Measuring Quality of Life

GDP (Gross Domestic Product) is convenient for economists and politicians, but it misleads us into thinking an increase in GDP makes us better off. More guns, worse natural disasters, and private prisons add to GDP, but show us that not every contribution to GDP improves our lives.

Measures of the improvement in the quality of our lives is vastly more important. Unfortunately, GDP is easier to measure, so that’s what we look at. As any laid-off or underpaid worker can tell you, the quality of life for everyone but the richest few has been stagnant or declining for decades in spite of rocketing GDP. The desperation of these workers is why Donald Trump’s lies about how he was going to make everything better convinced them.

Every demagogue knows he must tell his followers that they have an enemy who is to blame for all their miseries. Hitler blamed the Jews, and Trump blamed Democrats, especially Hillary Clinton. Those elite, pointy-headed, out-of-touch ivory tower intellectuals who never worked a day in their lives and don’t know what the real world is like. Liars. Criminals.

We don’t have a good, simple measure of the quality of life yet, but we do know that it does not lie in the realm of “stuff”. We already have too much stuff, and the addition of an 80-inch TV will not improve our quality of life.

Actually, it’s relatively easy in modern nations to have high quality of life. Why do we not have it? We do not have high quality of life because the very rich and corporate powers have given far too much wealth to themselves and to Congress. Members of Congress are all given fabulous amounts of money in the expectation that it will earn access for lobbyists to convince Congress to vote in ways that favor these interests. It works. Congress again and again votes for bills that make the rich richer and the rest of us less well off. We cannot, for example, use leverage to obtain better prices for medicines because Big Pharma paid Congress to pass a bill that says we can’t. So we are forced to subsidize a multi-million dollar bonus for a Big Pharma CEO when we buy our grossly overpriced meds.

Wealth is finite. If it goes to the very wealthy it cannot go elsewhere. The wealthy do not use it to build factories and provide jobs. They merely invest it for themselves, taking it out of circulation, where it would improve the quality of our lives.

Health care is one of the most important elements of quality of life.

Congress, almost entirely because of the Republican position, has never given serious study to one of the most important ways to improve the quality of life: national health care. We are literally the only modern nation without national health care, and it shows. Our health as a nation is much worse than virtually any other modern nation, in spite of the fact that we pay literally double what others pay. This doesn’t bother the wealthy because they can easily buy top quality medical care. The poor who can’t get treatment just die.

A large part of this tragedy is because a quarter of our health care bill goes to private insurers, who provide absolutely no health care at all. Another big chunk goes down the drain because we can’t readily control the price of what we pay for medical care or medications. Countries with national care have neither of these major problems. We still have this antiquated system largely because Republicans have a pathological aversion to anything they think is “socialism”, which they apparently equate with Stalinist communism. They stick to this story because they are beholden to moneyed interests that get them re-elected.

Are we entitled to health care? Yes, we are.

Consider the case of one of the most important medical advances in recent centuries, penicillin. Penicillin and its later offspring has cured diseases that in the past claimed millions of lives. Penicillin greatly improved our quality of life. It also earned truckloads of money for those who manufactured it, but that money did not improve our quality of life.

I maintain that we are all entitled to penicillin if we need it, and it would be amoral to withhold this lifesaver from anyone, even if they are penniless. The same holds true even for expensive medical treatment. Half a million families every year are bankrupted after selling everything they own to pay for an expensive medical treatment. This creates a net negative effect for the whole country, because each of these families is thrust into worse quality of life. The children may have to give up college plans, so the effect lasts more than a generation. This national disaster happens only in the US, the only country without national health care.

Inexplicably, Republicans waste endless hours trying to preserve unearned wealth yet make health care affordable. They cannot understand that the biggest insurance pool is the most efficient, that the private health care insurance industry is completely useless, and that the cost of medical procedures and medicines can easily be managed by national boards. We are the only modern nation in the world that hasn’t figured this out.

Health care is not rocket science, it’s simple arithmetic.

Meaningless Growth

The use of “growth” as a measure of how well our democracy is doing is inadequate on two counts: (1) What we call growth is a measure of money spent, not growth; (2) “Growth” does not tell us how well wealth reaches everyone.

Measurement of economic growth is defined as a comparison of Gross Domestic Product at two points in time, usually calendar or fiscal years. It is assumed that “growth” is improvement, but that may or may not be true, and it is true that growth cannot be infinite.

