This morning's Japan Times carried an opinion piece titled "Inviting Economic Suicide?" by Hong Kong based journalist Kevin Rafferty. The occasion was the news that India has surpassed Japan to become the world's third largest national economy, pushing Japan, already surpassed by China, down to fourth place in GDP rankings. This morning's email included a long rant on the decline of America, couched in very similar terms: China is surging, we're in trouble.
My instant reaction was to remark to myself that, given differences in population size, that if China and India raise per capita GNP to a part with Japan and the USA, of course they will be, by far, the biggest economies in the world. Having populations an order of magnitude bigger than their rivals makes that a sure thing—barring, of course, ecological catastrophe that wipes us all out. From this perspective, GDP rankings are, let's face it, insane. If your interest is human welfare, per capita GDP adjusted for local price structures is clearly the more important measure.
But no, even that is crazy. Per capita GDP is an average. It doesn't take account of the range of incomes—If Bill Gates walks into a coffee shop, what does it do to the average income of those having breakfast there.
Then, it just occurred to me, that if Amartya Sen is right and there are fundamentally only two ways to measure economic output, in units of wealth, a.k.a., currency, and value to human lives, the financial press is insanely obsessed with only the former, regarded primarily as a score keeping mechanism in what amounts to a World Cup of money making calculated on a national team basis. Is life really all and only about pecking orders and bragging rights?