Global Current Issues: July 2017

Jay Owen Beyond GDP

Total US nonfarm payroll employment in June rose by 222,000 while May was revised up from 138,000 to 152,000 and April was revised up to 207,000.   In 2016, job gains totaled 2.2 million.  Over the past 3 months of 2017 job gains averaged 180,000 per month.  Indicating strong ending to the Obama presidency.  Trump’s decision to backslide on the Paris Climate agreement, see “Climate Risking the Trump Brand” changed dynamics at the G20 Hamburg Summit, July 7-8.  With Germany’s Angela Merkel and France’s Emmanuel Macron now viewed as leaders of the free world.  Trump’s meeting there with Putin with no reporters pitted him against Putin and Lavrov, with only Tillerson at this side- without even a US note-taker, let alone US National Security Adviser, as customary.  Reports from this meeting of 2 hours, 16 minutes came from Tillerson and from Russian sources.

The US labor force participation in June was 62.8%.  People returned to looking for jobs, so the unemployment rate rose to 4.4%, but 7.1% for African Americans, Hispanics 4.8% and Asians 3.6%.  GDP was1.2% in the first quarter of 2017 after increasing at an annual rate of 3.54% in the third quarter of 2016, and 2.1% in the 4th Quarter.  Labor market statistics are notoriously subject to revision.  The number of unemployed was 7 million people.  There were 514,000 discouraged workers while the employment-population ratio rose slightly to 60.1%.  We expect the Fed to continue to raise US interest rates slightly and gradually.  Wall Street is continuing to absorb the Fed’s long-awaited gradual rate increases from zero in 2015.

The markets rally after Trump’s electoral college victory continued on expectations of his tax cuts promised as well as his large-scale infrastructure plan “Greening Trump’s Infrastructure Plan”.  These are now on hold as focus on Russia’s interference in US politics widened.  The fight over healthcare and widening investigations of Russian hacking have become the focus in Washington together with threats from North Korea, and news of continuing Russian spying on US electoral processes.  The Electoral College instituted by US founders to keep small states, some slave-owning, in the Union met December 19th to confirm Donald Trump’s electoral win over Hillary Clinton’s almost 3 million popular vote.  Trump’s historically low 40% approval fell further confirming a deeply divided country.  Many in the US and Europe are concerned over Russia’s hacking and Trump’s style.  (“Concern Over Trump’s Tweets Grow”).

Continued global weakness could be expected in 2017, due to Europe’s refugee crisis, Brexit, US political uncertainty, still-turbulent oil markets in spite of OPEC’s pledge to cut production.  Wall Street still ponders Trump’s trade and climate policy and misunderstands China’s stock market – even though as in the USA, these markets resemble casinos and are not reflective of the real economies in China or the USA.  Payrolls changed little: average hourly earnings were $26.25 while the average for non-supervisory private sector rose to $22.03.  Market players now focus more on the need for wage growth, still continuing its historic trend at only some 2.5% annually—recognizing that this is key to maintaining aggregate demand.

Wall Street is still hoping for more of Trump’s promised regulatory repeals and more tax cuts, while also focusing on the Fed and other central banks, China, oil prices and global GDP–measured growth.  Financial markets are still avoiding real world risks of water shortages and climate change as I reported in Risks! What Risks?.  Central banks’ tools are exhausted as I discussed in Ben Bernanke and Milton Friedman Were Right: Helicopter Money or Qualitative Easing?  and many calls for governments to step up with fiscal spending, particularly on infrastructure were echoed by the OECD.  Financiers and media reporting daily roller-coaster volatility are still ignoring the destabilizing role of computers, algorithms and high-frequency trading’s many “flash crashes” and the need for Reforming Electronic Markets and Trading, now an official UN document.  This UN Inquiry will now follow up for two more years on these issues and the disruptions to traditional finance by fintech and IT startups in which Ethical Markets continues to participate (see my “FINTECH;  The Good and Bad News for Sustainable Finance”).   The USA is still unevenly shared as I note in “Facing Up to Inequality”.  The economy is still the top worry of voters as well as the growing inequality gap between Wall Street and Main Street, with these anxieties drove much of the election debate.  For example, they are concerned as to what extent corporations are fair as found in the survey by JUSTCapital founded by hedge fund executive Paul Tudor Jones, who announced recently that his firm will lower its fees.  Just Capital’s 100 Leading Companies, Nov. 30, 2016.  Rising sea levels in South Florida concerned the The Palm Beach Post, showing picture of water-logged roads around Trump’s Mar-a-Lago and other properties on this “billionaire’s row”.  Bloomberg reported that pessimistic owners are selling to optimists.

