The Great Invention: The Story of GDP and the Making and Unmaking of the Modern World - Ehsan Masood (2016)
1.My Pakistan economics lessons took place in a small, newly opened independent college called the Centre for Advanced Studies, established by the radical education reformer Sami Mustafa. Mustafa had come back to Pakistan after a spell studying and teaching in the United States, determined to make a difference in an otherwise lackluster education system. His college is still going strong.
2.In GDP: A Brief but Affectionate History (Princeton, NJ: Princeton Universty Press, 2013), Diane Coyle, professor of economics at the University of Manchester, says that GDP can be measured in three ways. The first is by adding up everying that an economy produces. The second is by adding together spending (or expenditures). The third method is to calculate incomes. Offices for national statistics in most countries will report on the results of all three methods. In the 1930s, Colin Clark and Simon Kuznets favoured an incomes approach. Much of the global media at the time of writing concentrates on the expenditures approach. This book will do the same, that is to define GDP as the sum of all that is spent in the domestic economy, unless specified otherwise. Occasionally, readers may see the letters GNP, or Gross National Product. The difference between GDP and GNP is that the latter also includes economic activities of national entities overseas. In many countries, including the United States, the difference between the two can be significant.
INTRODUCTION: THE GREAT INVENTION
1.J. Steven Landefeld, “GDP: One of the Great Inventions of the 20th Century,” Survey of Current Business, Bureau of Economic Analysis, January 2000, 6.
2.William M. Daley, “Press Conference Announcing the Commerce Department’s Achievement of the Century,” Survey of Current Business, Bureau of Economic Analysis, January 2000, 10.
3.Jan Luiten van Zanden, Joerg Baten, Marco Mira d’Ercole, Auke Rijpma, Conal Smith and Marcel Timmer, How Was Life: Global Well-Being Since 1820 (Paris: OECD Publishing, 2014), 64.
4.Alan Greenspan, “Press Conference Announcing the Commerce Department’s Achievement of the Century,” Survey of Current Business, Bureau of Economic Analysis, January 2000, 12.
5.Josiah Stamp, “The Measurement of National Income,” in Wealth and Taxable Capacity: The Newmarch Lectures for 1920–1 on Current and Statistical Problems in Wealth and Industry (London: P. S. King & Son, 1922), 39.
6.Khadija Haq and Richard Ponzio, Pioneering the Human Development Revolution: An Intellectual Biography of Mahbub ul Haq (New Delhi: Oxford University Press, 2008), 101
ONE: GDP AND ITS DISCONTENTS
1.See Author’s Note (note 2).
2.GDP does not include government spending known as “transfer payments,” such as welfare or pensions.
3.Charles Bean, “Independent Review of UK Economic Statistics: Interim Report,” HM Treasury, December 2, 2015, accessed December 8, 2015, https://www.gov.uk/government/publications/independent-review-of-uk-economic-statistics-interim-report.
4.My high school economics teachers in the UK were Ian Pinkus and John Dickinson and they taught at what is now Coombe Boys School, New Malden, Surrey. Re-reading their notes I can see that they took a playful approach to teaching what could have been a dry topic. They defined GDP as a collection of goods and services measured in terms of money. The definition came with a series of health warnings regarding the difficulties in measurement. These difficulties included incomplete information—“Some items have to be estimated, e.g., when a dressmaker does a job for a friend.” International comparisons of GDP, they added, are “pretty useless” because different countries have different needs and different ways of measuring well-being and prosperity. Finally, they ended by saying that the figures “cannot measure quality of life, pollution, or the effects of siting cruise missiles next to Newbury Racecourse.”
5.“Gross Domestic Product: Preliminary Estimate, Q2 2012,” Office for National Statistics, July 25, 2012, accessed July 31, 2015, http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q2-2012/index.html.
6.Russell Lynch, “Work Experience Chancellor George Osborne Urged to Quit as GDP Slumps,” Independent, July 26, 2012, accessed July 31, 2015, http://www.independent.co.uk/news/uk/politics/work-experience-chancellor-george-osborne-urged-to-quit-as-gdp-slumps-7976829.html.
7.“Labour Market Statistics, August 2012,” Office for National Statistics, accessed July 31, 2015, http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/august-2012/index.html.
8.“Rise in Home Movers Drives Boost in House Purchase Loans and Gross Lending,” Council of Mortgage Lenders, September 12, 2012, accessed July 31, 2015, http://www.cml.org.uk/news/press-releases/3302/.
9.“Help to Buy (equity loan scheme) and Help to Buy: NewBuy statistics: April 2013 to December 2014,” Department for Communities and Local Government, accessed November 22, 2015, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/399565/Help_to_Buy_Equity_Loan_and_Help_to_Buy_NewBuy_statistical_release.pdf.
10. Marina Vornovytskyy, Alfred Gottschalck, and Adam Smith, “Household Debt in the US: 2000 to 2011,” accessed July 31, 2015, https://www.census.gov/people/wealth/files/Debt%20Highlights%202011.pdf.
11. Gordon Brown, “Budget Statement,” Hansard Parliamentary Debates, Commons, April 9, 2003, accessed July 31, 2015, http://www.publications.parliament.uk/pa/cm200203/cmhansrd/vo030409/debtext/30409-04.htm. Brown, who was chancellor for ten years, began to develop a habit of repeating how his government was delivering the longest period of continuous economic growth ever recorded.
