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On January 4, 1934,
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a young man delivered a report
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to the United States Congress
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that 80 years on,
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still shapes the lives of everyone in this room today,
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still shapes the lives of everyone on this planet.
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That young man wasn't a politician,
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he wasn't a businessman,
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a civil rights activist
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or a faith leader.
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He was that most unlikely of heroes,
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an economist.
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His name was Simon Kuznets
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and the report that he delivered was called
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"National Income, 1929-1932."
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Now, you might think
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this is a rather dry and dull report.
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And you're absolutely right.
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It's dry as a bone.
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But this report is the foundation
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of how, today, we judge the success of countries:
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what we know best as Gross Domestic Product,
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GDP.
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GDP has defined and shaped our lives
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for the last 80 years.
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And today I want to talk about
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a different way to measure the success of countries,
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a different way to define and shape our lives
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for the next 80 years.
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But first, we have to understand
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how GDP came to dominate our lives.
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Kuznets' report was delivered
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at a moment of crisis.
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The U.S. economy was plummeting
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into the Great Depression
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and policy makers were struggling to respond.
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Struggling because they didn't know what was going on.
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They didn't have data and statistics.
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So what Kuznet's report gave them
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was reliable data on what the U.S. economy
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was producing,
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updated year by year.
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And armed with this information,
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policy makers were, eventually,
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able to find a way out of the slump.
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And because Kuznets' invention
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was found to be so useful,
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it spread around the world.
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And now today, every country
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produces GDP statistics.
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But, in that first report,
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Kuznets himself delivered a warning.
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It's in the introductory chapter.
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On page seven he says,
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"The welfare of a nation can, therefore,
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scarcely be inferred
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from a measurement of national income
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as defined above."
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It's not the greatest sound bite in the world,
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and it's dressed up in the cautious language of the economist.
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But his message was clear:
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GDP is a tool
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to help us measure economic performance.
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It's not a measure of our well-being.
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And it shouldn't be a guide to all decision making.
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But we have ignored Kuznets' warning.
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We live in a world where
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GDP is the benchmark of success
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in a global economy.
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Our politicians boast when GDP goes up.
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Markets move
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and trillions of dollars of capital
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move around the world
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based on which countries are going up
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and which countries are going down,
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all measured in GDP.
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Our societies have become
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engines to create more GDP.
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But we know that GDP is flawed.
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It ignores the environment.
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It counts bombs and prisons as progress.
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It can't count happiness or community.
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And it has nothing to say about fairness or justice.
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Is it any surprise that our world,
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marching to the drumbeat of GDP,
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is teetering on the brink of environmental disaster
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and filled with anger and conflict?
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We need a better way to measure our societies,
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a measure based on the real things that matter to real people.
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Do I have enough to eat?
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Can I read and write?
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Am I safe?
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Do I have rights?
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Do I live in a society where I'm not discriminated against?
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Is my future and the future of my children prevented from environmental destruction?
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These are questions that GDP
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does not and cannot answer.
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There have, of course,
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been efforts in the past
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to move beyond GDP.
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But I believe that we're living
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in a moment when we
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are ready for a measurement revolution.
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We're ready because we've seen,
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in the financial crisis of 2008,
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how our fetish for economic growth
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led us so far astray.
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We've seen, in the Arab Spring,
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how countries like Tunisia
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were supposedly economic superstars,
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but they were societies
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that were seething with discontentment.
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We're ready, because today we have the technology
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to gather and analyze data
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in ways that would have been unimaginable to Kuznets.
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Today, I'd like to introduce you to the Social Progress Index.
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It's a measure of the well-being of society,
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completely separate from GDP.
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It's a whole new way of looking at the world.
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The Social Progress Index
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begins by defining what it
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means to be a good society
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based around three dimensions.
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The first is, does everyone have the basic needs for survival:
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food, water, shelter, safety?
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Secondly, does everyone have
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access to the building blocks to improve their lives:
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education, information, health and sustainable environment?
