WHAT’S WRONG AND WHAT MIGHT BE RIGHT?

We begin with some references to basic concepts that question the fundamental principles of growth as we know it. People from North America might find some of these questions especially perplexing since they have been born into a structure that allows for only one way to deal with space: mainly big, mainly fast, and usually private. What is smaller, slower, and public gets less of a fair share of attention and less funding as well. Europeans are not exempt from these ills, as they too consume much more than a planet can sustain.

GDP AND SOCIAL WELL-BEING

Thibault Deloye

You cannot deny that the GDP remains the most “famous” economic index for evaluating the “economic health” of a country. It is the most-often used indicator for making economic comparisons between countries, and in some developing countries it is the only indicator available.

But it seems obvious that it is far too crude to be used as the sole variable for evaluating the economic and social development of a country, for the links between social welfare and economic growth are often questionable.

Consider one particular graph that shows a comparison between the evolution of GDP in Canada along with an alternative indicator, the Index of Social Health provided by the Fordham Institute, located in the USA.

Index of social well-being and GDP per capita from the early 1970s until 1996
(top line is GDP and bottom line is the index of social well-being)

Source: M. et M-L Miringoff (1999)

 

This graph and many others like it raise the possibility that there may exist what might be described as the a kind of “scissors effect” in some countries between an increasing GDP and a dramatically decreasing index of social well-being. It is thus possible that economic wealth may increase while at the same time the general welfare can decrease. The upper 2 percent of a population could become considerably wealthier while the bottom 20 percent could become slightly more impoverished and the GDP, which is a mere average, could indicate that the nation is becoming wealthier.

It appears reasonable, then, that in a country like France, or any other developed country where numerous statistics are readily available, we should try to construct an index of alternative indicators which could better reflect the level of social inequalities created by indiscriminate growth.

One example of the complexity of creating alternative indicators would be the measurement of non-monetary variables, such as in a society where voluntary services are prominent. Regions that use alternative currencies to reflect non-monetary services and exchanges could be studied.

In order to construct this index, we would need to reflect on the whole notion of well-being, experimenting with various alternative criteria, and eventually creating a new way of measuring the real economic health and vitality of a nation.