It’s a shocking fact that Nicholas Sarkozy, a right-wing French president, is shaming the UK and US with the braveness of his economic thinking. He has commissioned a report that challenges the whole basis of using GDP as a measure of well being. As Will Hutton notes:
But as a nation, we carry on measuring the growth of goods and services that are sold in the marketplace — the gross domestic product — as if it were the only thing that matters. It is not.
Nicolas Sarkozy has been seized by the same conviction and last year he commissioned the world's best economists — a star-studded list of original thinkers — led by Nobel Prize-winner Joseph Stiglitz and Amartya Sen, to report on how best economic performance and social progress could be measured. Last week, they reported with a well-reasoned, technical but devastatingly radical document that could change all our lives.
They damn GDP as hopelessly inadequate, even in its own terms.
But the extraordinary group of thinkers Sarkozy commissioned do not stop there. Having been asked to measure social progress, they have had to identify what it is. Their answer is uncompromising. It is about promoting our well-being — and that is necessarily multi-dimensional.
I hope this is a serious moment when the world changes for the better. But having seen too many dinosaur economists at the World Bank last week, I have reason to fear the worst.
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It shows how far things had lurched to the right that Sarkozy is now viewed as towards the left of the political spectrum, you have to go back to Ted Heath before views like his were regarded as centre-right opinion in the anglosphere. Bill Clinton joked in his keynote at the netroots conference that Nixon was a communist compared to what followed him. He was picking up on just how ridiculous state of what passes for debate on the right has got, anything other than a hard-right view gets called Marxist.
I hope measures like those proposed by the Commission get taken seriously, it seems obvious now that the obsession with producing nominal growth in GDP, whatever the cost and even if is built on a mountain of debt, is something that has ruined political and economic thought. It seems almost like measuring your skill at driving by watching the speedometer and not looking out of the window or paying attention to where you’re going.
There have been indicators like Genuine Progress Indicator (GPI) before, hopefully this is the start of a recognition that there needs to be a more sensible view of what is really going on.
I believe Nixon actually had plans to reform the US health system, which of course never went anywhere because of watergate. His idea was that if he could sort out the health problem it would cement Republican dominance for a generation.
Nixon didn’t need to worry, as it turned out Reagan managed to cement that dominance for a generation anyway, without the healthcare. Even if Clinton (and New Labour) had wanted to do things differently, they were swimming against the tide of deregulation, free markets, and opposition to government involvement in anything.