It has been difficult to find information on government jobs, but they are now included in the main BLS summary. Losses of government jobs are key to understanding the state of the recovery.  Total government jobs in June are estimated at 22,353,000.  We report on these government jobs to correct misstatements by some politicians that “government doesn’t create jobs – only the private sector creates jobs”. Political uncertainty in Congress and the unprecedented political shifts among voters will likely continue through 2017.  Trade issues are in focus for voters and both parties acknowledge the plight of those dis-employed by corporations offshoring jobs, as well as US trade deficits.  The goods and services deficit in May was $46.5 billion, exports were $192 billion, and imports were $238.5 billion.  Beyond off-shoring, jobs losses via automation are a growing concern, discussed in our TV program Robot’s Taking Over:  What Will Humans Do?

The politicization of the Supreme Court after the death of Justice Anton Scalia with the Senate seating  Neil Gorsuch by changing its rules, remains unprecedented.  The deeper issues remain as in Time To Re-Balance The Corporate-Friendly Supreme Court and Aligning the Supreme Court with the US Constitution.  Further adverse consequences beyond gridlock are continuing unrest across the USA over the degraded public election debate influenced by Russian hacking now confirmed by 17 U.S. intelligence agencies, fake news, police brutality and shootings of unarmed African American citizens, unresponsive legal systems as well as Trump’s second blocked travel ban – all damaging the USA’s reputation worldwide.  Trump’s erratic policy proposals, executive orders, tweets and phone call are widely reported internationally, as well as the USA lag in internet access and broadband ranks the USA at 28th worldwide behind many emerging economies.  (See also my “New Trends in Globalization”)

Public debates turn to job outsourcing which Trump vowed to end by withdrawing from the Climate agreement and charging a proposed border tax on company products entering the USA.  Instead he has taken credit for many companies’ previously announced job creation similar to the story of Carrier in Indianapolis saving 1,000 jobs through tax breaks while sending some 1,000 other jobs to Mexico.  Such isolated jaw-boning of companies cannot substitute for overall economic policy. Meanwhile wages for middle class families still need to close the gap between most workers and the 1% winners.  California became the first state to raise the minimum wage to $15 an hour.  The some ten percent of Americans who gained from the stock markets rise were doing well with financial activities adding 169,000 jobs over this year.  Professional, technical and business services added 35,000 in June and total 642,000 jobs in the past 12 months.  The rest who rely on lower-wage jobs in the real economy for their income had their spending constrained.  Job growth has shifted to healthcare with 35,000 in June.  Social assistance added 23,000 jobs in June, with 115,000 over the past 12 months.  Job cuts if Obama care is repealed are not yet estimated, nor are the numbers losing coverage.  Demand for restoring purchasing power to minimum wages was widely supported even in the “red” states for the White House increase to $10.10 an hour.  A survey of the US public in October by JUSTCapital found majorities supporting better pay and conditions for US workers.  Seattle became the first city to offer $15 an hour in June.  In 2016, so far Los Angeles and New York City have followed suit.

Mining sector jobs grew by 8,000 in June, mostly in support services.  While this reflects global commodity prices, some mining activities such as coal are phasing out as with the bankruptcy of coal companies including giant Peabody.  As we at Ethical Markets point out with our EthicMark® GEMS standard, global gem mining is now obsolete and unnecessary since science now creates diamonds and other gems in laboratories in many countries, as also reported in The Economist, July 1, 2016  and NPR, December 1, 2016.  De Beers reported a 32% decline in its diamond sales in 2015.  The human and environmental hazards of mining gems are recognized in several UN resolutions on “blood diamonds,” while Russia recently dumped a large quantity of mined diamonds – tanking the global market, as documented in “Beyond Bloodstained Gems: New Science and Standards”.

