The income divide

Jonathan Power
The Statesman, 7 December

National income figures give us only the bare bones of a society’s progress. They neither reveal the real beneficiaries nor the composition of that income. Neither do they value the things that human beings consider important for themselves but have little or no market value for other people or for those beholden to statistical aggregates ~ better nutrition and health services, greater access to knowledge, more secure livelihoods, better working conditions, security against crime and physical violence, satisfying leisure hours and a sense of participating in the economic, cultural, religious and political activities of their communities.

Of course, people also want higher incomes. But income is never the sum total of human life. For most people, health, security and love are the three important things in life and how many people can put their hand on their heart and say they are sure that in their own lives these three things are eternally spoken for?

This debate reaches back in European thought at least to the time of Aristotle. “Wealth is evidently not the good we are seeking, for it is merely useful for the sake of something else,” he wrote. Even the 19th century philosophers never were gross national product absolutists after the fashion of today. Adam Smith, David Ricardo, Karl Marx and John Stuart Mill, from very different perspectives, all saw the creation of wealth as only one part of a complicated whole. How marvellous it is then at the gloomy end of a gloomy year to be presented with a report by the UN Development Programme that makes the reader feel good about human progress.

In its just released human development report there are long, sophisticated tables encompassing all the world’s countries in which countries are not ranked by income per head but by yardsticks considered more telling ~ longevity, knowledge and a decent standard of living. Cold and wintry though it is, Iceland comes out top, followed closely by Norway, Australia, Canada, Ireland, Sweden, Switzerland and Japan in that order. (The weather obviously is not a factor.)

Hong Kong is higher up the table than Germany or Israel and Barbados is the top of the developing countries with, surprise, surprise, Argentina, yesterday’s basket case, not far behind, which goes to show how with dynamic leadership, sound economic policies and a social will, how quickly a country can be turned around.

The report also presents another way of looking at progress ~ countries with a relatively crime-free environment. If you want to live in a country with a high standard of living, low violence and a miniscule murder rate one would choose Japan first, with Hong Kong as a close second, or perhaps Jordan (though poorer) where I am now.

Indeed all the Muslim countries, in particular the Arab ones, have murder rates. Then come Norway, Austria, and Greece. The countries best to avoid are Colombia, South Africa, Venezuela, Jamaica, El Salvador and Russia. Surprisingly, the USA, though much worse than the European average, compared with these six countries is only moderately violent. But then, as is true with all these statistics, if you exclude the urban slum parts of the USA, its status improves remarkably: it is not only fairly low in crime but also high on the human development index. Today, many governments are finding, after many decades of stressing the pursuit of high growth rates, that they have failed to reduce the social and economic deprivation of a substantial number of their people.

At the same time, we have become aware that a number of low-income countries have achieved high rates of human development by a judicious use of their scarce resources to ensure a basic level of wellbeing throughout their societies ~ Costa Rica, Uruguay, Cuba, and the ex-British Caribbean islands are good examples. Few outsiders looked at China, Taiwan and South Korea 30 years ago and anticipated their present fast growth rate. The present income of a country may offer little guidance to its growth prospect if is nurturing its resources by investing in its people, as these countries did in the early years of their decision to modernise and develop economically.

Not least, we should be aware of how misleading aggregate figures can be. Income is a means, not an end.

It may be used for essential medicines or narcotics, for sitting in a luxury car in a traffic jam or for a high-speed train link. For green spaces or multistoreyed car parks. Everyone in any country that has experienced rapid economic growth, whether it be a mature economy like the USA and Denmark or an up and coming one like Malaysia and Brazil, knows from their own firsthand experience that it doesn’t tell you that much about a society. It gives a kind of useful benchmark of aggregate economic momentum. But, beyond that, the more one looks at it the more misleading it can become.