Does GDP truly reflect a nation’s progress?


 

March 18,2019

Does GDP truly reflect a nation’s progress?

Opinion  |
by Lim Su Lin

Published:  |  Modified:

 

COMMENT | In the eyes of the world today, Malaysia is seen as a relatively affluent upper-middle income nation.

According to World Bank projections, we are expected to reach the high-income threshold sometime between 2020 and 2024.

Our economy has transformed impressively since post-Independence. From a primary resource-based, agriculture-dominant settings, Malaysia experienced industrial ‘boom and growth’ in the 1970s.

The heyday lasted roughly 30 years, followed by a gradual tapering of export-oriented industrialisation, and the tandem rise of the services sector, at the turn of the century.

Today, Malaysia’s economy continues to transform and advance, in the wake of digitalisation and accelerated technology adoption rates.

One of the ways that economists, politicians and top-level decision-makers measure our country’s progress is by referring to key national economic indicators, such as Gross Domestic Product (GDP).

Seen through the lens of GDP, Malaysia’s development story in the past decade has been one of steady progress, and encouraging year-on-year growth, as seen in the chart below.

While these are indeed comforting figures, has this economic progress also brought about improvements in other dimensions of our society? To what extent does GDP tell us the full story of socio-economic development?

A limited proxy of human well-being

To answer this question, we first need to ask ourselves if GDP is an accurate proxy for human well-being and quality of life. The brief answer to that is, not really.

GDP is typically measured by adding the following:

  • a nation’s personal consumption expenditure (households’ payments for goods and services);
  • government expenditures (public spending on the provision of goods and services, infrastructure, debt payments, etc.);
  • net exports (the value of a country’s exports minus the value of imports); and
  • net capital formation (the increase in value of a nation’s total stock of monetised capital goods).

In other words, it is a very specific tool designed for the particular purpose of measuring the flow of goods and services produced within the market, and which are publicly traded for money.

The US Bureau of Economic Analysis describes the purpose of measuring GDP as being to answer questions such as:

  • how fast is the economy growing;
  • what is the pattern of spending on goods and services;
  • what percent of increase in production is due to inflation; and
  • how much of income produced is being used for consumption, as opposed to investment or savings.

Today, many – though not all – governments continue to treat GDP not only as a measure of national economic activity, but also as if it were the default indicator of how well its people are faring.

However, this is a short-sighted view.

On the one hand, it might be true that increased economic activity spurs creation of more jobs, providing income for people to access basic necessities such as food, clothing and housing, and, over time, opportunities to accumulate capital and so enjoy more material comforts.

However, it is also important to recognise that human welfare is not exclusively based on material well-being.

Past a certain level, well-being and happiness is also determined by other social and environmental factors and activities, such as volunteer work, social capital formation within families, the costs of crime and depletion of natural resources.

These are all important indicators of economic welfare, societal well-being and quality of life, yet are entirely excluded from GDP measurements.

GDP conceals inequality

Another major weakness of using GDP as a measure of progress is that it measures how much economic activity there is, but not necessarily who might be benefitting from this economic activity.

The graph above depicts national trends in Malaysian household incomes, ranging over roughly the past two decades, sourced from the Department of Statistics (The figures shown are absolute, i.e. before adjusting for inflation.)

From 1997 to 2016, the figures show that top 20 percent earners (T20) saw their average household incomes rise from about RM8,000 to RM17,000, while income for the middle 40 percent (M40) increased at a slower pace, only from around RM3,000 to RM7,000.

What should be of greatest concern is that, compared to both these groups, the bottom 40 percent (B40) households experienced extremely lagging income growth, increasing from RM1,000 to a mere RM3,000 over two decades.

Comparing income differences at both start and end points, T20 and M40 households were initially separated by an absolute earnings gap of RM6,000 in 1997, increasing to RM11,000 in 2016.

Meanwhile, the original gap between T20 and B40 was RM8,000, and this stretched to RM15,000 in 2016.

In other words, the absolute earnings gap between the top 20 percent earners, versus the middle and bottom 40 percent households, have almost doubled in the past two decades.

