Dear Editor,
I have over the past few days sent out emails to some of my development colleagues on the article in this week’s The Economist magazine of September 17. The article is titled ‘Measuring what Matters’ with the subtitle ‘Man does not live by GDP alone…’ It deals with the report by the Commission on the Measure-ment of Economic Performance and Social Progress (CMEPSP), popularly known as the Stiglitz Report since the commission was chaired by the Nobel Laureate economist, Prof Joseph Stiglitz, of Columbia University, New York, and included outstanding experts from universities in the USA, France, the UK, India, as well as from bodies such as the World Bank, the IMF, the OECD, UNDP, and the French department of statistics. The commission was appointed in February 2008, by French President Nicholas Sarkozy to identify and study the limitations of Gross Domestic Product (GDP) as a measurement of economic performance and social progress, and to make recommendations on changes to the existing systems and methodologies so as to provide more appropriate indicators of social progress. The report covers 292 pages and can be downloaded free of cost from the commission’s website at www.stiglitz-sen-fotoussi.fr, a website which should be a reference bookmark for every professional, civil society organization, and the rich and poor.
The subjects covered by the report are not new and have long been debated by politicians, policymakers, academics, and scientists. However, the commission has put together, analyzed and made recommendations not only on the statistical measurement of the well-being of society, but also on the quality or value of life, and the sustainability of a comfortable standard of living. The report identifies the shortcomings in the methodologies used by the multilateral and bilateral organizations in measuring wealth and welfare on the basis of per capita GDP or on Gross National Product (GNP), and suggests changes which should include greater attention to income distribution, household incomes and the consumption of basic goods and services. Moreover, such areas as health, education, the environment and climate change are brought into the development equation. Even the more intangible subjects, like happiness, which are usually excluded from the equation have been quantified through appropriate indicators. The contributions of good governance, transparency, full and meaningful involvement of civil society organizations like trade unions, in the development process, which provide the sound foundation for the cohesion of the society and its well-being are also examined, encompassing analyses of crime, poverty, child and female abuse, and drugs and alcohol abuse.
The usefulness of the report is that it provides the framework of what I venture to call the framework model for development, peace, and prosperity for the 21st century; a framework which can provide a multiplicity of development models which are applicable to both the developed and developing countries, and which should form the basis for national development planning and discussions for reform of the international economic and social institutions, including the World Health Organization (WHO) and the United Nations Development Programme (UNDP). But development is not similar in all countries and societies, and hence the outcome of various models. However, the basic economic and social issues are common to all countries and hence the usefulness of the Stiglitz report in bringing together a full analysis of the various issues and their coordination within national policies and international development initiatives.
It is ironic and coincidental that the report comes at a time today in the wake of the current world financial crisis, and when similar issues were debated and written about during the period between the two world wars and the follow up to the Great Depression in the 1920s and 1930s. Then, the debate was led by the English economist, Alfred C. Pigou, in his writings Wealth and Welfare (1912) and The Economics of Welfare (1920). In the late 1930s, Lionel Robbins and Frank Knight in their The New Welfare Economics joined the debate by criticizing Pigou’s analysis and approach to welfare which assumed that political leaders made laws like “benevolent despots.” JR Hicks joined the debate with his publication The Foundations of Welfare Economics (1939), and along with RGD Allen wrote the Reconsideration of the Theory of Value (1934), which introduced to economics the quantification of value and welfare through the application of statistical probability theory and mathematics.
Undoubtedly, the debate will continue for some time to come since it is difficult to measure happiness and value in exact quantities for different societies and socio-economic and political thought; a liberal, conservative, communist, a democrat, a Christian and a non-Christian, may each have different measurements and concepts of value and happiness. How does one measure the happiness of an Amerindian who prefers to relax in his hammock in the forest and then goes hunting with his bow and arrow and finds that the fish have died because of river pollution from mining and logging? And does a country need a “benevolent despot” to prevent the poor from returning to live in a shantytown or Tiger Bay when more comfortable housing has been provided elsewhere?
In moving forward for the Caribbean, it is important that Caricom governments should improve the collection, processing and publication of statistics; fudged and inaccurate data cannot support any sound and convincing proposition. The regional universities have a tremendous role to play in bringing to the front and sustaining the debate and writings on all the economic, social, scientific, and political issues of development which would assist governments in their development policies and thus promote equitable and sustainable growth, social cohesion, more public confidence in government, and happiness. While the developing countries will continue to make their case for a reform of the basis for measuring well-being, rather than a reliance on the more narrow use of per capita income, reform should eventually rely more on the use of the Human Development Index (HDI) and the Millennium Deve-lopment Goals (MDGs). The exhaustive Stiglitz report should however continue to provide the coordinated basis for development in both the developed and developing countries and a more fruitful development relationship between these two groups of countries.
Yours faithfully,
A Donald Augustin
