GDP & beyond

The Gini coefficient, devised by the Italian sociologist Corrado Gini in 1912, is a measure of income or wealth disparity in a population. It is usually expressed as a fraction between 0 and 1, and it seems easy to understand, because 0 is the coefficient if everyone owned an equal amount, while 1 would obtain if one person owned everything and everyone else nothing. In our real world of the mid-twenty-first century, countries with a low Gini coefficient, like the social democracies, are generally a bit below 0.3, while highly unequal countries are a bit above 0.6. The US, China, and many other countries have seen their Gini coefficients shoot up in the neoliberal era, from 0.3 or 0.4 up to 0.5 or 0.6, this with barely a squeak from the people losing the most in this increase in inequality, and indeed many of those harmed often vote for politicians who will increase their relative impoverishment. Thus the power of hegemony: we may be poor but at least we’re patriots! At least we’re self-reliant and we can take care of ourselves, and so on, right into an early grave, as the average lifetimes of the poorer citizens in these countries are much shorter than those of the wealthy citizens. And average lifetimes overall are therefore decreasing for the first time since the eighteenth century. Don’t think that the Gini coefficient alone will describe the situation, however; this would be succumbing to monocausotaxophilia, the love of single ideas that explain everything, one of humanity’s most common cognitive errors. The Gini figures for Bangladesh and for Holland are nearly the same, for instance, at 0.31; but the average annual income in Bangladesh is about $ 2,000, while in Holland it’s $ 50,000. The spread between the richest and the poorest is an important consideration, but when everyone in that spread is pretty well off, this is a different situation than when everyone across the spread is poor. Thus other rubrics to think about inequality have been devised. One of the best is the “inequality-adjusted Human Development Index,” which is no surprise, because the Human Development Index is already a powerful tool. But it doesn’t by itself reveal the internal spread of good and bad in the country studied, thus the inequality adjustment, which gives a more nuanced portrait of how well the total population is doing. While discussing inequality, it should be noted that the Gini coefficient for the whole world’s population is higher than for any individual country’s, basically because there are so many more poor people in the world than there are rich ones, so that cumulatively, globally, the number rises to around 0.7. Also, there are various ways of indicating inequality more anecdotally (perhaps we could say in more human terms) than such indexes. The three richest people in the world possess more financial assets than all the people in the forty-eight poorest countries added together. The wealthiest one percent of the human population owns more than the bottom seventy percent. And so on. Also, note that these disparities in wealth have been increasing since 1980 to the present, and are one of the defining characteristics of neoliberalism. Inequality has now reached levels not seen since the so-called Gilded Age of the 1890s. Some angles of evidence now suggest this is the most wealth-inequal moment in human history, surpassing the feudal era for instance, and the early warrior/ priest/ peasant states. Also, the two billion poorest people on the planet still lack access to basics like toilets, housing, food, health care, education, and so on. This means that fully one-quarter of humanity, enough to equal the entire human population of the year 1960, is immiserated in ways that the poorest people of the feudal era or the Upper Paleolithic were not. Thus inequality in our time. Is it a political stability problem? Perhaps in a controlocracy backed by big militaries, no. Is it a moral problem? But morality is a question of ideology, one’s imaginary relationship to the real situation, and many find it easy to imagine that you get what you deserve, and so on. So morality is a slippery business. So it is that one often sees inequality as a problem judged economically; growth and innovation, it is said, are slowed when inequality is high. This is what our thinking has been reduced to: essentially a neoliberal analysis and judgment of the neoliberal situation. It’s the structure of feeling in our time; we can’t think in anything but economic terms, our ethics must be quantified and rated for the effects that our actions have on GDP. This is said to be the only thing people can agree on. Although those who say this are often economists. But that’s the world we’re in. And so people invent other indexes to try to come to grips with this issue. In fact we have seen a real proliferation of them. Recall that GDP, gross domestic product, the dominant metric in economics for the last century, consists of a combination of consumption, plus private investments, plus government spending, plus exports-minus-imports. Criticisms of GDP are many, as it includes destructive activities as positive economic numbers, and excludes many kinds of negative externalities, as well as issues of health, social reproduction, citizen satisfaction, and so on. Alternative measures that compensate for these deficiencies include:

• the Genuine Progress Indicator, which uses twenty-six different variables to determine its single index number;

• the UN’s Human Development Index, developed by Pakistani economist Mahbub ul Haq in 1990, which combines life expectancy, education levels, and gross national income per capita (later the UN introduced the inequality-adjusted HDI); .

• the UN’s Inclusive Wealth Report, which combines manufactured capital, human capital, natural capital, adjusted by factors including carbon emissions;

• the Happy Planet Index, created by the New Economic Forum, which combines well-being as reported by citizens, life expectancy, and inequality of outcomes, divided by ecological footprint (by this rubric the US scores 20.1 out of 100, and comes in 108th out of 140 countries rated);

• the Food Sustainability Index, formulated by Barilla Center for Food and Nutrition, which uses fifty-eight metrics to measure food security, welfare, and ecological sustainability;

• the Ecological Footprint, as developed by the Global Footprint Network, which estimates how much land it would take to sustainably support the lifestyle of a town or country, an amount always larger by considerable margins than the political entities being evaluated, except for Cuba and a few other countries;

• and Bhutan’s famous Gross National Happiness, which uses thirty-three metrics to measure the titular quality in quantitative terms.