Gross Domestic Product
is an inadequate measure,
but it’s the only one used.

GDP is virtually the only measure that economists have used since the 1930s. GDP counts every dollar spent as a contribution to growth, whereas it is clear that a portion of what we spend reflects negative contributions to the welfare of the nation.

Every good produced and every paid activity contributes to the GDP. The question is, what part of the spent money actually made things better? The trouble is that so much of this activity contributes to the movement of money, but not to the improvement of the nation. The cost of a bank robber’s getaway car contributes to GDP, but neither that nor the cost of his capture, trial, and incarceration could be considered a positive contribution. Just incarcerated prisoner costs alone exceed median income. There are also the enormous costs of natural disasters, epidemics of disease, wars, accidental deaths, and so on. This is all money lost. It cannot be spent on something useful.

We don’t have a real democracy
as long as low income workers
are inadequately paid.

GDP has little to do with the welfare of individuals, or the equality of wealth in the nation. We cannot lay claim to a progressive and egalitarian democracy as long as low income workers don’t make enough money to pay for essentials, including health care. It should be mentioned that when low income workers are not adequately paid, they are forced by circumstances to avail themselves of every government welfare program they qualify for, which increases tax costs. Pay is so poor at fast food joints alone that half of workers are using welfare. Our tax money is sponsoring McDonald’s and others to the tune of $7-billion a year. GDP tells us very little about our democracy.

When lost money is deducted from the GDP, what we find is that our national wellbeing has not really improved for decades, despite the rosy picture provided by GPD. Everybody knows this; everybody feels this. It worsens further when you take measures of equality into account, because virtually all gain for decades has gone to the rich, the top 1%, who certainly don’t need more money.

If the only ones who have benefited from an increase in GDP are people who don’t really need more money, the country is not improved in spite of “growth”, because there is nothing they can do with this money. It often sits in their offshore accounts like stored antiques. Things are made better when uninsured people get access to health care insurance, when the unemployed find jobs, or when their work is adequately paid, but not when the richest of us can afford yet another house.

Our national wellbeing
has not really improved for decades,
despite the rosy picture provided by GPD.

Altogether, GDP is inadequate as a measure of how well our society is functioning, because it’s simply not realistic. A more convincing overall evaluation would include a measure that accounts for those negative contributions to GDP. The third part of that evaluation is a measure of equality, and other measures include environment, resource depletion, and peace.

While measures of equality and negative contributions do exist, they rarely find their way into discussions of economic health. The most well known measure of spent money that does attempt to account for negative contributions, called the Genuine Progress Indicator (GPI), shows that, while GDP has been rapidly increasing, the increase in GPI has been nearly imperceptible. Factor in a measure of equality such as the GINI Index, which has been worsening for decades, and we move into minus territory. This is especially distressing because we are the richest country in the entire history of the world.

The Genuine Progress Indicator (GPI)
plus the GINI index
gives us negative growth.

A shortcoming of the GPI is that it attempts to quantify losses in wellbeing from things like leisure lost and public lands degraded, which cannot provide a realistic dollar amount. Another difference between GPI and GDP is that GDP measures money spent during a specific period, whereas GPI recognizes that gains and losses occur over longer periods. Thus, gains from solar electricity last the duration of the hardware’s life, which could be several decades, while most costs are “up front”. Losses from hurricane flooding continue until all damage is corrected or infrastructure is moved from the danger zone, and residents’ lives are reestablished, so such losses extend over time.

While GPI has not gained a foothold among economists, planners, or politicians in general, it is being used by several states, notably Maryland, Vermont, and Colorado, and in these states has provided valuable insight into state budget allotments. Laws in these states have been proposed or adopted that require estimates of their economic effect, which GPI provides. For example, a proposal for subsidies for home insulation included not only an estimate of the immediate cost, but an estimate of the benefit to the state over the lifetime of the insulation.

Real Stuff That Actually Exists Someplace

It is good to be reminded that the plutocrats have not succeeded in subduing us into poverty and servitude everywhere. For this reminder I am indebted to the article Fantasy Economics, by Andrew Simms, The Guardian, UK, 16 February 2013, and a few other places such as the Real World Economics Review Blog  and Yes! magazine that reports good news when it occurs. Simms points out that there is no single place where all of these beneficial advances exist at the same time, but they do exist, and make life better for the people.

