3. Jeremy Bentham, An Introduction to the Principles of Morals and Legislation, 1789.
4. William Davies, The Happiness Industry, Verso, 2015, p. 10.
5. Ibid., p. 61.
6. Ibid., p. 17.
7. This is based on a lecture by Jeffrey Sachs, director of the Earth Institute of Columbia University, at the London School of Economics, December 2016.
8. George Ward, “Is Happiness a Predictor of Election Results?,” Centre for Economic Performance, April 2015: cep.lse.ac.uk.
9. John F. Helliwell, et al., World Happiness Report, 2012: worldhappiness.report/download.
10. World Happiness Report, 2016, chapter 2, “The Distribution of World Happiness”: worldhappiness.report/download.
11. IMF data for 2015, with GDP per capita expressed in purchasing-power parity terms.
12. Ibid.
13. Results cover 90,000 people in 46 countries. Richard Layard, Happiness, Penguin Books, 2005, p. 65.
14. Ibid., p. 64.
15. Ibid., p. 79.
16. “Carrie Fisher’s ashes carried in Prozac-shaped urn,” January 7, 2017: www.bbc.co.uk.
17. Author interview with Richard Layard.
18. Layard, Happiness, p. 233.
19. Ibid., p. 154.
20. Layard cites research from Robert Sampson and Byron Groves of Harvard University, “Community Structure and Crime (1989)”: dash.harvard.edu.
21. Paul Ormerod, “Against Happiness,” Prospect Magazine, April 29, 2007: www.prospectmagazine.co.uk.
22. Richard Layard, “Paul Ormerod Is Splitting Hairs,” Prospect Magazine, June 2007.
23. Cited in World Happiness Report, 2012, p. 111.
24. Gardiner Harris, “Index of Happiness? Bhutan’s New Leader Prefers More Concrete Goals,” New York Times, October 4, 2013.
25. Ibid.
26. According to 2016 IMF figures, it has a GDP of just over $8,227 in purchasing-power parity terms, which adjust for local prices.
27. All figures from Unesco.
28. Bill Frelick, “Bhutan’s Ethnic Cleansing,” New Statesman, February 1, 2008: www.hrw.org.
29. Bhutan’s 2015 Gross National Happiness Index, Centre for Bhutan Studies and GNH Research, November 2015: www.bhutanstudies.org.bt.
CHAPTER 13: GDP 2.0
1. Tobin became most famous for his proposed tax on foreign exchange transactions to reduce risky and what he considered useless speculation.
2. “Against the Human Development Index”: econlog.econlib.org.
3. Minus net investment is when the value of new investments is less than the value of depreciation.
4. Interview with author, February 2017.
5. From a conversation with Steve Landefeld, February 2017.
6. “Canadian Index of Wellbeing, Executive Summary,” 2016: uwaterloo.ca.
CHAPTER 14: THE GROWTH CONCLUSION
1. Author telephone interview with Joseph Stiglitz, April 2017.
2. Partly based on a conversation with Jagdish Bhagwati, New York, March 2017.
3. In an interview with the author, Larry Summers said GDP tended to track other things we might be interested in, including environmental protection and health, thus limiting the need to come up with different measurements. In other words, in his opinion GDP is not a bad proxy for well-being. “When some other welfare measure grows fast, that tends to be the period when GDP grows fast, and vice versa. When you do it across countries, I think the correlation between growth in alternative welfare measures and growth in GDP ends up being relatively high, not relatively low. So that all makes me a little less bowled over with the efficacy of these kinds of alternative calculations.”
4. Jonathan Soble, “Japan, Short on Babies, Reaches a Worrisome Milestone,” New York Times, June 2, 2017: www.nytimes.com.
5. Hans Rosling projected the world’s population would peak at about 11 billion in 2100, when he estimated there would be 1 billion people in the Americas, 1 billion in Europe, 4 billion in Africa and 5 billion in Asia. Lecture at Davos, Switzerland, January 2014.
6. Most though not all economists see a clear trend of increased inequality in the majority of rich countries.
7. Sometimes it is expressed on a scale of 0 to 1.
8. Gini Index (World Bank estimate)—Country Ranking, Index Mundi website: www.indexmundi.com.
9. The coefficient can be calculated before or after government redistribution, including tax and benefits.
10. Data source: C. DeNavas-Walts, B. D. Proctor, and J. C. Smith, September 2013, US Census Bureau, Current Population Reports, P60–245, Income, Poverty, and Health Insurance Coverage in the United States: 2012 (Table A-2).
11. “Income Inequality Remains High in the Face of Weak Recovery,” Centre for Opportunity and Equality, OECD, November 2016, Table 1: Key indicators on the distribution of household disposable income and poverty, 2007, 2012, 2014, or most recent year: www.oecd.org.
12. Interview with author, Washington, March 2017.
13. Calculating net domestic product requires a number of assumptions, most important of which is over how many years does an asset depreciate. You might decide, for example, that the value of a building falls to zero over twenty years. So even though the building is still standing in twenty years’ time, in national accounting terms it would be valued at nothing. If different nations apply different assumptions to different assets, comparing national domestic products internationally becomes difficult. But it does provide a rough guide of how well or badly an individual nation is doing in maintaining its assets and therefore how sustainable its growth is likely to be.
14. Telephone conversation with the author, April 2017.
15. As Stiglitz points out, CO2 might not be the best measure in all situations. In China for example you could make a case that immediate health issues associated with chronic air pollution are more pressing. In that case it might be better for Beijing to measure fine particulate emissions.
