Focus on GDP Fuelling Inequality and Short-Termism
Decades of prioritizing economic growth over social equity has led to historically high levels of wealth and income inequality and caused governments to miss out on a virtuous circle in which growth is strengthened by being shared more widely and generated without unduly straining the environment or burdening future generations. These are the findings from the World Economic Forum’s Inclusive Development Index 2018, which is released today.
Excessive reliance by economists and policy-makers on gross domestic product as the primary metric of national economic performance is part of the problem, since GDP measures current production of goods and services rather than the extent to which it contributes to broad socio-economic progress as manifested in median household income, employment opportunity, economic security and quality of life.
The Inclusive Development Index is an annual assessment that measures how 103 countries perform on 11 dimensions of economic progress in addition to GDP. It has three pillars: growth and development; inclusion; and intergenerational equity – sustainable stewardship of natural and financial resources.
According to this year’s index, over the past five years, the 29 advanced economies included in the study have on average flatlined in terms of inclusion, which is measured by median household income, poverty, and wealth and income inequality, despite boosting their Growth and Development score by over 3%. The four indicators that make up the index’s Growth and Development pillar are: GDP per capita; labour productivity; employment; and healthy life expectancy.
Over the same period, only 12 of the 29 advanced economies were successful in reducing poverty and only eight saw a decrease in income inequality.
More worrying still: rich and poor countries alike are struggling to protect future generations. The index’s Intergenerational Equity and Sustainability pillar – which takes into account public debt; carbon intensity of GDP; dependency ratio and adjusted net savings (which measures savings in an economy after investments in human capital, depletion of natural resources and the cost of pollution) – actually deteriorated in upper-, middle- and low-income economies since 2012 and improved only marginally (0.6%) in advanced economies.
Top performing countries
According to the index, the most inclusive advanced economy in the world in 2018 is Norway. The Nordic nation ranks second overall for intergenerational equity and third for the two other pillars of the index: Growth and Development, and Inclusion. Small European economies dominate the top of the index, with Australia (9) the only non-European economy in the top 10.
Of the G7 economies, Germany (12) ranks the highest. It is followed by Canada (17), France (18), the United Kingdom (21), the United States (23), Japan (24) and Italy (27). In many countries, there is a stark difference between individual pillars. For example, the US ranks 10 out of 29 for Growth and Development; however, it ranks 28 on Inclusion and 26 on Intergenerational Equity. France, on the other hand, fares less well on Growth and Development (21 out of 29); however, it ranks 12 for Inclusion. Its low ranking on Intergenerational Equity (24) suggests it may be storing up problems for the future.
Six emerging European economies are located in the top 10 spots in the emerging economies’ ranking: Lithuania (1), Hungary (2), Latvia (4), Poland (5), Croatia (7) and Romania (10). These countries perform well on Growth and Development, benefiting from EU membership, as well as on inclusion indicators, as median living standards rose and wealth inequality declined significantly. Latin America also performs well, with three countries featured in the top 10: Panama (6), Uruguay (8) and Chile (9).
Performance is mixed among BRICS economies, with the Russian Federation ranking 19th, followed by China (26), Brazil (37), India (62) and South Africa (69). Although China ranks first among emerging economies in GDP per capita growth (6.8%) and labour productivity growth (6.7%) since 2012, its overall score is brought down by lacklustre performance on Inclusion. Other emerging countries such as Mexico (24), Indonesia (36), Turkey (16) and the Philippines (38) show more potential on Intergenerational Equity and Sustainability but lack progress on Inclusion indicators such as income and wealth inequality.
Key findings and policy implications
IDI data suggest that relatively strong GDP growth cannot be relied upon by itself to generate inclusive socio-economic progress and rising median living standards. All but three advanced countries have experienced GDP growth over the last five years, but only 10 of 29 have registered clear progress in the IDI’s Inclusion pillar. A majority, 16 of 29, have seen Inclusion deteriorate, and the remaining three have remained stable. A majority of those countries with the best GDP growth performance failed to improve on Inclusion. This pattern is repeated in the relationship between GDP growth and performance on Intergenerational Equity and Sustainability with 11 of 29 showing clear progress and 18 of 29 deteriorating.