Consequences of budget cutting and “austerity” are seen in the job losses we have witnessed in Europe.  The migrant crisis is forcing EU decision-makers to choices about the costs of absorbing these refugees fairly in member countries or a loss of solidarity in the EU itself.  Britain’s referendum on “Brexit” shocked the 48% who voted to stay in the EU, and Theresa May, Conservative Prime Minister’s losses in the latest election make negotiations on the EU’s Article 50 for the exit even harder.  Many voters still express remorse on Brexit as well as much consternation in the EU.   Concern grows in Europe over Russian hacking and political interference in the election of Emmanuel Macron in France and those upcoming in Germany.  In Austria and France, as well as the Netherlands, voters rejected right-wing candidates.

The wage gap in the US continues, fueling the national debate on inequality and that among professional economists over Thomas Piketty’s Capitalism in the 21st Century, which concludes that this inequality is endemic and requires global taxes on wealth (Pikettymania, cover of Businessweek, June 2, 2014).   TIME business editor Rana Foroohar’s Makers and Takers (2016) overview details how Wall Street is now preying on businesses on Main Street rather than serving them.  Donald Trump’s promise to “drain the swamp” of special interests in Washington, has become the butt of jokes.  His picks to serve a Trump administration are largely insiders with many Wall Street billionaires, from Goldman Sachs, including right-wing advisor Steven Bannon.   Even IMF chief Christine Lagarde focused on inequality in her September 2014 speech at Georgetown University and in July repeated her urging of EU countries to re-structure Greece’s un-repayable debt. More realistic approaches include those by business leader/economist Peter Barnes in With Liberty and Dividends for All which calls for user fees on exploitation of all commonly owned resources: e.g., air, water, the electronic spectrum and rebated to all citizens-owners as dividends.

Unemployment stands at 7 million people with 5.3 million part-time workers still looking for fulltime jobs and 514,000 discouraged workers no longer counted in the unemployment rate of 4.4%.  A new debate began about whether the “sharing economy” (Task Rabbit, Mechanical Turk, Uber, Lyft, et al) can provide decent jobs or whether it will lower wages, since its “freelancers” accept these part-time jobs along with uncertain hours, no benefits or security.  Such companies are less about sharing and cooperation and more about extending and re-organizing labor markets in what is now called the “gig economy”.  Recent books make such critiques: Throwing Rocks at the Google Bus (Rushkoff, 2016) and Raw Deal (Hill, 2015) which I reviewed in  Self-employment remains a growing trend, with many unemployed people preferring to remain independent, often home-based consultants or joining such social, office-sharing sites as WeWork.  Meanwhile, many of these Silicon Valley startups and the lofty valuations of the “unicorns” are now slipping and with many which went public trading well below their IPO prices.

Policy wonks and statisticians set of revisions announced back in July 31, 2013, and back cast to 1929 have begun accounting for the evolution of the US economy from manufacturing to services.  The US Bureau of Economic Analysis (BEA) finally entered the 21st century.  GDP now includes much of the intangible production and services which make up over 70% of mature 21st century economies: software, R&D, entertainment, trademarks, copyrights, design and other creative innovation.  The BLS now breaks out employment in Information Technology, such as computer services.  Back to the July 31, 2013 report from the BEA, US GDP then rose 1.7% (with the revised accounting method adding 0.41% of the total).  Italy and Britain now inflate their GDP growth by including prostitution in Services!  So far, the shifts of these intangibles from “costs” to “investments” is slight.  At last, The Economist weighed in on the deficiencies of GDP, offering its own somewhat improved GDP-Plus.  Better late than never!  Still not included is the most important investment all societies make in their future: education, still categorized as an “expense”!  With student debt now at over $1.2 trillion and too few jobs available, many are now opting for online courses now exploding as MOOCs offer free access.  Ethical Markets now provides its free MOOC at for global citizen activists and lifelong learners.