The staggering, and ever-increasing, gap between richer and poorer households tells us this: although rising GDP figures may tell a shining story of economic growth and progress, not everyone is benefitting from this growth.

Closer to reality is that scores of individuals and families have been left behind in the development story. These are Malaysians, who still lack the economic wherewithal to meet their basic living needs, let alone enjoy a good quality of life.

Disguised poverty

Talking about inequality brings us to confront poverty, another major issue that has largely been disguised in national indicators and statistics.

The graph above shows official poverty counts sourced from the Department of Statistics, and trends in the reduction of poverty over the years.

One glance at these figures, and it would seem as if there is almost no poverty left in Malaysia!

According to the data, the official poverty rate has fallen from nearly 50 percent in 1970 to just 0.4 percent in 2016 (the latest year available). This supposedly amounts to one of the lowest poverty rates in the region.

Yet, relative poverty (defined as earning less than 60 percent of the median income) has risen by more than 50 percent, to three million households since 1995, based on a 2018 Khazanah Research Institute report on the state of Malaysian households.

According to the same report, 40 percent of 7.5 million households nationwide are still considered relatively poor, pointing to a starkly different reality from the rosy picture of virtual poverty eradication depicted in official figures.

Poverty line set too low

One important reason for this discrepancy lies in the limitations of the Poverty Line Index (PLI), the official indicator used to measure poverty in Malaysia.

In simple terms, PLI is an income-based index which calculates the minimum monthly income requirements of households to fulfil basic survival needs, such as food, clothing, shelter and transport.

These calculations are used to determine a cut-off threshold for poverty.

The problem with measuring poverty using this ‘cost of basic needs’ approach is that it sets the bar at an extremely low threshold, and computes income needed to fulfil only the barest minimum of necessities, instead of realistically representing the standards of what an average family would need to survive.

Currently, Malaysia’s national PLI is set at RM920 per household per month, or a little over RM7 per person per day, at average household size.

Considering the high level of living costs, not to mention the diversity of needs and demographics of households across states and regions, RM920 clearly is far from what most Malaysian families would realistically need to thrive and live decently, let alone survive.

In the government’s Household Income Surveys, PLI is further broken down into regional categories: for Peninsular Malaysia, the cut off is RM 960, whereas for Sabah, it is RM 1,180 and Sarawak, RM 1,020. But even this threshold is too low.

In comparison, Japan defines poverty as being the income of a household at or below half of the median household income. This method of estimating poverty “relatively” is the same as that used in the UK and most other OECD (Organisation for Economic Co-operation and Development) nations.

Though still not a perfect definition, it is a far more meaningful interpretation compared to an absolute poverty line that is severely out of touch with current needs.

Key takeaways

To sum up, it is important to question indicators and “grand” statistics that are commonly bandied in Malaysia’s economic debates, and understand what they truly represent.

With the GDP example, it is important to remember that economic indicators may measure the size of a country’s economic activity, but not necessarily capture the true state of economic welfare, or society’s quality of life.

On the other hand, certain other indicators, like poverty rates and the PLI, might be better “barometers” of societal wellbeing.

Yet, as argued above, the current dimensions of measuring poverty in Malaysia do not translate to a meaningful index. Rather, what it does is hide the true extent of poverty in our country.

Often times, the power of simple, easy-to-grasp figures can mask the presence of critical issues that are setbacks to human-centred development and well-being: chronic income inequality among different households for instance, or lingering impoverished and vulnerable communities.

These matters require critical attention from the authorities and those involved in steering policy decisions.

There needs to be more criticism of how certain measures and indicators have been popularised as proxies for national progress, and collective effort to develop better measures, hand-in-hand with a strong and sustained reform process.

If we can collectively accept that the overall goal of an economy is to sustainably improve human well-being and quality of life, then we will not be satisfied with maintaining the status quo.

Instead, we will make it a priority to unmask the realities that have been shoved under the carpet, and push for necessary changes, so that there will be more equally balanced development, and a better future for all citizens of this country.