Emerging -country data show a similar disconnect between GDP growth and Inclusion. Of the 30 emerging economies with the highest GDP per capita growth over the past five years, only six have scored similarly well on a majority of the Inclusion indicators, while 13 have been no better than mediocre and 11 have registered outright poor performance. With respect to Intergenerational Equity, only eight have scored similarly well on a majority of the Intergenerational Equity and Sustainability indicators, while 12 have been no better than mediocre and 10 have registered outright poor performance.
This evidence suggests that GDP growth is a necessary but not sufficient condition for achievement of the broad-based progress in living standards by which most people judge countries’ economic success. This message is particularly relevant at a time when global economic growth is returning to a more robust level and policy-makers could do more to future-proof their economies and make them more equitable. Political and business leaders should not expect higher growth to be a panacea for the social frustrations, including those of younger generations who have shaken the politics of many countries in recent years.
“Economic growth as measured by GDP is best understood as a top-line measure of national economic performance. Broad, sustainable progress in living standards is the bottom-line result societies expect. Policy-makers need a new dashboard focused more specifically on this purpose. It could help them to pay greater attention to structural and institutional aspects of economic policy that are important for diffusing prosperity and opportunity and making sure these are preserved for younger and future generations,” said Richard Samans, Managing Director and Head of Global Agenda at the World Economic Forum.
About the Inclusive Development Index
The IDI is a project of the World Economic Forum’s System Initiative on Shaping the Future of Economic Progress, which aims to inform and enable sustained and inclusive economic progress through deepened public-private cooperation, thought leadership and analysis, strategic dialogue and concrete cooperation, including by accelerating social impact through corporate action.
Newsweek: “Putin scores a win in Turkey’s election”
Russian President Vladimir Putin secured a victory in Turkey’s presidential election results on Sunday, writes ‘Newsweek’.
Turkish President Recep Tayyip Erdoğan appeared to beat back a challenge from Kemal Kilicdaroglu, the head of the center-left Republican People’s Party (CHP), winning his third five-year term since taking office in 2014. Erdoğan claimed victory on Sunday, telling supporters in a speech, “I thank each member of our nation for entrusting me with the responsibility to govern this country once again for the upcoming five years,” the Associated Press reported.
He ultimately prevailed by roughly 5 percentage points, according to unofficial data from state-run Anadolu Agency. Turkey’s election has been defined by high voter turnout, but has also led to questions about the fairness of Turkey’s electoral system.
Erdoğan’s victory is viewed as good news for Putin, whose relations with many world leaders grew strained after he launched the invasion of Ukraine last February. Many governments viewed the “special military operation” as lacking justification and a violation of international norms, leading to swift backlash and economic sanctions against Moscow.
Turkey, however, has taken an important role in the conflict, often serving as a mediator between Kyiv and Moscow. Erdoğan himself has walked a fine line between support for Ukraine while also maintaining close diplomatic relations with Russia. Both countries lie along the Black Sea, so maintaining strong economic ties has remained a priority for both governments.
Erdoğan’s victory likely guarantees a continuation of the status quo.
Notably, Turkey’s actions in the North Atlantic Treaty Organization (NATO) have aligned with the interests of Russia. Turkey has previously blocked bids from Sweden and Finland to join NATO, which would bring the alliance to Putin’s doorstep. The Russian leader has also opposed the expansion of NATO, an issue that has sparked tensions with the West.
Putin congratulated Erdoğan on his victory, writing in a statement that he appreciates the Turkish president’s “personal contribution to strengthening friendly Russian-Turkish relations, mutually beneficial cooperation in various areas.”
“Winning the election was a natural result of your selfless work as head of the Republic of Turkey, evidence of the Turkish people’s support for your efforts to strengthen the state sovereignty and the pursuit of an independent, independent foreign policy,” the Russian leader wrote.
Erdoğan has previously touted his relationship with Putin during his reelection bid.
“We are not at a point where we would impose sanctions on Russia like the West have done. We are not bound by the West’s sanctions,” he told CNN earlier this month. “We are a strong state and we have a positive relationship with Russia.”
Larry Johnson: The aftermath of Bakhmut and why the CIA is in trouble
The West is desperate to avoid having any meaningful discussion or review of the Battle of Bakhmut because it was such a massive loss. Think about it — a small “private” paramilitary force backed by former Chef with no military experience, forced Ukraine’s NATO-trained and supplied Army to retreat, notes Larry C. Johnson, a veteran of the CIA and the State Department’s Office of Counter Terrorism.
