new misery

There are many ways to assess a society. Here's something I saw recently in a book review:

One nonprofit organization, Redefining Progress, proposes tossing out growth as the first economic yardstick and substituting a "Genuine Progress Indicator" that, among other things, weighs volunteer work as well as the output of goods and services. By this group's measure, American society peaked in 1976 and has been declining ever since.

The sentence jumped out at me because it validated something Allan and I had been talking about. It is frequently said that the US has changed for the worse, that it is no longer a beacon of democracy and freedom, that it no longer sets an example for the world, that it has become an empire. To which we always say, Become?

So we were trying to think of when the US actually was said beacon of democracy. Failing that, we tried to define when the country was at its most democratic - exactly when.

Whole swathes of US history are ineligible. It has to be after slavery was abolished, and after women won the right to vote. It has to be after the reforms of the New Deal: social security, unemployment insurance, minimum wage, workers' right to organize, basic health and safety laws. It has to be after Jim Crow.

The modern women's movement and the civil rights movement should be in full swing, and other people's movements, such as gay rights, should at least exist.

But it would also have to be pre-Reagan, when the US took a sharp turn away from social reform, away from a healthier environment, away from individual rights and freedoms, towards a greater share of wealth concentrated in fewer hands, towards unchecked corporate power, towards empire.

Our answer: "somewhere between 1975 and 1978".

Now, I don't think most experts would agree America's golden age was in the late 1970s. But we think that's probably as good as the country ever got, and that it's been declining ever since.

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There are many ways to assess a society's health and progress. My dear friend Alan With One L (not to be confused with Allan who is Redsock) sent me this article from The Economist. Emphasis his - and mine.

Les Miserables
Jan 12th 2006

The misery index celebrates its 30th birthday. Time for a revamp?

Is the economy in a better or worse state than ten years ago? The "misery index" (the sum of unemployment and inflation rates) is a back-of-the-envelope gauge of economic health. The higher the score, the greater the economic misery. It was invented by Arthur Okun, an American economist, just after the first oil crisis of the 1970s caused a sharp rise in both unemployment and inflation. Jimmy Carter popularised the misery index during his successful presidential campaign in 1976.

The classic misery index makes America's economy look pretty good, compared both with the past few decades and with much of Europe, burdened by higher jobless rates. But like many people when they hit 30, the index may be due for a spruce-up.

Merrill Lynch's economists have come up with a broader, international index. In addition to unemployment and inflation, it also adds interest rates and the budget and current-account balances, but then subtracts GDP growth (a good thing). In other words, the index not only reflects how cheery an economy feels today, but, by including budget and external balances, it also captures the ability of a country to sustain its merriment. For example, a large budget deficit probably implies higher taxes in future.

This new index could wipe the smile off the faces of exuberant Americans. The United States has the highest score (see chart), ie, it has the most wretched economy among the big G7 countries, thanks to its huge deficits. In the 1990s, by contrast, before its imbalances exploded, its index was one of the lowest. The United States is the only country to have seen a large increase in its misery index over the past decade. Virtually all the other G7 countries--including Europe--have seen sizeable improvements.

Japan, after a decade of woe, is now back to where it was in 1994. However, Japan's misery index is somewhat misleading, since, in effect, it treats deflation as good, not bad.

The superstar that deserves to smile is Canada. Over the past decade it has seen the biggest reduction in its misery index of any G7 economy. It is the only country running both current-account and budget surpluses--in happy contrast to its southern neighbour.

Let's hope the result of next week's election doesn't wipe that smile off Canada's face!