Congress still drives to repeal Obama Care and cut reimbursements to Planned Parenthood for its general health services already rendered to patients in poverty.  Cuts favored by Republicans fall on vital public health services as well as our most vulnerable, politically less-influential citizens.  We will need to balance further government job cuts with hopefully more gains in the private sector.  Ethical Markets 2017 update of the Green Transition Scoreboard® focuses on Deepening Green Finance.  Earlier reports cover  Energy Storage & Batteries and in the 2016 report on “Ending Externalities: Full-Spectrum Accounting Clarifies Transition Management”.  Earlier reports have focused on the growing market for green bonds, as reported in the Institutional Investor, September 2014.  The February 2015 report focused on the UN’s Sustainable Development Goals (SDGs) is now ratified by its 193 member countries.  Current cumulative total of private investments in green sectors tracked worldwide since 2007 is $8.1 trillion, indicating that the global green transition is now unstoppable.

As more cuts in government jobs are deemed necessary by Republicans, the need to continue growing new jobs in renewable energy, smarter infrastructure and cities as well as in R&D and education will be critical. The official unemployment rate of 4.4% shows the number of unemployed persons at 7 million is still too high. Climbing out of the 2008 financial crisis where GDP dropped by 9% has proved to be the long climb back most analysts expected.  As President Obama left office he provided Trump with a sound economy and healthy job growth.   Few can acknowledge a key problem: the US domestic money supply, which is created by banks’ lending and securitization, has shrunk.  Since our money is created by private banks when they make loans, after 2008, lending dried up and securitization of loans which had ballooned during the housing bubble collapsed.  Today, hedge funds are buying up foreclosed homes and renting them at high rates and beginning a new round of securitization of these rental incomes into backing more bonds.  Congress began in 2016 investigating the huge spike in drug prices and the role of hedge funds and lack of competition.  As hedge funds enter Puerto Rico to take advantage of its financial crisis, they are renamed “hedge-hogs”.

The 2009 $789 billion stimulus (mostly individual tax cuts, infrastructure and help to states) did create and save over 1 million jobs along with 1.1 million saved in the auto company bailouts as reported in The New New Deal.  The money supply shortfall remained which former Fed Chair Ben Bernanke recognized in his QE1, QE2 and other unusual measures of taking toxic assets onto the Fed’s balance sheet.  At last, mainstream critiques offering alternatives appeared in Foreign Affairs, September/October 2014, urging direct QE with stimulus cash to citizens rather than banks.  Now many central banks talk of “helicopter cash” as Milton Friedman recommended as the fastest, most effective stimulus as I describe in “Bernanke and Friedman Were Right: Helicopter Money or Qualitative Easing?”.  New efforts in many countries to bolster purchasing power and aggregate demand with basic incomes emerged, after the success of Brazil’s “Bolsa Familia” in bringing 40 million out of poverty (Brazil’s Antipoverty Breakthrough, Foreign Affairs, Jan/Feb 2016) .   The current crises in Brazil over endemic corruption and losses in GDP-measured economic growth obscure the country’s natural capital riches and creative human energies.  Bernanke’s reliance on the textbook “trickle down” model gave almost free money to the big banks at the Fed’s discount window which never trickled down to Main Street.  Instead, the old theory failed to account for the globalization of finance and that the banks sent most of the QE’s new money into asset bubbles offshore, some creating jobs in China and Brazil, while much ended up in speculation on European bonds, derivatives, commodity ETFs, rising food prices and unwanted asset bubbles in BRIC countries. Lawyer Ellen Brown analyzes all this in her Even the Council on Foreign Relations Is Saying It: Time to Rain Money on Main Street.   The head of Britain’s Labor Party, Jeremy Corbyn now advocates a similar “Peoples QE.”