This is a very important point. Conventional military doctrine stipulates that an army attacking an entrenched force will need at least three times more soldiers than the defending force. Looks like Russia is very unconventional.
The Wagner Group’s 50,000 fighters defeated a Ukrainian force that employed over 120,000 troops, inflicting 70% casualties on the Ukrainians. Russia is writing new chapters for military academies and war colleges on how to attack and defeat a numerically superior force entrenched in fortifications.
Russia was not fighting Afghan shepherds or Iraqi tribesmen armed with AK-47s. It faced off with a NATO proxy force, equipped with modern weaponry, and beat it.
…Even more, I chatted with a retired CIA buddy who filled me in on the personnel disaster that is transforming the CIA into a fully woke institution. Thirty years ago an aspiring employee had to pass a polygraph and had to be drug free. Prior use of marijuana or other recreational drugs could be a show stopper. That was then. Now?
The CIA only asks if the applicant has smoked pot or taken other illicit drugs in the year prior to applying to the Agency. I would not be surprised to learn that once a former drug user is brought on board that there is no obstacle for him or her to continue to indulge the guilty pleasure of getting buzzed (hopefully while not at work).
More disturbing is the current hiring practice — in a recent class for new analysts, 92% of the new hires came from one State. If you guessed Alabama or Virginia you would be wrong. 92% of the analysts hail from one of the most liberal states in the United States. The Agency hiring standard is welcoming the Woke crowd and eschewing men and women who profess traditional values. If you hold Conservative values you need not apply. You probably will not be hired.
I have written previously about the pressure CIA managers face when they write the yearly evaluation on their employees, which plays a key role in determining who gets promoted. If an employee is a minority or openly homosexual or transgender and does not get promoted the manager is required to write an explanation why he or she did not promote said person.
Guess what happens? People get promoted because of their social justice status rather than the quality of their work. Is it any wonder that the quality of the CIA analytical product is succumbing to political pressure, writes Larry C. Johnson.
Drone attack on Moscow
The Russian Defence Ministry:
– This morning, the Kiev regime has launched a terrorist drone attack on the city of Moscow. Eight aircraft-type drones were employed in the attack, informs Russian MoD.
– All enemy drones were downed.
– Three of them were suppressed by electronic warfare, lost control, and deviated from the intended targets.
– Five more UAVs were shot down by the Pantsir-S SAM system in Moscow region.
TASS has gathered the main facts about the incident
– Moscow and the Moscow Region were attacked by drones early on Tuesday morning, TASS informs.
– Several buildings sustained minor damage, Moscow Mayor Sergey Sobyanin said.
– According to the authorities, there were no casualties and emergency services are continuing to work at the scene.
– Early on Tuesday morning, Russia’s Emergencies Ministry told TASS that ministry staff were investigating an incident in the Moscow suburbs, in which windows in a high-rise apartment building had been blown out. Fire and rescue units arrived at the scene. There were no signs of fire. According to eyewitnesses, the sound of an explosion was heard at the time of the incident.
– Emergency services told TASS that drone-like fragments were found around the house. The windows of apartments on three floors were shattered.
– It later became known that law enforcement personnel were verifying information about explosions in two other multi-story apartment buildings in the west and southwest of Moscow. There were also broken windows in some apartments.
Reaction of authorities
– Sobyanin confirmed the drone attack on Tuesday morning. As a result, according to him, several buildings sustained minor damage.
– According to the mayor, there are no casualties in the capital and all of the city’s emergency services are working at the scene.
– Emergency services evacuated the residents of two apartment buildings damaged by the drones. Once all necessary work is completed, the residents will be able to return to their homes. “According to information from municipal medical services, at this time, none of the residents of the buildings damaged by UAVs [unmanned aerial vehicles] have been seriously injured. Two individuals requested medical aid. Nobody had to be hospitalized and the necessary help was provided on site. Also, the emergency services and several ambulance crews continue to work at the sites of incidents,” the mayor wrote.
– Several drones were shot down as they approached the capital, Moscow Region Governor Andrey Vorobyov said.
– Domodedovo, Vnukovo and Zhukovsky airports are operating as usual, representatives of two of the airports told TASS.
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