12. This data comes from the nonprofit organization Trussell Trust, one of the UK’s largest providers of emergency food supplies. The charity operates 445 food banks, to which citizens and businesses donate food, which is then distributed to those in need; www.trusselltrust.org, accessed July 31, 2015.
13. Tunisia page of UN Data, accessed December 3, 2015 http://data.un.org/CountryProfile.aspx?crName=Tunisia. The data shows 17.4 percent unemployment in 2012.
14. Carmen DeNavas-Walt and Bernadette D. Proctor, “Income and Poverty in the United States: 2013,” US Census Bureau, September 2014, accessed August 1, 2015, http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf.
15. Johan Rockstrom, Will Steffen, Kevin Noone, Åsa Persson, F. Stuart Chapin III, Eric F. Lambin, Timothy M. Lenton, et al., “A Safe Operating Space for Humanity,” Nature 461 (2009): 472–475, accessed December 3, 2015, http://www.nature.com/news/specials/planetaryboundaries/index.html. The fossil record suggests the background rate of species loss to be between 0.1 and 1 extinctions per million species per year for marine life, and between 0.2 and 0.5 extinctions for mammals. Today, the rate of species extinction is between 100 and 1000 times more than what could be considered “natural.” Human activities, especially urbanization and industrial-scale farming are among the causes.
TWO: THE FIGHT FOR THE FORMULA
1.David Moss and Joseph P. Gownder, “The Origins of National Income Accounting,” Harvard Business Review, December 30, 1998. This is a Harvard Business School case study in which the authors reproduce three primary documents, including the 1932 US Senate resolution in which Simon Kuznets was commissioned.
2.Carol S. Carson, “The History of the United States National Income and Product Accounts,” Review of Income and Wealth 21 (1975): 153–181. Carson, a member of the Commerce Department’s Bureau of Economic Analysis, points out that Senator La Follette Jr. was not the only senior official looking for national income data around the time of the Great Depression, and that such an idea was “in the air.”
3.Copies of the full 261-page report exist online. However, the National Archives and Records Administration in Washington, DC, has only a six-page summary. Staff told me that for some reason Simon Kuznets’s original document was never saved or archived. They added that it is possible that a copy may exist in Senator La Follette’s private papers.
4.Carson, “History of the United States National Income,” 159.
5.National Income 1929–32, Department of Commerce, in response to Senate Resolution No. 220, 72nd Congress (Washington, DC: Government Printing Office, 1934).
6.Benjamin Mitra-Kahn, “Redefining the Economy: How the ‘Economy’ Was Invented in 1620 and Has Been Redefined Ever Since” (doctoral thesis, City University London, 2011). Mitra-Kahn’s account, based on primary sources, says Keynes’s contribution to GDP has been overlooked, partly because it “contradicts the official [government] history of a smooth evolution from Kuznets to GNP.”
7.Robert Skidelsky, John Maynard Keynes: The Economist as Saviour 1920–1937 (London: Macmillan, 1992). My reading of Keynes is taken from The General Theory of Employment, Interest and Money (New York: Harcourt, Brace & World, 1936) and How to Pay for the War (London: Macmillan, 1940), as well as the three volumes of Skidelsky’s biography.
8.In response to the 2008 crash, the US Congress authorized $700 billion in “Keynesian” government spending called the Troubled Asset Relief Program, or TARP. Although the program is associated with President Barack Obama, it was in fact President George W. Bush who signed it into law on October 3, 2008. “TARP Programs,” US Treasury Department, accessed August 1, 2015, http://www.treasury.gov/initiatives/financial-stability/TARP-Programs/Pages/default.aspx.
9.John Kenneth Galbraith, A History of Economics: The Past as the Present (London: Penguin Books, 1987), 222. Galbraith called Hitler a Keynesian before Keynes.
10. In The Entrepreneurial State, Mariana Mazzucato, professor of economics at the University of Sussex, describes how many of the components of Apple’s iPhone, for example, would not have been available for the company to use had it not been for prior government investment in certain technologies.
11. Skidelsky, Keynes, 544.
12. Ibid., 540. In fact, as Keynes’s biographer Robert Skidelsky points out, Keynes believed that economics was addicted to what he called “specious precision,” attempting to make precise and perfect that which in reality is messy and complex. Keynes considered economics to be a “moral” science, meaning that it needed the exercise of human judgment, supplemented by models and data. Most science and economics today works the other way around: We reduce complex behaviors to data that isn’t always sound or rigorous. We apply ever more elaborate ways to understand this data. Then we use words to the effect that “this data represents such and such reality.”
13. John Maynard Keynes, “The Character of the Problem,” How to Pay for the War, (London: Macmillan, 1940), 1. Keynes’s articles for the Times were subsequently republished in this short book.
14. Colin Clark had come to economics by way of a chemistry degree at the University of Oxford and a brief period carrying out research in physics. A Labour Party supporter for many years, he had tried and failed three times to become a member of Parliament. Clark’s big break came in 1929 when he got a job as a special adviser to a sitting Labour MP, William Beveridge. He couldn’t have chosen better, for this is the same Beveridge who would go on to create the postwar welfare state in Britain. Colin Clark, The National Income 1924–1931 (London: Macmillan, 1932), and National Income and Outlay (London: Macmillan, 1937).
