How Comprehensive Wealth Works
Including comprehensive wealth in our measures of national progress will help map the future of a sustainable Canada, for us, and for those who will inherit the country we create through our decisions.
Canadians generally accept that the goal of public policy is to make life better for everyone, for those living today and for generations to come. However, improving life for the current generation remains the primary goal of public policy—ensuring the well-being of our children and grandchildren gets much less attention. The measures we use to gauge national progress such as the unemployment rate, the inflation rate, and GDP, reflect this short-term view. These are all measures of how well we are doing today. But none of these influential measures tells us anything about how well off the next generation will be.
With the support of the Ivey Foundation, the International Institute for Sustainable Development (IISD) has released a detailed assessment of Canada’s comprehensive wealth. We want Canadians to understand what comprehensive wealth means and how measuring it can positively impact our future. IISD and Ivey believe that this report will help shift public and government focus towards a more balanced perspective on progress.
Using comprehensive wealth indicators to measure our country’s progress can map the future of a sustainable Canada, for us, and for those who will inherit the country we create through our decisions.
Measuring Wealth Has Long Been
A Cornerstone Of Business
Businesses have long measured wealth as well as income. Business owners know that the value of their assets—their wealth—provides insights into their company’s health and it’s potential for future growth. Corporate assets such as buildings, machinery, patents and resource reserves, are recorded on a balance sheet. Together, a company’s balance sheet and income statement allow for robust long-term planning. It’s time for nations to plan using a more comprehensive framework as well. The comprehensive wealth report is an important step in that direction.
What About The GDP?
Since the 1940s, measuring economic progress has focused largely on national income, GDP, and a few other short-term measures like inflation and unemployment rates. There is no denying that GDP is an important tool for guiding the economy. However, there is more to progress than simply growing income. Equally important is expanding the foundations of well-being; that is, the produced, human, natural and social capital assets that make up the comprehensive wealth portfolio.
As William Robson, president of the C.D. Howe Institute, recently said in The National Post, “GDP is so 20th century.” The head of this leading independent economic think-tank also thinks that comprehensive wealth will be the “next big thing.” Statistics Canada and other agencies are already tracking some comprehensive wealth measures, so Canada is well positioned to lead this “next big thing.”
Though relevant as a measure of current
economic progress, GDP must be complemented with new measures that reflect the prospects for long-term sustainability and well-being. Measuring GDP is important, but it doesn’t tell the whole story. GDP is just too narrow on its own.
Canadians may be earning a considerable income today, which obviously benefits this generation. However, high income today is no guarantee of high income tomorrow. Excessive depletion of natural resources might reduce our ability to trade. Insufficient investment in public education may jeopardize Canada’s place in the competitive global economy. Eroding social structures may reduce the cooperation needed for the economy to work effectively. Worrisome trends like these cannot be revealed by GDP measures until it’s too late to do something about them.
Knowing our long-term development is sustainable requires further measures than just GDP. The goal of comprehensive wealth is not to replace GDP but to develop complementary indicators that better assess the conditions required for long-term well-being.
It’s time to measure what matters —
for a sustainable and prosperous Canada.