LIM SU LIN is a policy analyst with the Penang Institute. A History graduate from Cambridge University, her research interests lie primarily in promoting good mental health as a criterion for public policy, and to carry out research into the social, economic and cultural factors that help to enhance mental well-being and support recovery from mental distress.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

Reflections on Achieving the Global Education Goals


February 15, 2019

Reflections on Achieving the Global Education Goals

Project Syndicate Logo

In today’s deeply interconnected world, the benefits of strong and inclusive education systems are far-reaching. A quality education gives people the knowledge they need to recognize the importance of safeguarding the planet’s finite resources, appreciate diversity and resist intolerance, and act as informed global citizens.

https://www.project-syndicate.oryO8cnaCfxvpRj6xZQWIVfABNo8v98hSxJ6_Tzc6M

 

NEW YORK – Throughout my life, I have seen the power of education. I have witnessed how quality education for all can support the creation of dynamic economies and help to sustain peace, prosperity, and stability. I have also observed how education instills in individuals, no matter their circumstances, a strong sense of self, as well as confidence in their place in the world and their future prospects.

We know that each additional year of schooling raises average annual GDP growth by 0.37%, while increasing an individual’s earnings by up to 10%. If every girl worldwide received 12 years of quality education, lifetime earnings for women could double, reaching $30 trillion. And if all girls and boys completed secondary education, an estimated 420 million people could be lifted out of poverty. According to a 2018 World Bank report, universal secondary education could even eliminate child marriage.

In today’s deeply interconnected world, the benefits of strong and inclusive education systems extend even further. Education gives people the knowledge they need to recognize the importance of safeguarding the planet’s finite resources, appreciate diversity and resist intolerance, and act as informed global citizens.

The United Nations Millennium Development Goals, created in 2000 to guide global development over the subsequent 15 years, gave new impetus to efforts to ensure education for all. From 2000 to 2015, primary-school enrolment in the developing world rose from 83% to 91%, reducing the number of out-of-school primary-school-age children from 100 million to 57 million. Moreover, from 1990 to 2015, the global literacy rate among people aged 15 to 24 increased from 83% to 91%, with the gap between men and women declining substantially.

But much remains to be done. Globally, at least 263 million children were out of school in 2016. This includes half of all children with disabilities in developing countries. Furthermore, half of all children of preschool-age – the most crucial years for their cognitive development – are not enrolled in early-childhood education.

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The situation deteriorates further in conflict zones, where girls are almost two and a half times as likely to be out of school as their peers in stable countries. And this does not cover the estimated 617 million children and adolescents of primary and lower-secondary-school age – 58% of that age group – who are not achieving minimum proficiency in reading and mathematics.

To help close these gaps, the successor to the MDGs, the Sustainable Development Goals, also emphasizes education. SDG4 commits the world to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all – essentially to harness the power of education to unlock every person’s potential. Despite the scale of the challenge and the diverse barriers that can restrict and disrupt learning, we know what an effective strategy would entail.

First, to be a true force for change, education itself must be transformed in response to the realities of accelerating globalization, climate change and labor market shifts. While advanced technologies – such as artificial intelligence, cloud computing, and blockchain – raise new challenges, they may be able to play a role in improving educational outcomes. Digital skills must be part of any curriculum, and new alliances with the tech sector – which can provide valuable insights into these topics – should be actively pursued.

Second, an inclusive and lifelong approach, focused on reaching the most marginalized and vulnerable populations, is essential. As UNICEF’s Innocenti Report Card 15 shows, this does not mean sacrificing high standards. In fact, as the report points out, children of all backgrounds tend to do better when they are in a more socially integrated school environment. Such an inclusive approach will require sharing best practices and investing in what is proven to work. Meanwhile, development partners must provide long-term support that emphasizes capacity-building and institutions, and balances humanitarian, economic, and security imperatives.

For education systems and services to be truly inclusive, however, they must also leave no one behind, such as refugees. UNESCO’s latest Global Monitoring Report estimates that refugees have missed 1.5 billion school days since 2016. While eight of the top ten hosting countries, including several low- and middle-income countries, have shouldered considerable costs despite the strain on education systems to ensure that refugees attend school alongside nationals, most countries either exclude refugees from national education systems or assign them to separate facilities. This entrenches disadvantage and hampers social integration. The two landmark global compacts on migration and refugees adopted by UN member states last December point the way toward addressing this challenge.