15. Keynes, How to Pay for the War, 13.
16. Mitra-Kahn, “Redefining the Economy,” 250.
17. See note 2.
18. Mitra-Kahn, “Redefining the Economy,” 250.
19. Mitra-Kahn, “Redefining the Economy,” 270.
THREE: MADE IN CAMBRIDGE
1.“The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1984: Richard Stone,” accessed August 7, 2015, http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1984/.
2.Keynes was a member of what is called The Bloomsbury Set. This was a close group of freethinking writers and artists who lived and worked in the Bloomsbury district of central London in the first half of the 20th century. They also included the novelists E. M. Forster and Virginia Woolf.
3.Richard Stone, “Autobiography,” Nobelprize.org, 1984, accessed December 4, 2015.
4.Richard Stone, “The National Income, Output and Expenditure of the United States of America,” Economic Journal 206–207 (1942): 154–175.
5.John Maynard Keynes, A Tract on Monetary Reform (London: Macmillan and Company, 1923), 79–80.
6.Mauro Baranzini and GianDemetrio Marangoni, Richard Stone: An Annotated Bibliography (Lugano: Università della Svizzera italiana, 2015), 11, 18.
FOUR: THE KARACHI ECONOMIC MIRACLE
1.For several decades after partition, “Can Pakistan survive?” was a not uncommon question both among international commentators and inside the nation’s own elites, the most famous example being Tariq Ali, Can Pakistan Survive? The Death of a State (New York: Penguin, 1983).
2.Sir Richard Jolly, interview with the author, Lewes, West Sussex, May 29, 2013.
3.Mahbub ul Haq, The Poverty Curtain: Choices for the Third World (New York: Columbia University Press, 1976), 3. Haq’s first book, The Strategy of Economic Planning: Case Study of Pakistan (Oxford: Oxford University Press, 1966), is a classical defense of the idea that maximizing GDP is the route to prosperity. In The Poverty Curtain Haq reflects on the lessons learned from his period as chief economist to Pakistan’s Planning Commission.
4.William Dalrymple, “On the Trail of the White Mughals,” Daily Telegraph, August 29, 2015.
5.Economy of Pakistan (Karachi: Office of the Economic Adviser, Ministry of Economic Affairs, Government of Pakistan, 1950), 333–340.
6.Gustav Papanek, telephone interview with the author, July 21, 2015.
7.Mahbub ul Haq, “An Evaluation of Pakistan’s First Five Year Plan,” The Strategy of Economic Planning: Case Study of Pakistan (Oxford: Oxford University Press, 1966), 136.
8.Haq, Strategy of Economic Planning, 35.
9.Economy of Pakistan, 397. The late historian of economic growth Angus Maddison is among those who argued that British colonial rule helped in the deindustrialization of India. The wiping out of the Mughal court and its replacement with a new European bureaucracy reduced the home market for luxury handicrafts by 75 percent. The value of domestic manufacturing and exports was around 6.5 percent of national income. Losing that “was a shattering blow to manufacturers of fine muslins, jewellery, luxury clothing and footwear, decorative swords and weapons,” Maddison wrote. Angus Maddison, Class Structure and Economic Growth: India and Pakistan Since the Moghuls (London: George Allen and Unwin, 1971), 53–55.
10. Zahid Hussain, “The First Five Year Plan: Size, Objectives and Limitations,” Pakistan Economic and Social Review 5 (1956): 3, accessed August 17, 2015, http://pu.edu.pk/home/journal/7/Volume_5_No_1_1956.html.
11. Haq, Strategy of Economic Planning, 156.
12. Gustav Papanek, “Confounding the Prophets,” Pakistan’s Development: Social Goals and Private Incentives (Cambridge, MA: Harvard University Press, 1967), 7.
13. The political context would be different. East Pakistan, which had been much neglected by politicians, who were mostly from the west, was calling for a more equitable transfer of resources and more autonomy to run its affairs. The country as a whole changed prime ministers four times in two years before a military coup in 1958 appeared to have brought some stability and predictability to the planning process. “In marked contrast to the first plan, Pakistan’s second five-year plan was launched in propitious conditions,” Haq wrote in 1963. “The revolutionary regime, which took over in October 1958, had restored political stability in the country, for lack of which the first plan had failed to command wide political or public support.” Haq, Strategy of Economic Planning, 173.
14. Ibid., 185.
15. Papanek, “Confounding the Prophets,” 7.
16. President Eisenhower’s visit of December 1959 made it onto the cover of Life magazine. The weekly periodical’s 6 million subscribers saw him traveling next to Pakistan’s president, Field Marshal Ayub Khan, inside a horse-drawn carriage, beaming and waving to the crowds. “Triumph in Pakistan: Ike and President Ayub,” Life, December 21, 1959.
17. Gustav Papanek, “The Development Miracle” (speech under the joint auspices of the Pakistani-American Chambers of Commerce and the Asia Society, New York, May 4, 1965).
18. Haq, Strategy of Economic Planning, 1.
19. Ibid., 174, 181.
20. Economy of Pakistan, 119.
21. Though delivered without a text, the speech was later published as Mahbub ul Haq, “A Critical Review of the Third Five Year Plan,” Management and National Growth: Proceedings of the Management Convention Held at Karachi (Karachi: West Pakistan Management Association, April 24–25, 1968), 23–33.