A computer model now links speculation to food price spikes, (“The Economics of Curbing Speculation in Food”).  Current Fed Chair Janet Yellen brings in a broader view beyond the domestic economy, looking at the global effects of the strong dollar on emerging economies.  Meanwhile, domestic savers in the USA still suffer from low to zero or negative real interest rates as now in several EU countries.  This view outside the economics box is now provided by IMF head Christina Lagarde and in my analysis of “Abenomics” in Japan at the Crossroads.  Prime Minister Abe met with Donald Trump and his daughter Ivanka in November as well as in February at Trump’s Mar-A-Lago Club, where members dues were raised to $200,000 annually.  Abe’s gift of a gold golf club we assume Mr. Trump returned. The progress at the UN COP 21 Climate Conference in Paris now ratified and in effect after COP22 in Marrakech in October 2016 augers the end of the fossil fuel era, but cannot prevent more mega-storms like Sandy, Bohpa and Haiyan, both of which hit the Philippines.  Whatever the price of oil, mostly used in transport, demand continues declining due to the spread of electric vehicles “Assessing Risk of Fossil Reserves”.  The UN Summit on Climate Change in New York City in 2016 continued to see citizens marching peacefully for progress on climate change, similar to the larger, women-led demonstrations in cities worldwide, on January 21st, 2017.

The SDGs were ratified in the UN General Assembly, New York, in September 2015, at which Pope Francis spoke, ushering in the new paradigm of sustainable development beyond money-denominated GDP growth, reinforced by the UN Inquiry’s report The Financial System We Need.  During COP21 in Paris, December 2015, Ethical Markets co-hosted events with HELIO International on their new indicators, HIFI which fits well with our 2015 Green Transition Scoreboard® Report.  The World Economic Forum 2016 Report on Global Risks has gone beyond financial risk models to look at the real risks our human family faces, such as water shortages.  We welcome the investor conference with 500 asset managers and trustees organized by Ceres at the UN, in 2016, pledging to accelerate shifting from fossilized sectors to $82 billion green bonds in 2016 and renewable energy for more efficient sustainable futures worldwide.  The new:  Transition Risk-O-Meter and Drawdown offer concrete plans.

The Fed’s ending of bond purchases and gradual interest rate hikes in 2016 reveal that the USA faces continued domestic and global uncertainty, currency volatility and unresolved issues, particularly over China, the world’s second largest economy and Europe.  Financial markets are now dominated by algorithmic high-frequency trading on electronic platforms and dark pools beyond the eyes of regulators. Ethical Markets expert seminar on “Reforming Electronic Markets and Trading” debated these issues in New York, Nov. 3, 2014, and its report launched in Washington, DC, January 2016, now an official document in the UN Inquiry’s report.  The Inquiry was taken up at the G20 meeting in Beijing, with China in the lead, endorsing green finance.  Additional Inquiry studies, particularly of fintech and its disintermediation of traditional finance will continue for 2017 and 2018.

The debate across EU countries on the growing refugee crisis, the failure of austerity programs and the uncertainty in Britain on how to exit the EU all call for fundamental reforms.  The ECB is still lowering its interest rate toward 0% and began its own brand of quantitative easing – to the delight of global markets.  Many EU bonds and banks now join in offering only negative interest rates.  Ellen Brown looks at the implications in “Hang Onto Your Wallets: Negative Interest, the War on Cash, and the $10 Trillion Bail-in”.  Italy’s new government vows to increase employment and tackle the stagnation of austerity.  Cyprus’ problems in 2013 produced the most radical bail-out plan, focused on haircuts to bank depositors as well as their equity-holders (“It Can Happen Here: the Confiscation Scheme Planned for US and UK Depositors”).  This has resulted in a 2-tier euro – as well as the flight to volatile bitcoins and many other cryptocurrencies and other digital forms of payment, as described in The Age of Cryptocurrency (2015) and many alternative investments, including farmland and forests in developing countries, and the growth of crowdfunding.

