3. Rwanda actually wants to ban the import of secondhand clothes so that it can build up its own clothing industry.
4. The method the commission employed is called hedonic accounting, which seeks to take into account questions of quality.
5. Brent Moulton, who as head researcher for the Bureau of Labor Statistics worked on the Boskin Commission, told me the exercise was very political. That was because many state benefits were linked to inflation. If inflation were lower, then benefits would be lower too.
6. For a discussion see Bean, “Independent Review of UK Economic Statistics.”
7. “How to Quantify the Gains That the Internet Has Brought to Consumers,” Net Benefits, The Economist, March 9, 2013: www.economist.com.
8. See Bean, “Independent Review of UK Economic Statistics,” p. 84.
9. Interview with author, September 2013. See also David Pilling, “Lunch with the FT: Ha-Joon Chang,” Financial Times, November 29, 2013: www.ft.com.
10. Murad Ahmed, “Your Robot Doctor Will See You Now,” Financial Times, January 13, 2016: www.ft.com.
11. “Why the Japanese Economy Is Not Growing: Micro-barriers to Productivity Growth,” McKinsey Global Institute, July 2000.
12. This hilarious example is taken from Rory Sutherland, “Life Lessons from an Ad Man,” TED Talk, July 2009: www.ted.com.
13. From a telephone interview with the former head of the Bureau of Economic Analysis, Steve Landefeld, or Mr. GDP as I like to call him, February 2017.
14. Adam Sherwin, “Welsh Town Moves Offshore to Avoid Tax on Local Business,” Independent, November 10, 2015.
15. Brian Czech, Supply Shock, New Society Publishers, 2013, p. 26.
16. If we did that though we would also have to acknowledge that much of the pollution we currently attribute to countries like China is actually pollution caused by Western companies who just happen to be operating in China.
17. Gordon Mathews, Ghetto at the Center of the World: Chungking Mansions, University of Chicago Press, 2011, p. 109.
CHAPTER 6: WHAT’S WRONG WITH THE AVERAGE JOE
1. African Americans were not actually plotted on the graph, but the rate of decline of their deaths was actually higher, at 2.6 percent a year over the 1999–2013 period.
2. IMF in current prices, accessed from knoema.com.
3. According to the US Bureau of Economic Analysis, GDP in constant 2009 prices was $16.5 trillion at the end of 2015 against $12.7 trillion at the end of 2000: www.multpl.com.
4. In 1970 the size of the US economy was $4.7 trillion, which had risen to $16.5 trillion by 2015 (US Bureau of Economic Analysis, GDP in constant 2009 prices). These figures do not account for population increase. In 2015 the US population was 321 million against 205 million in 1970, according to the US Census Bureau.
5. Edward Luce, “The Life and Death of Trumpian America,” Financial Times, October 9, 2016.
6. “The Decline of the Labor Share of Income,” IMF World Economic Outlook, cited in a blog on Bruegel: bruegel.org. As the post points out, the share has recovered marginally since the global financial crisis.
7. “Mortality and Morbidity in 21st Century America,” Brookings Institution, March 23, 2017.
8. Jeff Guo, “How Dare You Work on Whites,” April 6, 2017: www.washingtonpost.com.
9. “For Most Workers, Real Wages Have Barely Budged for Decades,” Pew Research Center, October 9, 2014: www.pewresearch.org.
10. Edward Luce, “The New Class War in America,” Financial Times, March 20, 2016: www.ft.com.
11. Angus Deaton, The Great Escape, Princeton University Press, 2013.
12. Ibid.
13. Albert Hirschman, “The changing tolerance for income inequality in the course of economic development,” World Development, vol. I, issue 12, December 1973. Angus Deaton alerted me to this idea: www.sciencedirect.com.
14. Angus Deaton in conversation with the author, July 2016.
15. Martin Wolf, review of Branko Milanovic, Global Inequality: A New Approach for the Age of Globalization, Harvard University Press, 2016, in Financial Times, April 14, 2016.
16. Inequality of wealth (see chapter 9) is almost always higher than inequality of income because advantages and disadvantages accumulate over time.