Achieving the needed educational transformation will require far more financing than is currently on offer. As it stands, the global annual funding gap for education amounts to nearly $40 billion. Closing this gap will require not just increased domestic financing, but also a renewed commitment from international donors.

Everyone has the right to an education. Upholding this right – and achieving SDG4 – will require well-designed strategies, coupled with a prolonged commitment to implementation and effective cooperation among all relevant stakeholders. The UN and its agencies will continue to support such actions, as we strive to ensure that no one is left behind.

 

 

Cambodia- China Strategic Partnership–Is everything about China bad?


January 23, 2019

Cambodia- China Strategic PartnershipIs everything about China bad?

by Doung Bosba

ttps://www.khmertimeskh.com

 

Cambodian ruling elites are China-educated

Wrong. None of the current Cambodian ministers are China-educated. In fact, most of them are Western educated. Their offspring are also mostly or wholly Western educated.

The number of alumni speaks for itself. The Fulbright and Undergraduate State Alumni Association of Cambodia (FUSAAC) has more than 1,000 members. Australian Alumni Association of Cambodia has over 700 members and Japan Alumni of Cambodia registered more than 1,000 past recipients of Japanese scholarships. As of now, the fact that around 1,000 Cambodian students studied in China does not mean that they are controlling the whole educational aspect of Cambodia.

..

According to data entitled “Global Flow of Tertiary-level Students” of Unesco in 2017, Thailand was the top destination with 1,031 Cambodian students, followed by Australia (908), United States (560), Vietnam (432), France (431) and Japan (397). China was not even on the list.

Cambodia is benefiting from trade with China

Wrong. Cambodia has never relied on trade with China. Trade with China has always been a deficit for Cambodia. The trade volume between Cambodia and China was valued at $5.8 billion in 2017 and Cambodia’s exports to China has not even reached $1 billion, making the trade deficit for Cambodia larger than 80 percent vis-à-vis China.

While in 2018 China agreed to increase Cambodia’s rice import quota to 300,000 tonnes, a deal was struck in 2014 that China would annually buy one million tonnes of Thai rice for five years.

Vietnam who is China’s strategic rival is actually one of the leading trading partners in Southeast Asia. In 2017, Vietnam-China bilateral trade stood at $93.69 billion.

There is a Khmer saying that goes, “you get angry with the cow but you hit the cart.” In this case, when the EU is displeased with China’s influence in Cambodia, and assumes that Cambodia is too much reliant on China, they instead decide to kill Cambodian jobs by introducing measures aimed at cutting down EU–Cambodia trade.

Cambodian ports are being controlled and militarised by China

 

 

 

sImage result for china in sihanoukville

Sihanoukville

Wrong. Some foreign pundits even mix up between two coastal provinces of Cambodia, namely Preah Sihanouk and Koh Kong provinces.

If this myth is aimed at Sihanoukville port, which is the only deep-water seaport in Cambodia, it is grossly wrong because technically speaking Sihanoukville Autonomous Port is almost under Japanese control. Japan has provided support to Sihanoukville Port for a long time. Starting with the 1999 Sihanoukville Port Urgent Rehabilitation Project, which was the first Japanese loan to Cambodia, JICA has provided continuous support for infrastructure and operations capacity building at the port through loans, grant aid and technical cooperation.

Japanese investors also hold the biggest percentage of shares in the Port’s public offering. More than 60 percent of the shares in the IPO were bought up by two Japanese institutional investors, one of them being the Japan International Cooperation Agency or JICA. National investors now control 35.57 percent of the issued shares after the IPO, while foreign investors hold 64.43 percent – the largest of which was JICA.

As for another sea port at Koh Kong Province, it is being developed by China’s Tianjin Union Development Group (UDG) as part of its $3.8 billion Dara Sakor Beachside Resort project.