Britain’s central bank President Mark Carney announced that climate change is a key world issue and that many reserves of fossil fuels will not be burned and need to be written down.  This has shifted asset allocation models and augers 2016 as the mainstream shift to low-carbon economies.  We advocate re-classifying fossil reserves a “feedstocks” for future use in plastics, construction and materials, so that they remain valuable and in the ground unburned. Meanwhile, the IMF estimates global subsidies to fossil fuels now tops earlier estimates at $5.3 trillion.  Lord Adair Turner, Britain’s former preeminent financial regulator, in Between Debt and the Devil called for an end to allowing private banks to create the nation’s money supply at interest and recommended this vital function should be returned to Britain’s public treasury (video).  This debate reached the British House of Commons in November 2013 and a civic coalition called for “Transforming Finance” January 2015.  In the USA stock markets rise while jobs and incomes stagnate and companies continue to hoard cash.  Tax avoidance by “reversions” of US companies relocating in other countries is now a hot issue, and new rules by the US Treasury may be a curb on these practices.  Will central bankers, including Janet Yellen, rethink theory-induced blindness in their “trickle down” policies and focus on the real economies?  Deeper reforms of finance are needed as exposed recently by Michael Lewis in Flash Boys (2014), as earlier in Broken Markets, Dark Pools and Bailout.  These were discussed at the conference “Fixing the Banking System for Good” at the Philadelphia Federal Reserve, April 2013, and at the annual conference of the Public Banking Institute, June 2013.  Ethical Markets expert seminar in New York City on “Reforming Electronic Markets and Trading” was reported on CSRWire.

Former US FDIC chair Sheila Bair, author of Bull by the Horns, joined former UN Secretary General Ban Ki-moon in announcing support for a financial transactions tax of well below 1%, to help curb high-frequency trading, also advocated by Independent Bernie Sanders to fund higher education.  This echoes growing calls in eleven EU countries, including Germany, France and pension funds in France and Holland.  A bill in the US Congress called for a financial tax for all US transactions as well.  In January 2013, the European Union approved a 0.1% financial transaction tax for member countries.  The focus as a “cancellation fee” targets high frequency traders who place thousands of orders each millisecond then cancel most of them immediately.  These taxes can curb this speculation and help raise some $400 billion annually for public needs.  Pushback by banks and the mainstream financial press continues.  Meanwhile, market-based approaches to reforming HFT such as the IEX platform continue to gain volume and new investors, while its application to the SEC as a national exchange was initially opposed by incumbents NYSE, NASDAQ and other big players.  Ethical Markets and our allies have supported IEX before the SEC, in its authorization approval in 2016.  (See our comment).  A new standard for electronic trading was launched by KOR Group, LLC, in September, the Best Execution Accreditation (BestEx), whereby broker-dealers eschewing the “maker-taker” kickbacks for placing their clients’ order flow can claim their higher ground practices (  KOR Group founded the non-profit, Healthy Markets ( ) and Ethical Markets have linked their sites.

The G20’s 2016 Beijing meeting boosted interest in the transition to green finance and accepted the new model of sustainable development beyond the mismeasurement of “growth” perpetuated by GDP. This still causes mis-pricing of sovereign bonds, energy, food and most goods due to externalizing of social and environmental costs and business models still based on “profits” based on passing on such unrecorded costs to taxpayers and future generations as “externalities”.  My Mapping the Global Transition to the Solar Age: from Economism to Earth Systems Science critiques economics from wider scientific research and calls for cranking into financial models all our new knowledge from Earth-observing satellites.  In company accounting, better models are provided by SASB and IIRC.  The UNEP global inquiry on designing financial markets for long-term sustainability steered by a high-level advisory group of global financiers, government and business leaders will now continue its excellent research and global networking of best practices.  The Chartered Institute of Management Accountants (CIMA) focuses on values and the six forms of capital:  financial, built, intellectual, social, human and natural. They will measure the performance of companies by the extent to which they enhance or degrade all six forms of capital.