There is no single place where
all of these beneficial advances
exist at the same time.

Begin with Uruguayan president José Mujica, who lives on $680 a month, which is the average income in Uruguay. He has a guard of two policemen and a three-legged dog, and drives a 1987 VW Beetle. He reminds me of California governor Jerry Brown, who, in he 1970s, lived in a two-bedroom apartment and drove a ten-year-old car. These may be extreme cases, but conspicuous consumption is unseemly in political leaders, and we have far too much of it. Voluntary simplicity accomplishes nothing substantial, but powerfully demonstrates support for the people.

After the 2008 market crash, the Icelandic “Pots and Pans Revolution” let the foolhardy banks go screw themselves, and didn’t bail them out. Then, half the population got involved in making a new constitution. Here at home Congress devotes most of its attention to keeping its owner-benefactors and their lobbyists happy.

After the 2008 market crash,
the Icelandic “Pots and Pans Revolution”
let the foolhardy banks go screw themselves.

Germany did better than most in the 2008 crash because 70% of its banks are community based small banks. Half of the banks’ mandate is to be useful, rather than just make profit. Quite a contrast with the US, where banks’ only purpose is profit. Wall Street and the Big Banks’ unregulated and amoral greed nearly succeeded in destroying the economy of the entire world, yet not one bankster has served time, and all the abuses continue as before.

The Mondragón Corporation in Spain, the Publix Supermarkets in the US, and the John Lewis Partnership in the UK, demonstrate that large worker-owned companies are possible and profitable. Worker-owned companies are the single most effective way to thwart the inherent faults of the capitalist system, and to foster a decent economic deal for workers. Such arrangements enrich the country as well as the worker-owners.

Worker-owned companies
are the single most effective way
to thwart the inherent faults
of the capitalist system.

Alternative ways to evaluate wellbeing include Bhutan’s famous Gross National Happiness index, which assesses 151 factors. An index more closely associated with financial wellbeing in the US is the Genuine Progress Indicator, which deducts destructive, harmful spending from the GDP, and demonstrates that, in contrast to what GDP tells us, our wellbeing has actually fallen.

Ecuador’s “National Plan for Good Living” guides the country away from market judgments and toward goals that actually make people better off. It is part of a movement in Latin America that has rejected US hegemony and its neoliberal demands. President Rafael Correa has stabilized the economy, reversed the punitive 85:15 ratio of oil company profit in order to benefit the people, and brought significant improvements to the lives of the citizens, with better education and health care in particular. There are also a more progressive tax system, improved collection of taxes, free healthcare and education, improvement of wages, the end of abusive loan arrangements, and seizure of bankrupt businesses for sale to the workers.

The beneficial effect of higher taxes in Scandinavia
directly contradicts dire warnings
from American conservatives.

Higher taxes in Scandinavia have led to increased investment, education, and R&D, while at the same time providing free health care and education, help for seniors, and assistance with childcare. This directly contradicts dire warnings from American conservatives that higher taxes (we have quite low taxes) will always be detrimental to economic health.

The takeaway lesson from all this is that government can take actions that not only improve the lives of ordinary citizens, but also improve the general economic condition of the whole country. The uncontrolled market economy we see and worship in the United States does the opposite, which is why we have record inequality today.

To be sure, these processes do not occur without controversy, and some changes have been heavy-handed, but the most vociferous of those who object are mostly the very rich, who have succeeded in making life sweet for themselves at the expense of everyone else.

The uncontrolled market economy we worship
in the United States is an anti-democratic force
that is creating an abusive plutocracy.

These examples provide demonstrations of what is possible, bringing obvious improvements to the lives of most citizens. For this we need for government to seize its proper role in bringing equality and the blessings of democracy to all citizens, and quit working only to satisfy the very rich.

How Will We Know We’re OK?

It won’t be because taxes are reduced. It won’t be because the national debt goes down. It won’t be because the rich got richer.

It will be because everyone who works is able to live reasonably well on what they earn. It will be because there are few reasons for our children to go to one school versus another. It will be because everyplace is reasonably safe from criminal activity. It will be because when you are sick, you can get treatment, no matter how little you earn.

It won’t be because taxes are reduced,
the debt goes down, or the rich got richer.