Asia Times and the Southern China Morning Post have been publishing articles insinuating militarisation of the port. As the saying goes, “Repeat a lie a thousand times and it becomes the truth.” Is it really true? Firstly, logically speaking, if it is a military port, it has to be under the jurisdiction of the Ministry of National Defence. This means that, to become a militarised port, Cambodia needs to nationalise that private investment, which is definitely not a smart move for any pro-investment country. Secondly, if it is a deep sea port, it is generally an acceptable practice to receive military ships, which are not permanently based, on account of friendship promotion or even business service provision.

Take for instance, the operation of Logistics Group Western Pacific (COMLOG WESTPAC) and Navy Region Center Singapore (NRCS) in Singapore. According to a Naval Today article published on August 9, 2012, “While no US base exists in Singapore, the US Navy presence here dates back several decades and the Navy leases facilities from the Singaporean government. Today, the US military community in Singapore includes active duty, civilian personnel and family members, distributed among 15 commands.

“COMLOG WESTPAC was established at the Port of Singapore Authority (PSA), Sembawang Terminal, in July 1992…. Established in 2007, NRCS provides administrative support to nine Navy, Army, Air Force and Joint commands in Singapore. It also manages 165 family and bachelor housing units and dozens of command, administrative and warehouse facilities.

“Additionally, COMLOG WESTPAC is 7th Fleet’s Theater Security Cooperation agent for Southeast Asia, promoting military-to-military relations and coordinating exercises such as Cooperation Afloat Readiness and Training.”

If the Asia Times and the South China Morning Post are anticipating that Cambodia is planning to provide such support to China like what Singapore is doing for the US, in terms of capacity, manpower and logistics, they are wrong. Cambodia is no way comparable to Singapore and still has a very long way to go. Since the colonial era, Cambodia has never been a major seaport. Most importantly, as an integral part of its foreign policy, Cambodia has never aspired to host a foreign military base regardless of foreign twisted perception.

Cambodia is providing privilege to Chinese investors

Wrong. Investment in Cambodia is not nationally labeled. The case in point is the comparison between two special economic zones with a similar name, Sihanoukville Special Economic Zone (SSEZ) and Sihanoukville Port Special Economic Zone (SPSEZ).

SSEZ has been jointly developed by Chinese and Cambodian enterprises. Established in 2008, SSEZ boasts more than 100 predominantly Chinese enterprises, making it the biggest and most active SEZ in the country both in terms of size and occupancy. More than 16,000 people are employed in the industrial park. SSEZ is trying to attract 300 enterprises and grow to a total of 70,000 to 80,000 workers within the next five years.

Image result for neak leung bridge

The Imposing Japan- built Neak Loeung bridge in Kandal- Prey Veng province

On the contrary, SPSEZ which is being developed by the Sihanoukville Autonomous Port Authority of Cambodia is just hosting three companies since the start of operations in 2012. The $33 million loan for building the SPSEZ came from Japan. The government is relying on Japanese expertise which in turn has set high ethical and environmental standards for investors. The harsh reality is that there is little interest among Japanese investors.

Book Review: The Sustainable State: The Future of Government, Economy and Society


 

January 12, 2018

 

 

By: Cyril Pereira

Can planet Earth survive Asia’s economic drive?

 

The Sustainable State is Hong Kong-based environmentalist and author Chandran Nair’s second book, following Consumptionomics, published in 2011. Both call for urgent recognition of the looming ecological disaster for humanity. The book launch in Hong Kong’s trendy Lan Kwai Fong district on Nov. 13 was billed as a conversation between Nair, and Zoher Abdool Karim, the recently retired TIME Asia editor. Nair’s manifesto dominated. A bemused Zoher was the smiling prop. The audience could have gained more from meaningful interlocution.

Chandran Nair has been the town crier on environmental disaster for 20 years. He faults industrialization, capitalism, free enterprise and liberal economics, for destroying the ecosystems of rivers, forests, air and water on so vast a scale, that life itself is the price paid by the poorest across the developing world. Malnutrition, starvation, and lack of access to potable water, plagues many societies at subsistence level.