Measuring societies’ “progress” beyond GDP became a hot topic at Rio+20, and Ethical Markets’ 2013 “Beyond GDP” survey by Globescan in eleven countries, co-sponsored by the Institute for Chartered Accountants of Britain and Wales (ICAEW) and Tomorrow’s Company (, followed the 2007 and 2010 results in continued finding of wide majorities favoring addition of indicators of health, education and environment ( released May 2013.  The Inclusive Wealth Index (IWI) devised by the UN University, the International Human Development Program and UNEP, while advancing considerably beyond GDP, suffers from too much baggage from obsolete economics: relying on prices and willingness-to-pay, while acknowledging their inaccuracies due to “externalities.”  The new Social Index from Harvard’s Michael Porter ignores infrastructure, employment, income and wealth, national security and recreation, which are all covered in our Ethical Markets Quality of Life Indicators originally launched in cooperation with the Calvert Group in 2000.  Most economists fail to examine the deeper problems with price systems, inflation, money-printing and the politics of money-creation and credit allocation – arguably deeper sources of un-sustainability in global financial systems (see the Transforming Finance statement).

A useful overview of the issues relating to GDP and comparisons with other indicators is the BrainPool Project, funded by the European Commission, concluding that a “quality of life” approach is likely to find acceptance, confirming three surveys by Globescan for Ethical Markets (2007, 2010, 2013) mentioned earlier.  Other approaches such as “happiness”, “wellbeing”, and “welfare” were less accepted.  “Beyond GDP: Measuring and Achieving Global Genuine ProgressEcological Economics vol. 93, 57-68, covers similar issues.

Another early effort is London-based new economics foundation’s Happy Planet Index (HPI), which has garnered much publicity and helped focus on the need to correct GDP.  Launched in 2006, it capitalizes on the Gross National Happiness measured in Bhutan which has captured the imagination of millions and received widespread publicity, including at the UN and Rio+20.  However, “happiness” is open to widely different definitions, is subjective and culturally-biased, while being appropriate for a small Buddhist nation.  The approach chosen by the Canadian Index of Wellbeing (CIW) (I serve on its Advisory Board) measures outcomes, an approach we take, as well as avoiding aggregation of the many “apples” and “oranges” aspects of well-being into a single index.  The Ecological Footprint, a well-researched, science-based approach used by the WWF in its Living Planet Index, is now the pre-eminent measure of ecological systems and is employed in the HPI along with official life-expectancy statistics.  Our Ethical Markets Quality of Life Indicators, pioneered by Calvert and Hazel Henderson, cover 12 unbundled indicators “dashboard” mounted on the web platform launched in 2000.  This “dashboard” model is now the preferred approach of the OECD’s Better Life Index and in measuring progress toward the UN Millennium Development Goals (MDGs), pioneered by statistician Jochen Jesinghaus.

The debacles of 2008 reinforced the need for higher capital reserves and deeper reforms at the TBTF banks as I and D. Wayne Silby, founder of the Calvert Group, remark in our “End TBTF: Some Skin Please!”   Bi-partisan passage of the Jumpstart Our Business Startups (JOBS Act) in 2012, after delays at the SEC, is continuing to democratize access to capital as we report on crowdfunding with many websites used by small investors.  The new support for the US Postal Service and debate may relieve it from onerous financial burdens to pre-fund health insurance imposed by Congress in 2006.  Without these burdens, the US Postal Service shows a profit and is up-dating its services.  Many groups share my view and that of Ralph Nader which support allowing the Post Office to expand its services to include savings accounts as in many OECD countries. The US Postal Service Inspector General’s whitepaper on “Providing Non-Bank Financial Service for the Underserved” (Jan. 27, 2014) is a pragmatic look at how US post offices can expand to serve millions of Americans without bank accounts, as in Japan and many European countries.

Ethical Markets focuses on the new green sectors growing unnoticed by Wall Street and mainstream media’s fossilized asset allocation models.  The idea of returning to plain vanilla “public utility” style banking is promoted by the Public Banking Institute, and the model of state-owned banks like the Bank of North Dakota is catching hold in 14 states.  The oil-shale boom has turned to bust in North Dakota but still requiring huge public spending on schools, services and infrastructure.  The state’s earlier sound performance was due to its public bank (“North Dakota Economic Miracle: It’s Not Oil“).