22. Khadija Haq was the author of the work on which Mahbub ul Haq’s data was based and he credited her in his speech to the West Pakistan Management Association though perhaps a little ungenerously. He said: “Since my wife was associated with some of these studies, I hope this does not make them less reliable!” Haq, “Critical Review of the Third Five Year Plan,” 27. Khadija’s research had been commissioned by the Pakistan Institute of Development Economics. However, following the publicity surrounding her husband’s speech, her publishers decided to spike the resulting paper, which to this day has never been published.
23. Haq, “Critical Review of the Third Five Year Plan,” 27.
24. Papanek, Pakistan’s Development, 67.
25. Lawrence White, “Industrial Concentration and Industrial Economic Power in Pakistan: The 22 Families (plus a Few More)” (Discussion Paper 24, Research Program in Economic Development, Woodrow Wilson School, Princeton University, July 1972), accessed August 18, 2015, http://www.princeton.edu/rpds/papers/WP_024.pdf.
26. Paul Streeten, “Dudley Seers (1920–83): A Personal Appreciation,” IDS Bulletin 20, no. 3 (July 1989): 26.
27. Dudley Seers, “What Are We Trying to Measure?” special issue on development indicators, Journal of Development Studies 8, no. 3 (April 1972): 21.
28. Biplab Dasgupta and Dudley Seers, “Statistical Policy in Less Developed Countries” (report of the conference Statistical Policy in Less Developed Countries, Institute of Development Studies, University of Sussex, May 12–16, 1975).
29. Sir Richard Jolly, interview with the author, Lewes, West Sussex, May 29, 2013.
30. There appears to be some debate over whether Haq said “twenty families” in his speech, or if the number was twenty-two. The published article based on his speech to the West Pakistan Management Association (see note 21) says “top 20 industrial families,” but all subsequent references, including Haq’s own, are to twenty-two families.
31. Haq, Poverty Curtain, 32–33.
FIVE: THE TALENTED MR. STRONG
1.Rachel Carson, “Silent Spring,” The New Yorker, June 16, 1962, 35.
2.Cheryll Glotfelty, “Cold War, Silent Spring: The Trope of War in Modern Environmentalism,” in Craig Waddell, And No Birds Sing: Rhetorical Analyses of Rachel Carson’s Silent Spring (Carbondale, IL: Southern Illinois University Press, 2000), 157.
3.Quoted in Mark Stoll, “Rachel Carson’s Silent Spring, A Book That Changed The World,” (Rachel Carson Center for Environment and Society, Virtual Exhibition, 2012), accessed November 24, 2015, http://www.environmentandsociety.org/exhibitions/silent-spring/industrial-and-agricultural-interests-fight-back.
4.Ehsan Masood, “The Globe’s Green Avenger,” Nature, July 22, 2009, 454–455. This essay was the result of an invitation to attend an international conference in Switzerland held to celebrate Strong’s eightieth birthday. The event, organized by his great friend and fellow environmentalist Julia Marton-Lefèvre, was a reunion of colleagues, friends, and others to whom Maurice Strong has been a mentor over the past fifty years.
5.John Ralston Saul, “Maurice Strong: Environmental Movement Loses a Founding Father,” The Globe and Mail, November 30, 2015, accessed December 4, 2015, http://www.theglobeandmail.com/news/world/maurice-strong-environmental-movement-loses-a-founding-father/article27524715/.
6.Maurice Strong, Where on Earth Are We Going? (New York: Texere Publishing, 2000), 48–49.
9.Andrew Brown, Fishing in Utopia: Sweden and the Future That Disappeared (London: Granta, 2009), 31.
10. The switch to right-hand driving took place on September 3, 1967, or H-Day as it is known in Sweden.
11. In the 1980s, large parts of the developing world were hit by recession and had to borrow from international financial institutions such as the International Monetary Fund and the World Bank. The conditions of lending included the kinds of prescriptions that Mahbub ul Haq had designed for the young Pakistani economy, as these were seen as more favorable for growth to return. Richard Jolly and Frances Stewart were among this policy’s more persuasive critics. See Giovanni Andrea Cornia, Richard Jolly, Frances Stewart, Adjustment with a Human Face: Protecting the Vulnerable and Promoting Growth (Oxford: Oxford University Press, 1987).
12. Mahbub ul Haq, The Poverty Curtain: Choices for the Third World (New York: Columbia University Press, 1976), 107. Haq would openly talk about his belief that the Stockholm conference had a hidden agenda to keep the developing world from industrializing: “There were suspicions that, after a century or more of accelerated development and technological progress, the Western societies were telling the majority of mankind that they must return to a simple life and try to make a virtue of it.” Haq, Poverty Curtain, 80.
13. Strong, Where on Earth Are We Going?, 120.
14. Ibid., 125.
15. This strategy was agreed at the end of a two-week meeting of experts in July 1971 in the village of Founex close to Lake Geneva. Strong described this meeting as the most important event in the run-up to the main conference. Haq was the meeting’s rapporteur. Stanley Johnson, UNEP: The First 40 Years (Nairobi: UNEP Publishing, 2012), 13. The full text of the Founex report can be downloaded from http://www.mauricestrong.net/index.php/the-founex-report, accessed August 18, 2015.
16. While Maurice Strong regards co-opting Mahbub ul Haq as an important success, Haq himself wasn’t quite convinced that the conference had been worthwhile and called it “a bit of a disappointment despite the most imaginative efforts of Maurice Strong and Barbara Ward to save it.” Haq, Poverty Curtain, 81.
