food, water, shelter, safety?

  • Secondly, does everyone have

  • access to the building blocks to improve their lives:

  • education, information, health and sustainable environment?

  • And then third, does every individual have access

  • to a chance to pursue their goals

  • and dreams and ambitions

  • free from obstacles?

  • Do they have rights,

  • freedom of choice,

  • freedom from discrimination

  • and access to the the world's most advanced knowledge?

  • Together, these 12 components

  • form the Social Progress framework.

  • And for each of these 12 components,

  • we have indicators to measure how countries are performing.

  • Not indicators of effort or intention,

  • but real achievement.

  • We don't measure how much a country spends on healthcare,

  • we measure the length and quality of people's lives.

  • We don't measure whether governments pass laws against discrimination,

  • we measure whether people experience discrimination.

  • But what you want to know

  • is who's top, don't you? (Laughter)

  • I knew that, I knew that, I knew that.

  • Okay, I'm going to show you.

  • I'm going to show you on this chart.

  • So here we are,

  • what I've done here is put on the vertical axis social progress.

  • Higher is better.

  • And then, just for comparison,

  • just for fun,

  • on the horizontal axis is GDP per capita.

  • Further to the right is more.

  • So the country in the world

  • with the highest social progress,

  • the number one country on social progress

  • is New Zealand.

  • (Applause)

  • Well done! Never been; must go.

  • (Laughter)

  • The country with the least social progress,

  • I'm sorry to say, is Chad.

  • I've never been; maybe next year.

  • (Laughter)

  • Or maybe the year after.

  • Now, I know what you're thinking.

  • You're thinking, "Aha,

  • but New Zealand has a higher GDP

  • than Chad!"

  • It's a good point, well made.

  • But let me show you

  • two other countries.

  • Here's the United States

  • considerably richer than New Zealand,

  • but with a lower level of social progress.

  • And then here's Senegal

  • it's got a higher level of social progress than Chad,

  • but the same level of GDP.

  • So what's going on? Well, look.

  • Let me bring in the rest of the countries of the world,

  • the 132 we've been able to measure,

  • each one represented by a dot.

  • There we go. Lots of dots.

  • Now, obviously I can't do all of them,

  • so a few highlights for you:

  • The highest ranked G7 country is Canada.

  • My country, the United Kingdom,

  • is sort of middling, sort of dull,

  • but who cares

  • at least we beat the French.

  • (Laughter)

  • And then looking at the emerging economies,

  • top of the BRICS, pleased to say, is Brazil.

  • (Applause)

  • Come on, cheer!

  • Go, Brazil!

  • Beating South Africa,

  • then Russia,

  • then China

  • and then India.

  • Tucked away on the right-hand side,

  • you will see a dot of a country with a lot of GDP

  • but not a huge amount of social progress

  • that's Kuwait.

  • Just above Brazil

  • is a social progress superpower

  • that's Costa Rica.

  • It's got a level of social progress the same as some Western European countries,

  • with a much lower GDP.

  • Now, my slide is getting a little cluttered

  • and I'd like to step back a bit.

  • So let me take away these countries,

  • and then pop in the regression line.

  • So this shows the average relationship

  • between GDP and social progress.

  • The first thing to notice,

  • is that there's lots of noise

  • around the trend line.

  • And what this shows,

  • what this empirically demonstrates,

  • is that GDP is not destiny.

  • At every level of GDP per capita,

  • there are opportunities for more social progress,

  • risks of less.

  • The second thing to notice

  • is that for poor countries,

  • the curve is really steep.

  • So what this tells us is that

  • if poor countries can get

  • a little bit of extra GDP,

  • and if they reinvest that

  • in doctors, nurses, water supplies,

  • sanitation, etc.,

  • there's a lot of social progress bang

  • for your GDP buck.

  • And that's good news, and that's what we've seen over the last 20, 30 years,

  • with a lot of people lifted out of poverty

  • by economic growth and good policies

  • in poorer countries.

  • But go on a bit further up the curve,

  • and then we see it flattening out.

  • Each extra dollar of GDP

  • is buying less and less social progress.

  • And with more and more of the world's population

  • living on this part of the curve,

  • it means GDP is becoming

  • less and less useful

  • as a guide to our development.

  • I'll show you an example of Brazil.

  • Here's Brazil:

  • social progress of about 70 out of 100,

  • GDP per capita about 14,000 dollars a year.

  • And look, Brazil's above the line.