I have long explored the entire range of distortions that make GDP a perverse measure of US progress, and TIME’s article agrees, pointing to our Ethical Markets Quality of Life Indicators and others including the United Nations Human Development Index (HDI).  In CSRWire “GDP: Still A Grossly Distorted Picture” (June 5, 2013), I show how GDP can mis-price sovereign bonds of Greece, Ireland and Portugal by omitting their real wealth: educated workforces, efficient infrastructure and productive ecosystems all count for zero in GDP.  As mentioned, better measures of human progress are gaining mainstream media attention: the excellent Canadian Index of Wellbeing (CIW) at and the report in Spirit Level (2010) by British researchers Richard Wilkinson and Kate Pickett linking equality with quality of life within and across countries.  They find that countries with the most equal income distribution (by GINI) have the largest socially and politically prosperous middle class while unequal countries do worse on most quality of life indicators (

UK economist Mariana Mazzucato points out that most of the patents underpinning Google, Facebook, Microsoft, Amazon were funded by US taxpayers through the Small Business Administration, National Science Foundation and other agencies, The Entrepreneurial State (US edition 2015).  The “hollowing out” of US manufacturing has continued for two decades at the behest of global corporations and their investment bankers.  President George H. W. Bush famously held that it did not matter whether the US manufactured computer chips or potato chips, while President Bush II’s chair of the Council of Economic Advisors, Gregory Mankiw, maintained that outsourcing was good for American workers who could take their severance pay and 401Ks and become day traders on the stock markets.  In spite of the growing protests in America’s streets, and the rise of populism most politicians, corporate leaders and their academic advisers don’t get it.  People see movies like The Big Short and watch money being printed on TV and their signs from left to right say “Where’s My Bailout?”

Conventional measures of output per capita masked this technological unemployment as beneficial “increases in productivity” for decades, as we have pointed out.  Two books now illuminate this issue further: Who Owns the Future by Jaron Lanier, and Race Against the Machine by Erik Brynjolfsson and Andrew McAfee.  Happily, the movie “Inside Job,” documenting economists’ conflicts of interest, won an Oscar and the University of Massachusetts now exposes these ethical lapses.

A revealing look at these issues is A Demon of Our Own Design (2007) by former hedge fund manager Richard Bookstaber and Fools Gold by Gillian Tett of the Financial Times showing how financial engineering of ever-more exotic swaps, derivatives, options, etc., are themselves adding to market instabilities worldwide. Another market institution, the Depository Trust and Clearing Corporation (DTCC) has a backlog in handling the huge volume of derivatives trading.  Much of the volatility on Wall Street is due to high-frequency trading as we reported, and the failure of these exotic “quant” models and the need for hedge fund managers to sell assets to cover margin calls from their bankers. Yet other challenges to Wall Street’s conventional wisdom are the best-seller The Black Swan, by veteran options trader and mathematician Nassim Nicholas Taleb, and Lecturing Birds on Flying by Paulo Triana, who critique risk assessment models used by investors and banks.  I made similar critiques of such models as Value At Risk (VAR) used so widely that unanticipated events could lead to system-wide crises in The UN: Policy & Financing Alternatives which I co-edited (Elsevier Scientific, UK, 1995, 1996).

Meanwhile, behind all the headline numbers, average wages for non-supervisory workers have remained stagnant for decades and many deeper structural problems in the USA go unaddressed.  The growing green economy worldwide is overlooked by Wall Street’s obsolete asset-allocation models dominated by the fossil fueled sectors (see my The Sustainability Sector at  The growing gap between rich and less affluent citizens is still worrying Democrats and Republicans – but their concerns offered the familiar remedy: more GNP-based economic growth.

For more on the current trends in US and global finance and economics, visit and browse the categories on Beyond GDP, Reforming Global Finance, Green Prosperity and Trendspotting.  For discussion of solutions, visit and browse the Ethical Markets series Transforming Finance, distributed globally to colleges at