17. Maurice Strong, interview with the author, President Hotel, Russell Square, London, 2009.
18. The Human Environment: The British View, Report Prepared on the Occasion of the Stockholm Conference on the Human Environment (London: Her Majesty’s Stationery Office, 1972), 39.
19. Maurice Strong, interview with the author, President Hotel, Russell Square, London, 2009.
20. Lord Zuckerman, “Science, Technology and Environmental Management,” in Who Speaks for Earth?, edited by Maurice Strong (New York: W. W. Norton and Co., 1972), 137.
21. Barbara Ward, “Only One Earth,” in Strong, Who Speaks for Earth?, 22.
22. Roberto Peccei, telephone interview with the author, London, September 9, 2013.
23. Calling the group the Club of Rome would provide endless material for those who believe that the world is controlled by a secret cabal of leaders.
24. John Maddox, The Doomsday Syndrome: An Attack on Pessimism (New York: McGraw Hill, 1972). I joined Nature in 1995, shortly before Maddox retired as editor. He encouraged my interest in writing about science policy in Pakistan.
25. H. S. D. Cole, Christopher Freeman, Marie Jahoda, and K. L. R. Pavitt, Models of Doom: A Critique of the Limits to Growth (New York: Universe Books, 1973). The book was published in Britain under a more academic-sounding title: Thinking About the Future.
26. Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III, “A Response to Sussex,” in Cole, Freeman, Jahoda, and Pavitt, Models of Doom, 221, 236.
27. All of Barbara Ward’s quotes are from Ward, “Only One Earth,” 20–24.
28. Zuckerman, “Science, Technology and Environmental Management,” 129–139.
29. Aurelio Peccei, “Human Settlements,” in Strong, Who Speaks for Earth?, 154–155. Peccei’s lecture was only tangentially about housing or settlements and was mostly a defense of The Limits to Growth and the work of the Club of Rome.
30. Maurice Strong’s BBC interview from the Stockholm conference is available to view at https://www.youtube.com/watch?v=1YCatox0Lxo, accessed August 19, 2015.
31. Maurice Strong, interview with the author, Geneva, 2009.
32. Parts of the speech are reproduced in Indira Gandhi, Safeguarding Environment (New Delhi: Indira Gandhi Memorial Trust, 1992), 17.
SIX: “AS VULGAR AS GDP”
1.The inability of Europe and America to give up some of their control over multilateral institutions is cited as a reason why China went ahead in 2015 to create an analog to the World Bank, the Asian Infrastructure Investment Bank.
2.Bill Draper, telephone interview with the author, May 2013.
3.Craig N. Murphy, “Bottoms Up Development Helps Make UNDP a Mammal,” in The United Nations Development Programme: A Better Way? (Cambridge: Cambridge University Press/UNDP, 2006), 234. Murphy, UNDP’s official historian, quotes an interview with Draper, who told him, “It must have been disconcerting to many staffers to have an Administrator dedicated and passionate about the private sector.”
4.Sir Richard Jolly, email communication with the author, November 30, and December 2, 2015. In a separate email dated December 4, 2015, Bill Draper also confirmed the lunch with Mahbub ul Haq and General Zia on August 17, 1988, the day of Zia’s death.
5.Bill Draper, telephone interview with the author, May 2013.
6.Mahbub ul Haq, “The Birth of the Human Development Index,” in Reflections on Human Development (New York: Oxford University Press, 1995), 46.
7.Bill Draper also tells his story of meeting Mahbub ul Haq and publishing the Human Development Index in his memoir, William H. Draper III, The Startup Game: Inside the Partnership Between Venture Capitalists and Entrepreneurs (New York: Palgrave Macmillan, 2011), 121.
8.Amartya Sen, “The Possibility of Social Choice” (Nobel Lecture, December 8, 1998), accessed August 19, 2015, http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1998/sen-lecture.pdf.
9.“A 20th Anniversary Human Development Discussion with Amartya Sen,” interview by UNDP for the Human Development Report 2010, accessed August 19, 2015, https://vimeo.com/16439165.
10. Frances Stewart, interview with the author, July 30, 2014, London.
11. Bill Draper, telephone interview with the author, May 2013.
12. Human Development Report (New York: Oxford University Press/UNDP, 1990), 9, accessed August 19, 2015, http://hdr.undp.org/en/reports/global/hdr1990.
13. I conducted two face-to-face interviews with Sir Richard Jolly at his home in Lewes, Sussex, England, first in June 2013 and again in May 2014.
14. Sir Richard Jolly, email communication with the author, November 30, and December 2, 2015.
15. Human Development Report 2010: The Real Wealth of Nations (New York: Palgrave Macmillan/UNDP, 2010), 15, accessed August 19, 2015, http://hdr.undp.org/en/content/human-development-report-2010. With the exception of some extra words in the title, the style of the reports had changed little in twenty years: no images; only text, tables, and graphics.
16. Natalie Day, Ehsan Masood, and James Wilsdon, A New Golden Age? The Prospects for Science and Innovation in the Islamic World (London: Royal Society, 2010), 5–10.
17. Khadija Haq and Richard Ponzio, Pioneering the Human Development Revolution: An Intellectual Biography of Mahbub ul Haq (New Delhi: Oxford University Press, 2008), 3.
