Well I never. One Facebook post and some questionable statistics (ultimately from the Bank of Thailand) and suddenly economic equality is the new buzz. Thailand is, according to just one source, Number One in the world for economic inequality. And the powers that be are not happy.
Before now, almost every comment on the national economy health and well-being has been couched in terms of GDP. A random sample of recent articles in One Of The Bangkok Newspapers reveals how.
‘The UTCC predicts GDP will grow 4.5% in 2019, 4.8% in 2020, 4.6% in 2021 and 5% in 2022’ with the assumption that higher growth is automatically better growth and A Good Thing.
‘The tourism sector accounted for 10.4% of global GDP in 2017’ with the assumption that a sector than accounts for more GDP is therefore more important and A Good Thing.
‘Iconsiam’s opening is viewed as a bright spot for the kingdom’s economy, which has been growing only sluggishly with just a 4.6% rise in GDP’ with the assumption that a hyper-luxury hyper-monstrosity must be A Good Thing because it raises GDP and raising GDP is A Good Thing.
So what is GDP? And why is it generally assumed to be such A Good Thing that this single number will tell us if the economy is doing well (when it goes up) or not (when it falls)?
The economics textbooks tell us that GDP measures the market value of all goods and services produced in a given country or sector over a given period of time. So if GDP goes up, it means more goods and services must have been produced.
Is that good?
Not always. Suppose on your drive home tonight, you are involved in an accident. Congratulations. You’ve just boosted GDP. The vehicle repairs, the medical treatment of victims, the services provided by insurance agents and police officers, all will contribute to GDP. And none would have happened without the accident, which therefore, according to GDP economics, is A Good Thing.
And what if GDP goes down? Is that always bad?
No. We are all being encouraged to use cloth shopping bags instead of plastic. If successful, then over the long term, this will reduce the production of plastic bags (partially offset by a much smaller increase in the production of cloth bags), which will lower GDP. So helping the survival of the planet, according to GDP economics, is A Bad Thing.
GDP, you see, includes not just goods and services, but bads and disservices.
Note also that, as with everything in the mainstream capitalist system, GDP is restricted to ‘market value’. If there is any economic activity which is not paid for, like the masses and masses of work done mostly by women in looking after homes, children, the sick and the old, it has no market value and so does not count toward GDP.
Expecting GDP to be, by itself, an accurate measure the health of an economy is akin to expecting a single clinical measure, such as temperature, or blood pressure, or weight, to be, all by itself, an accurate measure the health of a person.
GDP, like body temperature, tells us something, but nowhere near the whole thing. We need more measurements before we can properly decide if something is economically good for us or not.
For example, knowing that GDP has risen does not tell us who, if anyone, has benefited (or lost out). For that we need a measurement of economic equality.
And boy do we need it. One US economist asked his students to estimate how much of the national wealth is owned and earned by the richest 20% of the population. They guessed it was about three-fifths. He then asked what, for the economic health of the nation, they thought the figure ought to be. They reckoned it should be about one-third.
The real figure is in fact 84%. The richest 20% of the US population have more than five times what the remaining 80% have. And the trend is towards greater inequality.
And if you are tut-tutting at the economic ignorance of American students, just look at the horror with which the government (most of whose members belong to the 1%) has received the news of Thailand’s new Number One status, as if it hadn’t been there or thereabout for decades.
Wouldn’t it be nice if, instead of just asking how big the economy is by giving a GDP number, newspaper articles also reported how fair it is?
Is there any number that measures equality? Well, yes, there is. The figure that is causing conniptions in the government and bureaucracy is based on calculating the percentage of national wealth owned by the richest 1% of the population. The Gini coefficient is another measure that is often used for measuring wealth and income equality, and there are more alternatives.
But at the moment the statistics are a bit flaky. While a whole bureaucracy has been put in place to collect data for the calculation of GDP, the figures you need to calculate economic equality are often simply not there. For example, one major form is wealth is land, and the Land Department has been very reluctant to release data on who owns what.
But with sufficient will, it could be done.
So the next time we are told that Chinese tourists are deciding to go somewhere else, we could be told that yes, this will lead to lower GDP, but, given that tourism revenues are generally skewed in favour of the already wealthy, it may also reduce income inequality.
And wouldn’t it be even better if government projects were assessed for how much they improved economic equality between men and women, or Bangkok and the rest of the country, or among different age groups?
You see, apart from the moral question of fairness, economic inequality seems to correlate with all sorts of Really Good Things. More economically equal societies tend to do more recycling, suffer less domestic violence, have higher voter turnouts, do more civic volunteering, all manner of stuff, even if no one is quite sure why.
On the other hand, the consequences of economic inequality are not so benign. When an elite dominates the economy, they use their economic power to buy political power, pushing policies that perpetuate and even exacerbate inequality (and often restrict growth). Democracy is eroded, the environment suffers, and social mobility becomes ever more difficult. Trust within society decreases, and as the marginalized poor become ever more desperate, the chances of social and political upheaval increase, just the sort of thing that gives the 1% nightmares.
Do the Thai 1% want to continue their cushy existence? If yes, then they also should be clamouring for more equality.