All these important things are of particular concern to the large cluster of people at the lower end of the pay scale, which is where we should put our attention. Instead, we pay a lot of attention to interest rates, Gross Domestic Product, deficits, and tax breaks for the rich and for multi-billion-dollar corporations. Oxfam tells us that the wealthiest 100 on the planet could end abject poverty among the remaining 7-billion several times over. Seven billion. That tells us how extremely unbalanced wealth has become. Extreme wealth for a few diminishes crucial basic wealth for everyone else, which is why our inequality has risen in tandem with super-wealth, both worldwide and here at home.

GDP means nothing. It’s just how much money is spent, with no values assigned to what it is spent on. The grinding of our mega-war machine improves the GDP, but diminishes the quality of life for everyone not directly profiting from it.

The only way to measure our wellbeing is to consider the people, especially the low income earners. The money in our pocket is only part of it. Everyone needs a certain minimum income if they are not to be miserable, but beyond that, money doesn’t play a major role in life satisfactions. This is why our inequality is inexcusable. There are other things. Things like family and community, like sharing the great variety that life has to offer, such as good food, love, art and entertainment, and the opportunity to experience new and interesting things. These are the things that are missing for the poor, not expensive cars and designer clothing. Instead, their lives are characterized by endless stress, continual setbacks, and few enjoyments.

Beyond a certain minimum,
money doesn’t play a major role in life satisfactions.

Access to routine health care, opportunity for education and work, and enough income to save a bit for retirement are not luxuries. They should be part of everyone’s life, and if we question whether we’re OK and find that they aren’t available to everyone, then the answer is no. And the answer is no.

Life should not be excessively stressful. We shouldn’t be constantly worried that we’ll be fired from our low-wage job, with little chance of finding another. That we’ll lose our home. We shouldn’t be worried that there won’t be enough to eat before the next paycheck. We shouldn’t be constantly worried that we will be mugged or shot. If we are OK, we’ll have only the normal stresses of family life, school, and work, and those are quite enough.

Published in: on 2013/02/02 at 12:49 pm  Comments (1)  
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Wealth, Health, and the Poor

The best general measure of the national economic health is equality, not how much money we spend (GDP). This is expressed by the Gini Coefficient, which is especially useful in comparing ourselves to our peers. The Gini ranges from 0.0, perfect equality where everyone has the same amount of wealth, to 1.0, perfect inequality where one person has all the wealth. In essence, Gini gives us a number that tells us how well our democracy is doing.

At present, our democracy is failing. At a Gini score of .486, we have the greatest inequality of all countries of the Organization for Economic Cooperation and Development (OECD). If we are to restore a democracy worthy of the name, we must markedly improve our Gini score.

At present, our democracy is failing.
Our Gini score is the worst of all OECD nations.

The biggest block to specifically fixing inequality is the Republican worldview that says people are poor because they deserve to be poor, not because they are grossly underpaid for the crucial full-time work they do. Basically, the wealthy haven’t a clue about this. They believe that poor persons can simply bootstrap themselves not just out of poverty, but into wealth, and the only reason they don’t is that they are naturally lazy. Not many beliefs are farther from the truth. It is this belief that allows Republican capitalists to do everything they can to minimize wages and direct all wealth to the rich.

Keeping wages low is a capitalist imperative, because it improves the profit that goes only to owners, not to workers. Papa John’s Pizza and other corporations angrily increased their prices or fired workers after the recent election, declaring that it’s in retaliation for Obamacare. Such employers never consider that providing health care insurance for their underpaid workers is the right thing to do, that they need health care like everyone else, or that their firm has enjoyed an unfair advantage over more responsible employers. Their attitude is bad for the country, bad for equality, bad for democracy.

The concerns of the poor are not well represented in our legislative establishments. A large majority of Congress are millionaires, who are more concerned about re-election and their own wealth than they are about low income workers. Mitt Romney demonstrated the naivety of the rich when he said that everyone had health care because the poor could always go to the emergency room, and that nobody dies from lack of health care. But the ER is not health care, and more than a hundred Americans die from lack of health care every day. It’s noteworthy that the improvement in life expectancy for retirees seen in recent decades has gone almost exclusively to the wealthy, no doubt because they can afford excellent health care.

The standard Republican worldview
says that only the rich are deserving;
anyone not rich is simply lazy and undeserving.
Few beliefs are farther from the truth.