19. Sir Richard Jolly, interview with the author, Lewes, West Sussex, June 2014.
20. Paul Streeten in the Foreword to Haq, Reflections on Human Development, viii. Streeten also writes that Haq was open to changing his mind based on new evidence. He had a plaque on the wall of his World Bank office which said: “It’s too late to agree with me; I’ve changed my mind.” Haq, according to Streeten, gave the plaque to Maurice Strong.
21. Human Development Report 1991 (New York: Oxford University Press, 1991), 1.
22. Ben Santer, Tom Wigley, T. M. L. Wigley, T. C. Johns, P. D. Jones, D. J. Karoly, J. F. B. Mitchell, et al., “A Search for Human Influences on the Thermal Structure of the Atmosphere,” Nature, July 4, 1996, 39–46.
23. Paul Ekins, “The Kuznets curve for the environment and economic growth: examining the evidence,” Environment and Planning A 29, no. 5 (1997): 805-830.
SEVEN: EXPORTING SHANGRI-LA
1.The actual text of the speech I have so far not been able to locate. But many Bhutanese researchers and policymakers have confirmed that the King did give a speech saying Gross National Happiness is more important than Gross National Product. There are, moreover, numerous references to it in the scholarly literature, including the Journal of Bhutan Studies.
2.Following the introduction of Gross National Happiness, the OECD, one of the incubators of the original GDP idea, created an initiative known as the Better Life Index. The World Bank created its own project, which it called WAVES, or Wealth Accounting and the Valuation of Ecosystem Services. These attempts at quantifying nonmonetary indicators, one of the OECD’s senior officials told me, were partly to acknowledge to the outside world that the OECD could see problems in GDP, and also to help jump-start an internal conversation among the organization’s own economists. Although both the World Bank and the OECD are among the bodies that set the rules for GDP, it seems to me that both WAVES and the Better Life Index are at best marginal to the real game in town.
3.Brian Groombridge and Martin Jenkins, World Atlas of Biodiversity: Earth’s Living Resources in the 21st Century (Oakland: University of California Press, 2002), 272–273. Bhutan has 5,603 species of plants, 667 bird species, 200 mammal species, and 49 species of freshwater fish. The country is also home to snow leopards and Bengal tigers, Asian elephants and the exotic and rare black-necked crane.
4.Ida Kubiszewski, Robert Costanza, Lham Dorji, Philip Thoennes, and Kuenga Tshering, “An Initial Estimate of the Value of Ecosystem Services in Bhutan,” Ecosytem Services 3 (2013): 11–21.
5.Ashi Dorji Wangmo Wangchuck, Treasures of the Thunder Dragon: A Portrait of Bhutan (New Delhi: Viking/Penguin, 2012), 36–37.
6.Statistical Yearbook of Bhutan: 2014 (Thimpu: National Statistics Bureau, Royal Government of Bhutan, 2014). Unless otherwise referenced, the data in this chapter on Bhutan’s public sector is from this source.
7.Health care data in this paragraph is from Chencho Dorji, “Bhutanese Health Care Reform: A Paradigm Shift in Health Care to Increase Gross National Happiness,” in Gross National Happiness: Practice and Measurement: The Proceedings of the Fourth International Conference on Gross National Happiness, 24–26 November 2008, ed. Dasho Karma Ura and Dorji Penjore (Thimpu: Centre for Bhutan Studies, 2009), 413, accessed October 1, 2015, http://www.bhutanstudies.org.bt/category/conference-proceedings/.
8.Dasho Karma Ura, Skype interview with the author, December 27, 2013.
9.Tashi Wangyal, “Rhetoric and Reality: An Assessment of the Impact of WTO on Bhutan,” in The Spider and the Piglet: Proceedings of the First International Seminar on Bhutan Studies, ed. Karma Ura and Sonam Kinga (Thimpu: Centre for Bhutan Studies, 2004), accessed October 2, 2015, http://www.bhutanstudies.org.bt/category/conference-proceedings/. The author also makes the point that WTO membership would have an impact on Bhutan’s dependence on India, its largest trading partner.
10. Although the Accelerating Bhutan’s Socio-Economic Development project was eventually terminated, Bhutan’s government has kept the project website live on its servers (http://www.gnhc.gov.bt/absd/?page_id=25, accessed October 2, 2015). This is an unusual but very welcome step. Often in the public sector records of failed (even completed) projects are quickly removed from the Internet.
11. In some ways I would say that Bhutan’s experience with McKinsey wasn’t wholly negative and that people and policy makers both learned some valuable lessons. They discovered that it is entirely possible to question the advice they were getting and to believe that they had something good that they wished to protect. At the same time, they gained experience in handling a major consulting firm, which is an essential skill for any policy maker today.
12. Gus O’Donnell, Angus Deaton, Martine Durand, David Halpern, and Richard Layard, Wellbeing and Policy, Report of the Commission on Wellbeing and Policy (London: Legatum Institute, 2014), accessed October 2, 2015, http://li.com/docs/default-source/commission-on-wellbeing-and-policy/commission-on-wellbeing-and-policy-report---march-2014-pdf.pdf.
13. Madeline Drexler, A Splendid Isolation: Lessons on Happiness from the Kingdom of Bhutan (published by the author, May 2014).