16. So-called U6, the broadest measure of unemployment, includes “discouraged workers” who want work but have stopped looking because job prospects are so dim, and part-time workers who would rather work full time. See Bureau of Labor Statistics, Table A-15: www.bls.gov/news.release.
17. Partly based on conversation with Joseph Stiglitz, April 2017.
18. See OECD Better Life Index: www.oecdbetterlifeindex.org.
19. Stiglitz says that hourly wages in the US have stagnated over sixty years. For people to maintain their standard of living, they’ve worked longer and longer hours per household. In Europe hours worked per household have come down over the same period. If his numbers are right, Europeans have traded some income for leisure, while Americans have prioritized making money, even if they have no time to enjoy it.
20. Kenneth Boulding, quoted in Lorenzo Fioramonti, Gross Domestic Problem, Zed Books, 2013, pp. 145–6.
21. Faye Dunaway announced La La Land as Best Picture, but the card should have read Moonlight, the real winner. “Moonlight, La La Land and What an Epic Oscars Fail Really Says,” New York Times, February 27, 2017.
22. Telephone interview with author, February 2017. Incidentally, Oulton wrote a terrifically spiky defense of GDP in “Hooray for GDP! GDP as a Measure of Well-being”: voxeu.org.
23. According to officials at the Bureau of Economic Statistics.
24. The official spoke anonymously out of concern for retribution even after all this time.
25. Joe Earle, Cahal Moran, and Zach Ward-Perkins, The Econocracy: The Perils of Leaving Economics to the Experts, Manchester University Press, 2016.
26. Ibid.
27. Kenneth Boulding, quoted in “An A–Z of Business Quotations,” The Economist, July 20, 2012.
28. Earle et al., The Econocracy.
29. Author interview with Joe Earle, July 2016.
ACKNOWLEDGMENTS
Too many people helped with the writing of this book to be mentioned by name. I have been discussing the ideas behind it with friends, family, colleagues, and professionals, not to mention my two boys, Dylan and Travis, for years.
In addition, I conducted dozens of interviews in person or by telephone with practitioners, academics, economists, and thinkers in Europe, America, Africa, and Asia. Many of those who helped form the arguments appear in the text of these pages or in the notes. To all of them, I thank you profusely for your kindness and for your wisdom.
A few people deserve special mention. Staff at the Office for National Statistics patiently helped to explain the guts of GDP and how it was calculated. This book argues for more statistics, not fewer, so thank you for all your hard work and dedication, Luke Croydon, Darren Morgan, Sanjiv Mahajan, and Gareth Powell, to name but a few. Thank you also to all those at the US Bureau of Economic Analysis past and present and to the dedicated statisticians in Kenya, Nigeria, Liberia, and Tanzania with whom I spoke, as well as those in other parts of Africa who are trying to make sense of their countries’ economies in often trying circumstances.
At the Financial Times, I’d like to thank the editor, Lionel Barber, who has always been a friend and supporter. The FT, like the world’s best universities, allows its writers to pursue their own interests wherever they may lead them. The FT has published several of my articles on GDP—a practice run for this book—in the magazine, the Life and Arts section, and in opinion slots. The FT’s precious system of sabbaticals gave me some much-needed time off to write the first draft of the book. In addition to Lionel, I’d like to thank Gideon Rachman, a wonderful colleague, and Thomas Hale, who read an early draft and made helpful suggestions, as well as William Wallis and Andrew England, who have been great and supportive friends when it was most needed.
Other readers of early drafts or chapters include Akash Kapur and Geoff Tily, whose ideas and critiques proved most valuable. Joe Earle, a gifted young economist and one of the founders of the Post-Crash Economics Society, also read a draft and helped to assure me that I was on the right track.
Danielle Walker Palmour of Friends Provident Foundation, which supported the writing of the book, was endlessly encouraging. Alison Benjamin, who read early drafts, also cheered me on and made excellent suggestions. If they had not prodded me into action in the first place, this book would never have been written.
Likewise, my agents, Felicity Bryan and Zoe Pagnamenta, who saw me through my first book on Japan, believed in this one from the outset, even though it was on a totally unrelated subject and outside my usual sphere. At Bloomsbury, Alexis Kirschbaum, and in the US, Tim Duggan of Tim Duggan Books, were quick to see the potential of this project.
Thanks too to the dedicated publicity and marketing team in the UK—Natalie Ramm, Emma Bal, and Genista Tate-Alexander—as well as to Jasmine Horsey and Sarah Ruddick, who have been incredibly helpful. In the US, though I haven’t met them yet, thanks to William Wolfslau, Aubrey Martinson, Dyana Messina, Lisa Erickson, and Becca Putman for your true professionalism.
I would also like to thank Ha-Joon Chang, with whom I discussed the book at conception stage and who encouraged me to believe that this was something I could do.
This book was written during a difficult period of transition in my life and I’d especially like to thank my mum, Doria Pilling, for being there for me when I needed her most. She edited her own, far more ambitious book on social care around the world while I produced this one.
Thank you finally to Kimiko, who heard all the arguments in rough formation, winkled out invaluable snippets from the Internet, and encouraged me throughout. This book is dedicated to you—and to us.
ABOUT THE AUTHOR
DAVID PILLING is an associate editor at the Financial Times, where he has reported on business, economics, and politics from London, Chile, Argentina, Tokyo, and Hong Kong. He is currently the Africa editor, based in London.
What’s next on
your reading list?
Discover your next
great read!
* * *
Get personalized book picks and up-to-date news about this author.
Sign up now.
The Growth Delusion Page 25