Disabusing such people of their false beliefs is not so easily accomplished. First, these are items of the Republican faith, and faith is not easily shaken, even when it cannot be supported by the facts. Second, people who were born into privilege rarely experience hardship, of being unable to buy something essential, of putting aside a dream they can’t afford, of finding their world collapsing around them because of an illness, of having no place to turn. They can’t imagine why anyone would be in that position, since it can never happen to them.

There is a reason for every ordinary job. Every person who has a job performs a public service, and the public would be less well off if the work weren’t done. In other words, all work is a genuine contribution to the health and welfare of the nation, and pay should reflect this fact.

All jobs at the lower income level
are grossly underpaid.
This is where injustice occurs.

In the wealthiest country in history there should be no one whose wages cannot lift her out of poverty. This is where the injustice happens, because virtually all jobs at the lower income level are grossly underpaid. Nobody can live on them, let alone pay for health insurance. Nobody earning minimum wage can even afford rent anyplace in the country. This is where inequality must be addressed, not at the top end.

That is why Living Wage is so important. If we are to have the democracy envisioned in our founding documents, it is not the rich who are the appropriate measure of our national wellbeing, but those with the lowest incomes. Far too many can’t work their way out of poverty.

Good Morning, Sandy

Even now, while the storm still wreaks havoc and water is everywhere, it’s worth contrasting our response to Sandy with that of Katrina in 2005. As we watched Katrina, a Category 5 storm, closing in on New Orleans, it looked like every person for himself. Nobody seemed to be in charge. There was very little communication. It was chaos. As the catastrophe was in full swing, George W. Bush said to the hapless head of FEMA, “Heck of a job, Brownie”. Over 1,800 people died, some trapped in their attics. Thousands of pets were abandoned. The physical damage was so extensive that New Orleans remains heavily damaged even today, some seven years later.

Thirty-three deaths from Sandy,
compared to 1,800+ from Katrina.
Monster storms are expected every few years.
Yet Mitt Romney wants to dismantle FEMA.

Sandy was never a strong storm, but it was huge. Flooding and damage occurred up and down most of the US east coast. The storm crest, boosted by a full moon, was a record thirteen feet. But everyone from the president on down took it very seriously from the first. There was much damage, but as I write, the death toll, mostly from falling trees, was 33. Thirty-three compared to 1,800+. Yet Mitt Romney wants to dismantle FEMA and turn it back to the states. It will be underfunded. Coordination will be minimal. There will be no overall command. What will this mean when the next monster storm plows into Texas, or Georgia?

Sandy is said to be the storm of the century. Maybe so far. The likelihood is that there will be equivalent or worse storms every few years because of global climate change. It is far too late to do anything about them, either Sandy or future storms. We can only evacuate, batten down, hope for the best, and prepare for the worst. The worst will become common. The dollar cost of each storm will be enormous. They will challenge not only our national character, but our national budget.

Sandy is only the latest manifestation
of what thousands of climate scientists
have been saying
for more than three decades.

Note that money spent on Sandy contributes to GDP. That makes it good, according to the way the GDP is used, because it is money spent. But is there a single soul who thinks paying for the aftermath of Sandy will be beneficial for the country? This is why we need more realistic indices for the economic health of the country, such as the Genuine Progress Index and the Gini index of inequality.

Sandy is only the latest manifestation of what thousands of climate scientists have been saying for more than three decades: we will have more violent storms, greater snowfall, more flooding, more drought, more wildfires, rising ocean levels because of global warming. Yet there is no global agreement for dealing with climate change. There are few national plans. There is no US plan.

Global warming has not registered on the election radar at all. That’s because Obama can’t risk the distraction from other concerns, and Romney dare not deny the climate change deniers in his party. Meantime, Republicans want to radically increase the extraction of fossil fuels, all of which end up as greenhouse gasses contributing to global climate change. But that’s business, and business is always good, right?

Stalwart Republicans forge ahead, maintaining either that (1) there is no global climate change, (2) it is not caused by the greenhouse gasses we pour into the atmosphere at record rates, (3) its importance is greatly exaggerated. This is apparently a religious belief, an article of faith that cannot be shaken regardless of the tsunami of evidence.

Published in: on 2012/10/30 at 12:03 pm  Comments (2)  
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