EIGHT: $33 TRILLION MAN
1.Herman Daly, “The Canary Has Fallen Silent,” New York Times, October 14, 1970, 47.
2.Herman Daly told me in an interview on September 5, 2013 that he and Aurelio Peccei never met. That is unfortunate, more so because in 1972–1973 they both, independently, came to the conclusion that growth cannot go on forever; also because they were both engaged in highly public battles with more powerful individuals and institutions. They would have benefited from joining forces.
3.Herman Daly, telephone interview with the author, September 5, 2013.
4.Robert Costanza and Ida Kubiszewski, “The Authorship Structure of Ecosystem Services as a Transdisciplinary Field of Scholarship,” Ecosystem Services 1 (2012): 16–25.
5.The founding members of ecological economics also include AnnMari Jansson and Joan Martinez-Alier. Cited in Inga Røpke, “The Early History of Modern Ecological Economics,” Ecological Economics 50 (2004): 293–314.
6.Robert Costanza, Ralph d’Arge, Rudolf de Groot, Stephen Farber, Monica Grasso, Bruce Hannon, Karin Limburg, et al., “The Value of the World’s Ecosystem Services and Natural Capital,” Nature 387 (1997): 253–260.
8.Payment for Ecosystem Services: A Best Practice Guide (London: Department for Environment, Food and Rural Affairs, May 2013), 11, accessed August 29, 2015, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/200901/pb13932a-pes-bestpractice-annexa-20130522.pdf.
9.Quoted in William K. Stevens, “What Is Nature Worth? For You, $33 Trillion,” New York Times, May 20, 1997.
10. Stephen Smith, “David Pearce: Environmental Economist Whose Market-Based Ideas Caught the Changing Tide of the 1980s,” Guardian, September 22, 2005, accessed August 30, 2015, http://www.theguardian.com/science/2005/sep/22/highereducation.guardianobituaries. Pearce was an adviser to two successive Conservative ministers of environment in the administration of Margaret Thatcher: Christopher Patten and Michael Heseltine.
11. David Pearce, “Auditing the Earth,” Environment 40, no. 2 (March 1998): 23–28, accessed August 30, 2015, ftp://220.127.116.11/Transfer/ES_Pubs/ESVal/es_val_critiques/pearce_1998_AuditingTheEarth_Env_v40_2_p23.pdf.
12. Costanza and his team worked out the cultural value of oceans to be $76 per hectare as the difference between the values of coastal and noncoastal property. This was on the basis that people would pay more to live near an ocean, reflecting the increased cultural value of such places.
13. Pearce, “Auditing the Earth,” 26.
14. Robert Costanza, telephone interview with the author, May 17, 2013.
15. Robert Costanza, Ralph D’Arge, Rudolf de Groot, Stephen Farber, Monica Grasso, Bruce Hannon, Karin Limburg, et al., “Costanza and His Coauthors Reply,” Environment 40, no. 2 (March 1998): 26–27.
16. With the benefit of hindsight I do think that the journal panicked into taking a hasty decision and that it could have had more of a discussion with the reviewers before showing Costanza the door. Usually, when a manuscript is sent out to peer review, the journal’s editors are confident about its merits. Peer reviewers’ role is to suggest ways of improving a text. Their suggestions and criticisms are put to the authors, who are given an opportunity to respond, before possibly another round of peer review. Science’s team was clearly so shaken by the extreme reactions, they decided to cut their losses and turned the paper down.
NINE: STERN LESSONS
1.Before that Nicholas Stern had forged a career in development economics, which is the study of how poor countries can become richer. Indeed, his signature work, his long-lived academic achievement, is a social history of a small village in the north of India. For forty years Stern has documented the changing lives of families in the tiny farming village of Palanpur.
2.Tony Blair, A Journey (London: Hutchinson/Random House, 2010), 497. Blair had assured Gordon Brown that he would not fight a third election in 2005, allowing Brown to fulfill his ambition to become prime minister. However, Blair did not honor this commitment, he says, on the grounds that Brown was insufficiently committed to Blair’s public service reform agenda.
3.Nicholas Stern, telephone interview with the author, June 19, 2014. One of the commission’s more innovative ideas was to invite Africa’s leaders to temporarily leave the comfort of their chauffeur-driven cars and embark on a roadshow the length and breadth of the continent. Stern and his team invited thousands of students, farmers, industrialists, campaigners, and many others and arranged for them to attend public meetings where heads of state would be present. I attended one such event in Egypt’s port city Alexandria and I can remember all too well how the (mostly young) audience was both shocked and impressed that their continent’s usually aloof leadership had not only bothered to turn up, but had come to listen and not to lecture.
4.Tony Blair and the Commission for Africa, Our Common Interest: Report of the Commission for Africa (Commission for Africa, March 2005). Although the author list was headed by Tony Blair, much of the actual drafting was done by Stern and his team at the Commission for Africa Secretariat in London.
5.The UK’s Climate Change Act of 2008 mandates 80 percent reductions in emissions of greenhouse gases by 2050.
6.The UK’s first secretary of state for energy and climate change was Ed Miliband, who would later succeed Gordon Brown as leader of the Labour Party from 2010 to 2015.
7.Under Michael Meacher’s tenure, the environment lobby had a direct line to government. One of their collective achievements was to oppose plans from scientists or farmers for genetically modified crops to be grown on a commercial scale, as Meacher told me in an interview for a BBC Radio documentary. Ehsan Masood, “Science: Right or Left?” BBC Radio 4, broadcast August 11, 2013, accessed August 30, 2015, http://www.bbc.co.uk/programmes/b037tsw0.