Resource curse

The developed world prospered from early industrialization to capture vast resources via conquest and colonization of Asia, Africa and Latin America, he writes. The poorest societies hold the richest deposits of minerals, fossil fuels and land for plantations of rubber, palm oil, tea and coffee. Pesticides and insecticides from Monsanto and others destroy their soils and ruin their water systems. They have also been too frequently run by kleptocrats.

What he calls the “externalities” of capitalist trade – environmental degradation, pollution, social dislocation, disease and malnutrition, impact the poorest disproportionately. Therein lies the supreme irony. Nair wants these externalities of economic activity priced and charged directly to corporations. He also wants individual accountability for wasteful consumption computed for carbon footprints and taxed to discourage waste.

Responsible development and consumer habits need to be enforced, if we are to survive our collective un-wisdom. How the corporations and individuals would agree to these principles, and the respective methods to calculate the amounts to pay, are undefined. Nair does not expect the culprits to volunteer. By the legal trick of defining corporations as ‘persons,’ companies can argue rights protecting individual citizens, under national Constitutions.

Migration to cities in Europe progressed over an extended period, without too much social disruption. Rural migration to cities in the developing economies is too rapid, within a compressed time-frame. Slum populations struggle without sanitation, proper housing, access to fresh water, electricity, or schooling for children, in too many cities across the developing world. This hollowing-out of rural populations is wasteful.

Rethink development

A whole new raft of public policies needs to evolve for ecological balance. Development plans to retain rural manpower and incentivize agricultural food security, are absent. Urban dwellers have to pay higher prices for natural produce, instead of buying packaged food in supermarkets. Efficient public transport systems have to be built to prevent city traffic gridlock. Electric vehicles have to replace fossil fuel engines.

Nair’s nightmare is the adoption by developing countries of the Western model for economic growth. India and China will constitute 30 percent of the global 10 billion by 2050. Add Africa, Latin America, and the rest of developing Asia to that, and the consequences of feckless industrialization, along with wasteful urban consumption, are too obvious. Nair advocates a radical overhaul of the development mindset.

Prescriptions from the developed world peddled by the World Bank and the IMF, in Nair’s mind, exceed Planet Earth’s healing capacity. Natural resource depletion and poisoning of the earth, water and air, must be stopped now. Hurricanes and typhoons destroying habitats and flooding societies, are increasing in frequency and ferocity. The consequences are all too real for climate change deniers.

Related image

Plastic Pollution in the World’s Oceans: More than 5 Trillion Plastic Pieces Weighing over 250,000 Tons Afloat at Sea

The weight of floating plastic in the oceans will soon exceed that of the global fish stock. This poison has entered our food chain, killing us slowly while choking sea life. Human overpopulation, food cultivation and de-forestation, wipes out wildlife at the rate of 30,000 species per year, according to Harvard biologist E. O Wilson. Now our collective irresponsibility will kill the oceans too.

Prioritize social equity

If replicating the Western growth model is madness, what are the alternatives? Nair moves into contentious territory on this. He calls for strong government and a revised development agenda. Rather than Hollywood-movie lifestyles, he suggests inclusive policies for all citizens to ensure clean water, electricity, sanitation, universal education and gainful employment as minimal benchmarks. Modest prosperity benefits all.

Social equity, well-being and protection of nature cannot be achieved without political legitimacy and effective rulership. Governance has been hijacked by Big Biz and sponsor politicians. Lobby groups target lawmakers. PR companies spin fakery for corporations and politicians. The mass media is co-opted through advertising and ownership. All at the expense of gullible citizens, led to believe they have some say every five years.

Strong state works

Nair contrasts the dysfunctions of India with the success of China. He skates on thin ice where individual rights and freedoms can be ignored, for the collective good. He says only a “strong” state has the mass mobilization capacity to marshal people, resources and investment, for sustainable development. To Nair, Hong Kong is a weak state unable to address basic public housing. He jests that a boss imposed by Beijing can fix that.

The European Union is a strong authority able to mandate socially responsible policy across its constituent members. Britain and the US are weak states floundering for effective governance, polarized by divisive populist politics. Nair is less interested in ideologies of the Left or Right, than in the State as effective authority for the common good. He wants the institutions of good governance strengthened at every level.