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And then third, does every individual have access
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to a chance to pursue their goals
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and dreams and ambitions
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free from obstacles?
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Do they have rights,
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freedom of choice,
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freedom from discrimination
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and access to the the world's most advanced knowledge?
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Together, these 12 components
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form the Social Progress framework.
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And for each of these 12 components,
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we have indicators to measure how countries are performing.
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Not indicators of effort or intention,
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but real achievement.
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We don't measure how much a country spends on healthcare,
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we measure the length and quality of people's lives.
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We don't measure whether governments pass laws against discrimination,
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we measure whether people experience discrimination.
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But what you want to know
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is who's top, don't you? (Laughter)
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I knew that, I knew that, I knew that.
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Okay, I'm going to show you.
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I'm going to show you on this chart.
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So here we are,
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what I've done here is put on the vertical axis social progress.
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Higher is better.
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And then, just for comparison,
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just for fun,
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on the horizontal axis is GDP per capita.
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Further to the right is more.
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So the country in the world
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with the highest social progress,
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the number one country on social progress
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is New Zealand.
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(Applause)
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Well done! Never been; must go.
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(Laughter)
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The country with the least social progress,
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I'm sorry to say, is Chad.
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I've never been; maybe next year.
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(Laughter)
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Or maybe the year after.
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Now, I know what you're thinking.
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You're thinking, "Aha,
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but New Zealand has a higher GDP
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than Chad!"
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It's a good point, well made.
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But let me show you
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two other countries.
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Here's the United States —
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considerably richer than New Zealand,
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but with a lower level of social progress.
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And then here's Senegal —
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it's got a higher level of social progress than Chad,
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but the same level of GDP.
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So what's going on? Well, look.
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Let me bring in the rest of the countries of the world,
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the 132 we've been able to measure,
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each one represented by a dot.
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There we go. Lots of dots.
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Now, obviously I can't do all of them,
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so a few highlights for you:
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The highest ranked G7 country is Canada.
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My country, the United Kingdom,
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is sort of middling, sort of dull,
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but who cares —
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at least we beat the French.
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(Laughter)
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And then looking at the emerging economies,
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top of the BRICS, pleased to say, is Brazil.
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(Applause)
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Come on, cheer!
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Go, Brazil!
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Beating South Africa,
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then Russia,
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then China
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and then India.
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Tucked away on the right-hand side,
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you will see a dot of a country with a lot of GDP
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but not a huge amount of social progress —
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that's Kuwait.
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Just above Brazil
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is a social progress superpower —
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that's Costa Rica.
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It's got a level of social progress the same as some Western European countries,
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with a much lower GDP.
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Now, my slide is getting a little cluttered
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and I'd like to step back a bit.
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So let me take away these countries,
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and then pop in the regression line.
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So this shows the average relationship
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between GDP and social progress.
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The first thing to notice,
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is that there's lots of noise
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around the trend line.
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And what this shows,
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what this empirically demonstrates,
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is that GDP is not destiny.
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At every level of GDP per capita,
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there are opportunities for more social progress,
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risks of less.
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The second thing to notice
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is that for poor countries,
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the curve is really steep.
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So what this tells us is that
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if poor countries can get
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a little bit of extra GDP,
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and if they reinvest that
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in doctors, nurses, water supplies,
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sanitation, etc.,
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there's a lot of social progress bang
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for your GDP buck.
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And that's good news, and that's what we've seen over the last 20, 30 years,
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with a lot of people lifted out of poverty
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by economic growth and good policies
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in poorer countries.
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But go on a bit further up the curve,
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and then we see it flattening out.
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Each extra dollar of GDP
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is buying less and less social progress.
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And with more and more of the world's population
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living on this part of the curve,
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it means GDP is becoming
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less and less useful
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as a guide to our development.
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I'll show you an example of Brazil.
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Here's Brazil:
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social progress of about 70 out of 100,
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GDP per capita about 14,000 dollars a year.
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And look, Brazil's above the line.
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Brazil is doing a reasonably good job
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of turning GDP into social progress.
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But where does Brazil go next?