17. Milanovic, Global Inequality.
18. Milanovic calls this “citizenship rent.”
19. Martin Wolf, review of Milanovic, Global Inequality, in Financial Times, April 14, 2016.
20. See Edward Luce, The Retreat of Western Liberalism, Little, Brown, 2017.
21. “Income Inequality and Poverty Rising in Most OECD Countries,” October 21, 2008: www.oecd.org.
22. Denmark and Australia were examples of countries with high social mobility, the report said.
23. The curve is based on the work of labor economist Miles Corak and was popularized by Alan Krueger, former chairman of the Council of Economic Advisers.
24. Table 1: Key indicators on the distribution of household disposable income and poverty, 2007, 2012, and 2014 or most recent year: www.oecd.org.
25. Larry Summers told me in a telephone interview, March 2017, “I think the statistics are wrong because I don’t think they take nearly enough account of quality improvements of various kinds. We need to make adjustments for quality increases.”
26. Chrystia Freeland, “The Rise of the New Global Super-Rich,” TED Talk, 2013: www.ted.com.
CHAPTER 7: ELEPHANTS AND RHUBARB
1. “Bright Lights, Big Cities, Measuring National and Subnational Economic Growth in Africa from Outer Space with an Application in Kenya and Rwanda,” Policy Research Working Paper WPS7461, World Bank Group, 2015.
2. Morten Jerven, Poor Numbers, Cornell University Press, 2013, pp. 17–20.
3. Ibid., p. x.
4. David Pilling, “In Africa, the numbers game matters,” Financial Times, March 2, 2016.
5. Jerven, Poor Numbers.
6. See “If the GDP Is Up, Why Is America Down?” Atlantic, October 1995.
7. GDP per capita in PPP terms, IMF for 2015. See knoema.com.
8. Jeffrey Gettleman, “As Grasslands Dwindle, Kenya’s Shepherds Seek Urban Pastures,” New York Times, November 14, 2016.
9. The study found that ruminants contributed 319 billion shillings to the economy versus only 128 billion shillings in the official GDP statistics. “The Contribution of Livestock to the Kenyan Economy,” Intergovernmental Authority on Development Livestock Policy Initiative Working Paper 03-11, p. 6.
10. Miles Morland, “Notes from Africa 2: Kioskenomics,” private note to his clients, June 2011.
11. Telephone interview with author, February 2016.
12. Jamil Anderlini and David Pilling, “China Tried to Undermine Economic Report Showing Its Ascendancy,” Financial Times, May 1, 2015.
13. Jerven, Poor Numbers, p 57.
14. Remarks to author, February 2016.
15. Based on author interview with officials from Liberia Institute of Statistics and Geo-information, Monrovia, March 2016.
CHAPTER 8: GROWTHMANSHIP
1. World Data Atlas: knoema.com.
2. Akash Kapur, India Becoming, Riverhead Books, 2012.
3. International Monetary Fund figures for 2015, adjusted for local prices. In dollar terms the difference is even starker: South Korea is eighteen times richer per capita.
4. Jagdish Bhagwati and Arvind Panagariya, Why Growth Matters, Council on Foreign Relations, 2013, p. xviii.
5. Partly based on various personal conversations with Jagdish Bhagwati, most recently in New York in March 2017.
6. Cited in Bhagwati and Panagariya, Why Growth Matters, p. 23.
7. That owed as much to China slowing down as to India accelerating. In fac
t, India’s growth also slowed somewhat, and the headline number may be flattered by a 2015 rebasing of GDP.
8. See Amartya Sen, Development as Freedom, Anchor Books, 2000, p. 8.
9. Ibid., p. 3.
10. James Lamont, “High Growth Fails to Feed India’s Hungry,” Financial Times, December 22, 2010.
11. Jagdish Bhagwati disputes many of Sen’s figures on malnutrition. See Bhagwati and Panagariya, Why Growth Matters.
12. “Indian Tycoon Hosts £59m Wedding For Daughter Amid Cash Crunch,” Guardian, November 16, 2016: www.theguardian.com.
13. Amartya Sen, “Bangladesh Ahead of India in Social Indicators,” Daily Star, February 13, 2015: www.thedailystar.net.
14. David Pilling, “India’s Congress Party Has Done Itself Out of a Job,” Financial Times, May 7, 2014: www.ft.com.
15. Rajiv Kumar of the Centre for Policy Research, Delhi.
16. Sam Roberts, “Hans Rosling, Swedish Doctor and Pop-Star Statistician, Dies at 68,” New York Times, February 9, 2017.
17. He objected because he said his observations were based merely on data.
18. When I asked him about the other 20 percent, he said, “That’s why we have public health. That’s the reason for my existence.”
