Timely Measures

by Daniel Sorid
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Sarkozy hoped his commission would encourage governments to measure the well-being of citizens, not just raw output. And he knew that that would challenge decades of economic orthodoxy. Which meant he needed a fighter. “If I give this kind of report to be done by the mainstream,” Sarkozy told Fitoussi, “we will never come out with something different.”

Stiglitz was in many ways the ideal choice, a respected academic who can rouse a crowd with crisp provocations and wonky economic concepts. One of his favorites: “If you measure things wrong, you’ll do the wrong things.”

By its nature, says Stiglitz, GDP treats spending on prisons as it would on more productive services like education, and distorts the economy’s picture when economic bubbles, like in housing or finance, inflate to dangerous levels. GDP also ignores the depletion of resources, environmental degradation, and health impacts of mining in developing countries. “The result of that is the well-being of the citizens of the country can go down at the same time that the GDP goes up,” he says.

In the United States, Stiglitz points out, GDP has begun to rise even as the unemployment rate hangs above 10 percent, painting a misleading picture for policy makers. “When the numbers that a government announces seem incongruous with what happens in people’s lives,” he says, “the public thinks the numbers are being manipulated.”

The commission’s work, touching on new ways to measure quality of life, economic sustainability, and technical adjustments to the current GDP metric, became the centerpiece of an October conference of the Organisation for Economic Co-operation and Development, the so-called rich-nations club, which has taken up an investigation of its policy conclusions. It has also prompted the influential G-20 to call for improvements in the way official statistics measure the well-being of citizens.

“The job of an economist is not just to describe the world,” Stiglitz has said, “but to work to improve it.”

Has history finally come around to Stig­litz’s activist vision?

Time will tell, but with the backing of a head of state and increasing support in America for government intervention in markets, Stiglitz is anxious to seize the moment. “You can push on an issue, and if it’s not an opportune time, it won’t have an impact,” he says.

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