Oddly, Nair dismisses world governance as the solution. The United Nations, overly compromised by funding dependency and too timid to upset powerful voting blocs, is not his answer. Where then will the needed global course-correction come from? The issues Nair raises are urgent. Are we doomed to self-destruct by default anyway? If he has an answer, Nair has not articulated it in his books, or his public campaigns. Perhaps there might be a third book for that.

Beyond GDP


 

December 6, 2018

 

Beyond GDP

ttps://www.project-syndicate.org/commentary/new-metrics-of-wellbeing-not-just-gdp-by-joseph-e-stiglitz-2018-12

What we measure affects what we do. If we focus only on material wellbeing – on, say, the production of goods, rather than on health, education, and the environment – we become distorted in the same way that these measures are distorted; we become more materialistic.

 

INCHEON – Just under ten years ago, the International Commission on the Measurement of Economic Performance and Social Progress issued its report,  Mismeasuring Our Lives: Why GDP Doesn’t Add Up.The title summed it up: GDP is not a good measure of well-being. What we measure affects what we do, and if we measure the wrong thing, we will do the wrong thing. If we focus only on material well-being – on, say, the production of goods, rather than on health, education, and the environment – we become distorted in the same way that these measures are distorted; we become more materialistic.

We were more than pleased with the reception of our report, which spurred an international movement of academics, civil society, and governments to construct and employ metrics that reflected a broader conception of wellbeing. The OECD has constructed a Better Life Index, containing a range of metrics that better reflect what constitutes and leads to wellbeing. It also supported a successor to the Commission, the High Level Expert Group on the Measurement of Economic Performance and Social Progress. Last week, at the OECD’s sixth World Forum on Statistics, Knowledge, and Policy in Incheon, South Korea, the Group issued its report, Beyond GDP: Measuring What Counts for Economic and Social Performance.

The new report highlights several topics, like trust and insecurity, which had been only briefly addressed by Mismeasuring Our Lives, and explores several others, like inequality and sustainability, more deeply. And it explains how inadequate metrics have led to deficient policies in many areas. Better indicators would have revealed the highly negative and possibly long-lasting effects of the deep post-2008 downturn on productivity and wellbeing, in which case policymakers might not have been so enamored of austerity, which lowered fiscal deficits, but reduced national wealth, properly measured, even more.

Political outcomes in the United States and many other countries in recent years have reflected the state of insecurity in which many ordinary citizens live, and to which GDP pays scant attention. A range of policies focused narrowly on GDP and fiscal prudence has fueled this insecurity. Consider the effects of pension “reforms” that force individuals to bear more risk, or of labor-market “reforms” that, in the name of boosting “flexibility,” weaken workers’ bargaining position by giving employers more freedom to fire them, leading in turn to lower wages and more insecurity. Better metrics would, at the minimum, weigh these costs against the benefits, possibly compelling policymakers to accompany such changes with others that enhance security and equality.

Spurred on by Scotland, a small group of countries has now formed the Wellbeing Economy Alliance. The hope is that governments putting wellbeing at the center of their agenda will redirect their budgets accordingly. For example, a New Zealand government focused on well-being would direct more of its attention and resources to childhood poverty.

Better metrics would also become an important diagnostic tool, helping countries both identify problems before matters spiral out of control and select the right tools to address them. Had the US, for example, focused more on health, rather than just on GDP, the decline in life expectancy among those without a college education, and especially among those in America’s deindustrialized regions, would have been apparent years ago.

Likewise, metrics of equality of opportunity have only recently exposed the hypocrisy of America’s claim to be a land of opportunity: Yes, anyone can get ahead, so long as they are born of rich, white parents. The data reveal that the US is riddled with so-called inequality traps: Those born at the bottom are likely to remain there. If we are to eliminate these inequality traps, we first have to know that they exist, and then ascertain what creates and sustains them.

A little more than a quarter-century ago, US President Bill Clinton ran on a platform of “putting people first.” It is remarkable how difficult it is to do that, even in a democracy. Corporate and other special interests always seek to ensure that their interests come first. The massive US tax cut enacted by the Trump administration at this time last year is an example, par excellence. Ordinary people – the dwindling but still vast middle class – must bear a tax increase, and millions will lose health insurance, in order to finance a tax cut for billionaires and corporations.

