This post has been on my mind for several years now and at the outset let me clarify that any suggestion for a new mechanism for assessing human well-being or prosperity yet eludes me. However, a few week’s back, The Economist’s main story was on The 21st Century Economy – How to Measure Prosperity and this perhaps served as a provocative start for this post. Since then, Brexit has happened along with several terrorist attacks and this blog perhaps may find more meaning now.
The Economist article states that GDP is perhaps not the right measure of economic growth and though GDP is increasing on its own, living standards are stuck for people across the world. The very fact that GDP is now referred to, in the article, as the lodestar for setting taxation policies, fix unemployment and manage inflation also suggests that GDP is perhaps not the measure of peoples’ well-being. However, the article does conclude that in the absence of anything to replace this yardstick, better methods of collecting and analysing economic data will perhaps provide a better picture of well-being and prosperity and help make policies more meaningful.
The following video by Dambisa Moyo talks about how economic growth has stagnated and needs stimulus, but with an ideological change. What then is this ideological change?
And, the following video by the Prime Minister of Bhutan shows that Bhutan has more to offer to the world by focusing its policies on Gross National Happiness over economic growth. Is this a viable ideological change?
In the recent weeks gone by, I have visited Bhutan, 30 years since I lived there as a child. People are happy and money didn’t seem to be an objective anywhere. Though the individual gratuities were taken with a smile and twinkle in the eye, there was none of the pain that sometimes goes with not receiving tips as expected!
So a bit on human motivation. Can the pursuit of monetary gains give way to the pursuit of happiness? Even if happiness is elusive and there is no single yardstick against which it can be measured? Money, serves in today’s world as a barometer for achievement, and an aspiration for people to strive towards. In a world without money, where basic needs as described by Maslow and in Dambisa Moyo’s Ted talk (above) are met by the state, is akin to socialism. Not all humans ascribe to altruism, and without aspirations or the fear of not surviving, would probably fall into misdeeds – alcoholism, drugs et al, because as we all know an idle mind is a devil’s workshop. For those without [money], in many cases not having, simply means taking, as is the case of rampant electricity thefts in many parts of the developing world. This comes as a cost to the economy as a whole rather than just taxpayers as a subset, as the fallout of actions such as these have multiple impacts.
Further more, from a well-being perspective, at no time have people probably been so divided as now, when digitisation has been a great leveller and a great divider. The digital economy has driven down the costs of many transactions, thereby conserving wealth for most of its participants. But one cannot ignore those who do not yet participate in this. For them, access to the basics – clean water, sanitation, healthcare, shelter, livelihood, insurance and cheaper access to money itself is a daily struggle. Digital adoption rates across the world therefore is no longer a matter or luxury but a matter of urgency. Only, through an increased uptake of digital services, can the under-privileged gain the benefits of the digitised economy. And only, through this can the underlying data collection be reasonable to assess and assure of well-being and prosperity. Digitisation in many ways provides identity, history [credit] and connection. Even the most marginalised section of society, by being digital, gains access to technological advances, be it in the use of digital wallets, which allow them to receive intervention payments directly, or access to cheaper goods and services.
A case in point was the business driver for deploying broadband to rural homes in India. The individual driver for making a payment of nearly 110USD per annum was that discounted air tickets available at 6am for a limited period for a family of 6 to 8 would result in a saving greater than the cost of the broadband. It is also not surprising to see mobile users with multiple prepaid SIMs / numbers where depending on the offer of the day, a number is used for making out going calls, but a single number is maintained for receiving all incoming calls.
Capitalism by definition moves capital to where returns are higher. However, in the world today, capital needs to move to newer avenues of creating value. Components of Gross National Happiness – free education, free healthcare, perhaps or even conservation of natural resources are ideal goals for capital allocation. However, how does one assess the returns on this capital allocation? This too requires an ideological change. A change where value is ascribed to not only material goods and services, but perhaps the cost of poor education, ill-health, poor weather etc are also included as direct costs within each transaction or in a more positive light, the benefits of improved health, education and environment are factored in.
The state’s participation, whether left or right leaning, today is in terms of taxation and socially beneficial programs through subsidies or pay-backs. A policy framework consisting of a planned improvement of health, education and environment, will therefore provide inputs to costs for each transaction with the money being so collected channeled directly to programmes which improve these aspects of well-being. These programmes themselves can provide for livelihood at the grassroots level and improvements over time should reduce the cost burden on transactions. India’s education and swacch bharat cess on all transactions are example of the collection side of the story.
The disbursal side of the story must be equally strong. Programmes for greening and for accountability should also be included within the purview of these disbursals, which may be state run programs or public private partnerships. And these programs should by design have a digital presence to ensure accountability and transparency. This will have the positive effect of reinforcing the virtuous cycle of providing livelihood, education and improving health and environment. After-all it is better to teach a man to fish than to give him a fish to eat! And put simply, this is called productivity.
However, much of this is easier said than done, when more than 70% of the world’s population are in developing nations and striving to improve their quality of life. Governments’ and nations have their own priorities for spending and collections are made to satisfy these. Ms. Moyo and Mr. Tobgay are both right in their statements regarding “Ideological change” and “Development with values” as the guiding light for economic growth and well-being, for without these, change is likely to be forced upon everyone at very high costs.
Sayan A Ghosh 