19. There is at least one country that breaks Rosling’s rule: Equatorial Guinea, where the elite has grown fat on oil money courtesy of Exxon Mobil, has a GDP per capita of $30,000 adjusted for local prices. But two-thirds of its population lives in abject poverty, and the infant mortality rate, at 67 per 1,000, is higher than in Eritrea, a country 20 times poorer as measured by GDP.
20. The World Bank defines lower-middle-income countries as those with a per-capita gross national income of between $1,026 and $4,035, calculated by the Atlas method, which tries to smooth out differences between countries caused by exchange-rate fluctuations. Upper-middle-income countries are defined as those with a GNI per capita of between $4,036 and $12,475.
21. These numbers come from Rosling.
22. “Why Ethiopian Women Are Having Fewer Children Than Their Mothers,” BBC, November 6, 2015: www.bbc.com/news.
CHAPTER 9: BLACK POWER, GREEN POWER
1. Chris Buckley 储百亮 (ChuBailiang).
2. Edward Wong, “Air Pollution Linked to 1.2 Million Premature Deaths in China,” New York Times, April 1, 2013: www.nytimes.com.
3. Javier Hernandez, “Greed, Injustice and Decadence: What 5 Scenes From a Hit TV Show Say About China,” New York Times, May 27, 2017.
4. See Frank Dikötter, Mao’s Great Famine, Bloomsbury Publishing, 2010.
5. Li Keqiang, who went on to become Chinese premier, warned in 2007 that Chinese GDP figures should not be taken too seriously. He recommended looking at three other numbers: electricity production, rail cargo, and bank loans. See David Pilling, “Chinese Economic Facts and Fakes Can Be Hard to Tell Apart,” Financial Times, September 16, 2015.
6. Paul A. Samuelson, Economics, McGraw-Hill Book Company, 1948, p. 10.
7. Lorenzo Fioramonti, Gross Domestic Problem, Zed Books, 2013, p. 151.
8. Leo Lewis, Tom Mitchell, and Yuan Yang, “Is China’s Economy Turning Japanese?,” Financial Times, May 28, 2017.
9. Jonathan Watts, “China’s Green Economist Stirring a Shift Away from GDP,” Guardian, September 16, 2011: www.theguardian.com.
10. Ibid.
11. Geoff Dyer, “Chinese Algae Spreads to Tourist Resorts,” Financial Times, July 12, 2008: www.ft.com.
12. Jonathan Watts, When a Billion Chinese Jump, Simon & Schuster, 2010, chapter 11.
13. Jared Diamond has argued that the Rwandan genocide of 1994 had a Malthusian element of overpopulation.
14. Pilita Clark, “The Big Green Bang: How Renewable Energy Became Unstoppable,” Financial Times, May 18, 2017.
15. Aibing Guo, “China Says It’s Going to Use More Coal, With Capacity Set to Grow 19%,” Bloomberg, November 7, 2016: www.bloomberg.com.
16. Yuan Yang, “China’s Air Pollution Lifts in Coastal Cities, But Drifts Inland,” Financial Times, April 20, 2016.
17. Yuan Yang, “China Carbon Dioxide Levels May Be Falling, Says LSE Study,” Financial Times, March 7, 2016.
18. Gabriel Wildau, “Small Chinese Cities Steer Away from GDP as Measure of Success,” Financial Times, August 13, 2014.
19. Arthur Beesley et al., “China and EU Offer Sharp Contrast with US on Climate Change,” Financial Times, June 1, 2017.
CHAPTER 10: WEALTH
1. This is something Martin Wolf of the Financial Times told me. Personal conversation, September 2016, London.
2. For companies there’s even a third set of accounts, called the cash-flow statement, which measures the actual cash position of the company—the liquidity at its disposal—and is thus different again from the profit and loss accounts.
3. Many advanced economies do measure what is known as produced capital, the stock of physical assets such as roads, buildings, and ports.
