The more than minimal fraud is in measuring social progress all but exclusively by the volume of producer-influenced production, the increase in GDP. J K Galbraith, 'The Economics of Innocent Fraud', Penguin Books, 2004.
By default, GDP, or GDP per capita, has become the measure of social progress. What Galbraith calls fraud, I would call a trap or an irrational tendency, which parallels, or arises from, our individual psychology. For most of us education has been almost entirely verbal. So we see happiness as a set of circumstances rather than a state of mind. But the correlation is neither strict nor necessarily positive. Our societal obsession with GDP is, in my view, an exact projection of our individual obsession with preconceived, generally numerical and monetary, goals. What gets lost are crucially important, but neglected public goods, such as a healthy environment, low rates of crime, or a low probability of war. Social Policy Bonds would explicitly target these goods and reward those who help achieve them. Our current incentive structure rewards those who increase GDP, even if they do so by, for example, destabilising the climate or selling weapons to corrupt despots.
2 comments:
If we could presume that when we get richer, we will look after ourselves better - better environment, better health - then do we really need to specifically target these areas? Will they just not improve as our means do?
For individuals in most cases yes, but I am really talking about public goods, or near public goods, which are much more efficiently tackled at societal level. Goals like improved climate stability, lower crime rates, reduced probability of nuclear war, or better basic health and education standards. These can, and in some cases have, actually become more remote while society as a whole has become richer.
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