Tuesday, 26 April 2011

Social policies and economics must work hand in hand - we don't want to turn into Zimbabwe

Why do social policies matter?
Isn't it just all about the economy?
If a country has a weak economy, won't it just be in poverty and make all of the social policies irrelevant?

I understand the logic behind this line of thinking - but it is really a convenient excuse for some countries to ignore the well-being of their citizens, and ultimately it is flawed logic.

To explain, let me quote from the "Commission on the Measurement of Economic Performance and Social Progress" set up by French President Sarkozy in 2008. This body is better known as Stiglitz-Sen-Fitoussi, who are the Commissioners, and it is assisted by a "Who's Who" of the world's economic and social policy experts..

It should be obvious that no single number can summarize anything as complex and variegated as “society”. But, inevitably,  certain numbers – in particular GDP – have taken center stage ... such a number may be misleading if it were applied to all purposes, and especially as a broader measure of societal performance. 

Measurement of “present” economic performance also includes an assessment of “quality of life”. Quality of life includes the full range of factors that make life worth living, including those that are not traded in markets and not captured by monetary measures. While many of our measures are directed at ascertaining short-run movements in the level of market activity ... the time has come to make a clear move from measuring production to measuring welfare, to try to close the gap between our measures of economic performance and widespread perceptions of well-being.

So here we have some of the world's leading economists explaining that it's not just all about economic measures.  Quality of life measures do matter, and quoting Stiglitz et. al. once more "...what we measure shapes what we collectively strive to pursue - and what we pursue determines what we measure."

For a stark piece of evidence, take a look at this chart of Zimbabwe's Human Development Index.  When Mugabe's land policies were implemented in the late 1990s, in combination with his human rights abuses, it hurt everyone.  The economy declined rapidly and the country's performance on social measures was easily the worst in the world. The social policies were a major factor in what hurt the economy.

Social policies impact on the economy and the economy impacts on society and quality of life. They both matter.

Let me know what you think.

Mark S

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