4. Partha Dasgupta, “Getting India Wrong,” Prospect Magazine, August 2013.
5. This example comes from a conversation with Partha Dasgupta, September 2016.
6. Partha Dasgupta, “The Nature of Economic Development and the Economic Development of Nature,” Economic and Political Weekly, vol. 48, issue 51, December 21, 2013.
7. This account is taken from Jared Diamond’s article “Easter’s End” in Discover Magazine, August 1995: courses.biology.utah.edu.
8. Ibid.
9. Author interview with Partha Dasgupta.
CHAPTER 11: A MODERN DOMESDAY
1. J. A. Giles and J. Ingram, The Anglo-Saxon Chronicle, Project Gutenberg: www.gutenberg.org.
2. Dieter Helm, Natural Capital, Yale University Press, 2015, p. 96.
3. Robert Costanza et al., “The Value of the World’s Ecosystem Services and Natural Capital,” Nature, May 1997: www.nature.com.
4. Partly based on a discussion with Partha Dasgupta, September 2016.
5. Robert Costanza et al., “Costanza and His Coauthors Reply,” Heldref Publications, March 1998, vol. 40, no. 2: ftp://131.252.97.79/Transfer/ES_Pubs/ESVal/es_val_critiques/responseToPearce_byCostanza.pdf.
6. Helm, Natural Capital, p. 8.
7. Former Norwegian prime minister Gro Harlem Brundtland was given no less a task by the United Nations than convincing the world’s governments to commit to a form of growth that did not destroy the planet. In 1987 the commission released its report, “Our Common Future.”
8. The same law could be applied to other forms of capital, including infrastructure and even institutions.
9. See Helm, Natural Capital, pp. 99–118.
10. In practice such theories run into the problem of the “tragedy of the commons,” whereby everyone extracts as much as possible of a resource because the alternative is that someone else will.
11. Agnes Kalibata, president of the Alliance for a Green Revolution in Africa, says climate change is the single biggest challenge for Africa’s impoverished farmers, who are almost entirely dependent on rain-fed agriculture in an era when rainfall has never been so unpredictable. Interview with author, Nairobi, April 2017.
12. William Davies, The Happiness Industry, Verso, 2015, p. 65.
13. Andrew Simms, “It’s the Economy That Needs to Be Integrated into the Environment—Not the Other Way Around,” Guardian, June 14, 2016: www.theguardian.com.
14. This is the brilliant idea of Andrew Simms in ibid.
15. Simms, “It’s the Economy.”
16. George Monbiot, “Can You Put a Price on the Beauty of the Natural World?,” Guardian, April 22, 2014: www.theguardian.com.
17. See the Global Footprint Network website: www.footprintnetwork.org.
18. Ibid.
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19. Interview with author, March 2017.
20. These ideas are based on a discussion with Martin Wolf, my esteemed colleague at the Financial Times, September 2016.
21. Glenn-Marie Lange et al., “The Changing Wealth of Nations,” World Bank, December 2011, p. xii: www.worldbank.org.
22. Angus Maddison, a pioneer in calculating GDP over time, was professor at the University of Groningen from 1978 to 1997, and a founder of the Groningen Growth and Development Centre.
23. Oil, natural gas, hard coal, soft coal, bauxite, copper, gold, iron ore, lead, nickel, phosphate, tin, silver, and zinc.
24. The bank’s most recent methodology makes some attempt to factor in the hunting, fishing, and recreational value of forest land.
25. These figures are from Lange et al., “The Changing Wealth of Nations,” p. 7, for which the latest data on comprehensive wealth are from 2005. The bank publishes more regular numbers for related wealth measures, such as adjusted net savings.
26. Table 1.1, p. 7, in “The Changing Wealth of Nations”: documents.worldbank.org.
27. The account of Viken comes from “Discover How Norway Saved Its Vanishing Forests,” BBC, November 4, 2015: www.bbc.co.uk.
28. Tore Skroppa, “State of Forest Genetic Resource in Norway,” March 2012, p. iii: www.skogoglandskap.no/filearchive.
29. Its formal name, changed in 2006, is actually the Government Pension Fund Global, a slightly confusing name given that it is not really a pension fund but a sovereign wealth fund.
CHAPTER 12: THE LORD OF HAPPINESS
1. In 1975 pounds.
2. “Jeremy Bentham Makes Surprise Visit to UCL Council,” UCL News, July 10, 2013: www.ucl.ac.uk.
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