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Curing officials of addiction to GDP will be a challenge
By Wan Lixin |
March 3, 2011, Thursday
|
Print Edition
Print Edition
THE Chinese government is expecting a slightly lowered annual national GDP figure for 2011-2015, suggesting the government is sobering up to the falsity of statistically induced impressions.
But curing officials of their addiction to growth will be a tough job.
Yes, an annual growth rate of 7 percent would be inconceivable for nearly any other country, but for a country that has seen years of double-digit growth, that understated aspiration is definitely a show of great self-control.
The real challenge will be: When dazzling GDP figures cease to be the primary measure of official merit, what are the alternatives to evaluate job performance?
A real change in attitude should begin with a critical review of what GDP purports to measure.
GDP is supposed to measure the value of output of goods and services.
Some traces it to Adam Smith's "The Wealth of Nations," where Smith extolled the invisible hand of the market.
But in Smith's other major work "The Theory of Moral Sentiments," he believed the pursuit of happiness to be the highest end for humanity.
Limitations
A measure of material well-being is not enough, because a person becomes easily satiated with what he has and is forever yearning for fancier acquisitions.
Thus Smith came to the obvious conclusion that "happiness consists of tranquility and enjoyment."
Chinese sages and philosophers were suggesting that two thousand years earlier.
One of the serious problem with a GDP-dominating measure is that it fails to consider such factors as fairness and sustainability.
As a Xinhua analysis published in Shanghai Daily (March 1) pointed out, "In the past three decades, China's GDP rises significantly while income growth falls far behind, forming an obvious scissor-like gap."
Meanwhile, we are seeing an ever-longer list of newly minted billionaires.
This situation suggests that to a certain degree the GDP is an indicator of accelerating concentration of national resources and wealth in the hands of a minority.
This accelerating concentration of national wealth and resources will not contribute to the feelings of "tranquility and enjoyment."
Even when growth is achieved in more ideal conditions, as when accompanied by growing individual consumption, the satisfaction it brings about, as represented in such concepts as success and higher standard of living, is transient.
Nearly every Shanghainese aspiring to be seen as middle class today is talking about driving or owning a car.
A brand of expensive car can flatter one's vanity, but for how long? Be reminded how we once dreamed of owning a TV, or a refrigerator.
Restructuring
Owning a car and a house was once the salient aspects of the American Dream, though few Chinese know that dream often turned out to be nightmare.
In an article published in 2009, Nobel Prize-winning economist Joseph Stiglitz pointed to the absurdity of reducing aspects of human life to a figure, saying that GDP is a poor indicator of standard of living.
Americans spend on average much more than any other people in the world, but that spending does not translate into satisfaction.
As a matter of fact, in the US the money spent in building and maintaining prisons is about seven times its spending in education.
Thus after helping wean Chinese officials from GDP, the next thing to do is to teach them to be wary of such concepts as standard of living, which is a corollary of GDP.
It is mainly about the consumption of goods that have nothing to do with human subsistence, but has a lot to do with GDP.
The ability to see growth in a critical light is of particular importance at a time when government at all levels must be dead-earnest about economic readjustment, with which it has been flirting for a while.
But curing officials of their addiction to growth will be a tough job.
Yes, an annual growth rate of 7 percent would be inconceivable for nearly any other country, but for a country that has seen years of double-digit growth, that understated aspiration is definitely a show of great self-control.
The real challenge will be: When dazzling GDP figures cease to be the primary measure of official merit, what are the alternatives to evaluate job performance?
A real change in attitude should begin with a critical review of what GDP purports to measure.
GDP is supposed to measure the value of output of goods and services.
Some traces it to Adam Smith's "The Wealth of Nations," where Smith extolled the invisible hand of the market.
But in Smith's other major work "The Theory of Moral Sentiments," he believed the pursuit of happiness to be the highest end for humanity.
Limitations
A measure of material well-being is not enough, because a person becomes easily satiated with what he has and is forever yearning for fancier acquisitions.
Thus Smith came to the obvious conclusion that "happiness consists of tranquility and enjoyment."
Chinese sages and philosophers were suggesting that two thousand years earlier.
One of the serious problem with a GDP-dominating measure is that it fails to consider such factors as fairness and sustainability.
As a Xinhua analysis published in Shanghai Daily (March 1) pointed out, "In the past three decades, China's GDP rises significantly while income growth falls far behind, forming an obvious scissor-like gap."
Meanwhile, we are seeing an ever-longer list of newly minted billionaires.
This situation suggests that to a certain degree the GDP is an indicator of accelerating concentration of national resources and wealth in the hands of a minority.
This accelerating concentration of national wealth and resources will not contribute to the feelings of "tranquility and enjoyment."
Even when growth is achieved in more ideal conditions, as when accompanied by growing individual consumption, the satisfaction it brings about, as represented in such concepts as success and higher standard of living, is transient.
Nearly every Shanghainese aspiring to be seen as middle class today is talking about driving or owning a car.
A brand of expensive car can flatter one's vanity, but for how long? Be reminded how we once dreamed of owning a TV, or a refrigerator.
Restructuring
Owning a car and a house was once the salient aspects of the American Dream, though few Chinese know that dream often turned out to be nightmare.
In an article published in 2009, Nobel Prize-winning economist Joseph Stiglitz pointed to the absurdity of reducing aspects of human life to a figure, saying that GDP is a poor indicator of standard of living.
Americans spend on average much more than any other people in the world, but that spending does not translate into satisfaction.
As a matter of fact, in the US the money spent in building and maintaining prisons is about seven times its spending in education.
Thus after helping wean Chinese officials from GDP, the next thing to do is to teach them to be wary of such concepts as standard of living, which is a corollary of GDP.
It is mainly about the consumption of goods that have nothing to do with human subsistence, but has a lot to do with GDP.
The ability to see growth in a critical light is of particular importance at a time when government at all levels must be dead-earnest about economic readjustment, with which it has been flirting for a while.
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