If we want to put people first, we have to know what matters to them, what improves their wellbeing, and how we can supply more of whatever that is. The Beyond GDP measurement agenda will continue to play a critical role in helping us achieve these crucial goals.

 

Anwar as Port Dickson MP


September 20, 2018

 Anwar  as Port Dickson MP

Opinion  |

COMMENT | If Anwar Ibrahim does make the cut, invariably, as the Member of Parliament of Port Dickson, perhaps something akin to a healthy rivalry with Langkawi island MP Dr Mahathir Mohammad will be immediately triggered.

Key government events should be held in Langkawi, either to brainstorm on the revival of Malaysia, or, the various ministries. Such events are bound to catch on in Port Dickson, too, which is just a short distance away from Putrajaya.

Image result for Langkawi

Indeed, high-end hotels, over the last 15 years, have also sprung up on Langkawi island (pic above), including the globally renowned Four Seasons. From time to time, it is not rare to see Indian families touring in huge numbers in Langkawi, too, often booking all their suites and rooms at one go.

Although Langkawi has also catered to the tourists of Scandinavia and Germany, who can often be seen basking in the sun, no discernible (foreign) presence has been seen at Port Dickson’s beaches as yet.

Image result for Port Dickson

Port Dickson Chalets

This is where Port Dickson has to stand out. Making its seas and shorelines pristine would make Port Dickson an ideal destination for families and international group tours beyond what has generally been provided to Malaysians.

If Anwar Ibrahim does somehow attract more Chinese to the beach town, the facilities in Port Dickson would have to be significantly scaled up – without which, the residents of Port Dickson would be looking at immense traffic bottlenecks and congestion.

Such negative externalities of tourism cannot be ruled completely. Polluted air, crowded bazaars, shortage of proper food and medical facilities, too, can all be a turn off to well-heeled Malaysian tourists.

In fact, without an iconic landmark, Port Dickson would be at a disadvantage, compared to Langkawi island. Langkawi, for example, hosts one of the longest cable cars in Southeast Asia that allows thousands of tourists to enjoy a bird’s eye view of the whole island.

Port Dickson, being flatter, is only known for its small-town feel and delicious local food. Perhaps a high tower should be built that would permit Port Dickson visitors to peer into the Straits of Malacca, and the thousands of ships that pass through it. It would seem that such a service should be introduced, in order to allow Malaysians to take a peek into what goes on in one of the busiest straits in the world.

The depths of the quays in Port Dickson should be constantly dredged and deepened, to allow bigger ships and vessels to berth, ideally ships that can ferry passengers across to Sumatera, Indonesia, which is just across the shores of Malaysia.

Image result for mahathir vs anwar ibrahim

To be sure, friendly ecological themes have to be worked into the grand schemes for all arrangements. Otherwise, a tourism scheme that is merely heavy on sheer human traffic alone is bound to create many side effects, beyond overcrowding, noise pollution, and inadequate waste disposal.

Either way, it is first time in the history of Malaysia that a reigning Prime Minister is an MP of a touristy constituency, indeed a tax-free zone to boot, which is Langkawi island. Should Anwar win the Port Dickson seat, the eighth prime minister of Malaysia would have to transform Port Dickson into a major township.

Port Klang was previously known as Port Swettenham, in recognition of the tenure of Resident Frank Swettenham in the 19th century. Over the years, Port Klang has morphed into a seafood attraction and high-density port.

No one knows if Port Dickson can become the hub of “bunkering,” a business that caters to refueling the ships and vessels that traverse through the Straits of Malacca.

If it does, this is an economic sector that is worth no less than US$1 billion a year. At least that is the current size of the bunkering business in Singapore, an idea that was ironically coined by Dr Mahathir previously.

It would help if Anwar Ibrahim could come up with such an industry-relevant solution, beyond merely looking to boost tourist numbers in Port Dickson.


PHAR KIM BENG was a multiple award-winning Head Teaching Fellow on China and Cultural Revolution in Harvard University.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.