At first sight, indicators seem to be addressed to experts, economists, and statisticians, and yet they are part of our daily life. For example, whenever I watch the evening news on television, I am informed about at least two indicators: First, I am told how the Dow Jones Index evolved on that day, and then the weather report informs me about the next day's temperature.
The weather report helps me decide how to dress the next day, but the Dow Jones Index is absolutely useless for me because I do not own American shares. Nonetheless, I am forced to digest Wall Street's news. Of course, I could switch the television off, but a few seconds after the Dow Jones Index is given, the movie starts. There is hardly enough time to pour myself a drink, so I will probably just stay there and listen. Statistics show that ordinary people spend several hours watching TV every day. Even if we watch the news only once a day, this still implies that after 1 year, we have seen how the Dow Jones scored about three hundred times. During our professional life (i.e., about 40 years), people like you and me will have been told more than ten thousand times that a falling Dow Jones is bad, and a rising Dow Jones is good. After a while, we start believing the message. Maybe it is sheer coincidence, but on January 7, 2003, U.S. President Bush announced a tax cut on dividends aimed at helping the dwindling stock markets. This generous present to a small minority of shareholders will cost more than US$600 billion in the next 10 years. Who will pay this bill in the end?
The daily Dow Jones brainwash is a recent phenomenon, and I hope it will never get full control over people and politics. But there is an even more powerful indicator, the gross domestic product (GDP) growth rate, that does indeed strongly influence the democratic debates in our societies.
*This chapter reflects the strictly personal opinions of the author. Comments should be sent to [email protected].
Of course, it is almost impossible to prove this statement because no head of government has ever declared in public, "I made this decision, aimed at accelerating economic growth, because I wanted to be reelected, and I knew my voters would judge me on the basis of the GDP growth rate." Yet it is equally impossible to find a newspaper that does not contain at least one article lamenting the critical economic situation and urging the government to take measures to accelerate economic growth, preferably by lowering the tax burden of small and medium enterprises.
Certainly, the wealth of a nation depends to a great extent on its economic output (and that is essentially what GDP measures: output valued at market prices), but there is also a broad scientific consensus that GDP should not be misused—and unfortunately this is still common practice in the media—as a way to measure the well-being of our societies.
Under pressure from the media, governments are pushed to follow the "more growth is better" message of GDP. But do we really want to get richer,1 even if the price is destruction of the environment, poverty for the South, violation of human rights, gender inequality, and child labor?
The answer should be a clear "No," at least for somebody who has no television and does not read newspapers. However, most citizens do have television, are brainwashed, and consequently do vote for political parties and governments that behave as if "more growth" were the only important goal of Western democracy. No prime minister in the world can ignore the GDP growth rate.
There is an obvious solution to end this distortion of the political agenda: the abolition of GDP. If the statistical offices stopped publishing the GDP growth rate, the media pressure would end, and our politicians would start explaining to us in detail how their decisions make our lives better. Unfortunately, although there is abundant literature on why GDP is a flawed measure of economic success, it continues to be used as the most important policy performance barometer: A government may do plenty of good and intelligent things to increase the true welfare of its citizens, but if the GDP growth rate is —2 percent, it will definitely lose the next election. Given its role in politics, including some legitimate uses in economic policy, it is very unlikely that statistical offices will ever stop publishing GDP.
However, we could balance the power of GDP, and of its almost equally powerful companions inflation and unemployment rate, by redefining government performance on the basis of a comprehensive set of indicators covering all the important goals of society.
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