8.Croatia had not yet become a member of the European Union.
9.The UK’s priorities for the EU presidency included budgetary matters as well as the prospect of Turkey’s accession, which at the time was a serious prospect.
10. Blair, A Journey, 557.
11. Nicholas Stern, The Economics of Climate Change: The Stern Review (Cambridge: Cambridge University Press, 2007).
12. Nicholas Stern, telephone interview with the author, June 19, 2014.
13. At the time of the Stern review, the UK Foreign Office, the British Council, and the World Service of the BBC had been signed up to a UK government initiative called the Public Diplomacy Board. The idea was to pool their resources on activities that would create favorable impressions of the UK among international audiences. The board has since been disbanded.
14. I remember this meeting particularly well in part because my plane had landed in the middle of the night on a flight where I was the only passenger.
15. My dispatches from the African Union heads of government meeting in January 2007 are archived at “In the Field,” Nature.com, accessed August 30, 2015, http://blogs.nature.com/inthefield/author/emasood.
16. Masood, “Science: Right or Left?”
TEN: “NOTHING IS MORE DESTRUCTIVE OF DEMOCRACY”
1.Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi, Mismeasuring Our Lives: Why GDP Doesn’t Add Up: The Report of the Commission on the Measurement of Economic Performance and Social Progress (New York: New Press, 2010), viii.
2.The Sarkozy commission team would also include Nicholas Stern.
3.Stiglitz, Sen and Fitoussi, Mismeasuring Our Lives, 10–18.
EPILOGUE: UNFINISHED REVOLUTION
1.Robin Harding, “Data Shift to Lift US Economy by 3%,” Financial Times, April 21, 2013.
2.Ben Martin, “The Economic Benefits of Publicly-Funded Research: A Critical Review,” Research Policy 30 (2001): 509–532. The economist Ben Martin, professor at the Science Policy Research Unit at the University of Sussex, has spent the better part of a professional lifetime understanding the links between science and growth. He says there is no straightforward or linear relationship.
3.Fernando Galindo-Rueda, “Developing an R&D Satellite Account for the UK: A Preliminary Analysis,” Economic and Labour Market Review 1, no. 12 (December 2007): 18–29, accessed October 4, 2015, http://www.ons.gov.uk/ons/rel/elmr/economic-and-labour-market-review/no--12--december-2007/developing-an-r-d-satellite-account-for-the-uk--a-preliminary-analysis.pdf. At the end of 2007, the UK’s Office for National Statistics forecast that recapitalizing R&D in the national accounts would raise levels of UK GDP by 1.5 percent.
4.Alexander King, Let the Cat Turn Around: One Man’s Traverse of the Twentieth Century (London: CPTM Publishing, 2006), 236–249. King devotes an entire chapter of his memoir to his efforts to persuade ministers and heads of government that science spending must be seen as an investment toward economic growth. He recalls one encounter with the education minister of the Netherlands, who likened such an idea to “prostitution of science.” In his later years, King, too, would come around to that view.
5.Benoit Godin, “The Making of Statistical Standards: The OECD and the Frascati Manual, 1962–2002” (Working Paper 39, Project on the History and Sociology of STI Statistics, 2008), 34, accessed October 4, 2015, http://www.csiic.ca/PDF/Godin_39.pdf.
7.Fernando Galinda-Rueda, “Towards R&D Capitalisation: An OECD Perspective,” OECD Directorate for Science, Technology and Industry, Economic Analysis and Statistics Division (London, April 2011), 3–4, accessed October 4, 2015, https://community.oecd.org/docs/DOC-41735.
8.Murat Tanriseven, Dirk van den Bergen, Myriam van Rooijen-Horsten, and Mark de Haan, Research and Development Statistics: R&D Capitalisation in the Knowledge Module (The Hague: Statistics Netherlands, 2008), 14–15, accessed October 4, 2015, http://www.cbs.nl/NR/rdonlyres/9F8B7800-9261-4ECD-9664-E5F00880CCEE/0/200801x41pub.pdf. In this paper, published by the Netherlands’ office for national statistics, an expert advisory group to the government is reported to have recommended that freely available scientific knowledge should not be moved into the investment column of GDP.
THE END OF THE WORD: A NOTE ON SYMBOLS
1.Felix Salmon, “The Secret Formula That Destroyed Wall Street: How One Simple Equation Made Billions for Bankers—and Nuked Your 401(k),” Wired, March 2009, 74–85.
2.Joseph Mazur, Englightening Symbols: A Short History of Mathematical Notation and Its Hidden Powers (Princeton, NJ: Princeton University Press, 2014, 85–92.
3.Ibid., after p. 80.
4.Roy Harrod, The Life of John Maynard Keynes (New York: W. W. Norton, 1951), 624–625.
5.Paul Krugman, “How Did Economists Get It So Wrong?” New York Times Magazine, September 2, 2009, accessed October 4, 2015, http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?em=&pagewanted=all.
6.E. O. Wilson, “Great Scientist ≠ Good at Math,” Wall Street Journal, April 5, 2013, accessed October 4, 2013, http://www.wsj.com/articles/SB10001424127887323611604578398943650327184.