Thoughts and Travels

5.08.2008 Difficult Papers and GDP / GPI

Not a ton to report today.  I did write a paper and did quite a bit of research today about country GDP and other indicies that might offer a better way to consider development than does GDP.  The paper was for  Mr. Chen as he wanted to know what I thought about the differences between Nanchang and Hangzhou.  I, however, ended up with philosophical questions about why GDP was being used as the sole indicator of development when there were so many other things to consider in cost of production. 

I have tried to discuss this with him a couple of times, but somehow either the message doesn’t get across, or I just don’t say things correctly. I am a little concerned about talking to him about this as it is a delicate subject and I of all people don’t know any way for China to do things better than they are doing.   

There is truly a need to elevate masses of people out of poverty in the country, but currently the rate of the country’s “development” has been measured by GDP.  I’ll see what he says when he reads my paper.  We discussed the topic for a while in the office here, and there is no doubt that the people in the office know that there are issues with the way things are happening, but they don’t feel like they can do anything about it because of the government. The government just makes decisions, and even though they know about many of the problems (so I was told) the problems are either overlooked, due to potential economic growth, or just not shared with the public. 

I found a couple other indices that I’m very interested in, mainly the GPI or Genuine Progress Indicator.  This number takes many more things (up to 20) into account like: environmental impact cost, health costs, etc. I have included an excerpt from my paper below. 

All of this talk about development has interested me in the philosophical discussion about how development is viewed.  It’s been discussed that China needs to develop the countryside and to do that industry must come first and then this will help agriculture.  There is definitely a need to develop the countryside, or at least raise the countryside’s standard of living.  What I don’t completely understand is the definition of development that China is adhering to in order to make this happen.  I was told that GDP is the main measure, but in my view, development is a combination of economical, social and environmental development.  GDP really only addresses only one of these areas – Economy.  I’m not sure there is an answer to how development should be viewed.  The GDP for China in 2005 was 6,757 in comparison with France at 30,386 or the U.S. at 41,890 (United Nations Development Programme, 2008).

Unfortunately, GDP only takes into account only some kinds of economic activity within a country not actual standard of living. It seems that standard of living tends to increase as GDP increases (Wikipedia, 2008).   Is GDP a good measure of a “developed country”?  This is another philosophical question that is very hard to answer.  Should human happiness be defined by GDP?  There are many other things involved in Human happiness than just GDP or income.  Does GDP take the distribution of wealth in a country into account?  Does GDP measure sustainability in growth of a country’s economy? 

Because of the potential discrepancy of using GDP as the sole indicator for economic development, there have been several other indexes looked at to replace GDP.  Another indicator of development is the Human Development Index (HDI) which takes into account peoples’ quality of life in terms of adjusted real income, life expectancy, and education.  Currently the HDI for China is 0.777 (United Nations Development Programme, 2008).  In comparison, the HDI for France is 0.952 and the U.S. is 0.951 (United Nations Development Programme, 2008).

Another definition is that a developing country is one that has achieved a certain degree of industrialization relative to their population (Wikipedia, 2008). If China is to be considered developed solely on the basis of GDP, then how much industry will have to be put in the country to balance the population/industry ratio?   And yet another question would be, “What kind of living situation does a balanced ratio allow socially, economically, and environmentally for the general population ?”. 

Yet another possible index to use in determining how “developed” a country is would be the Genuine Progress Indicator (GPI).  This takes into account what is important to people (income, environment, etc.) and puts it on a scale (Genuine Progress Indicator, 2008).  After reading about the GPI in a Case study of four Chinese cities, (Zonguo Wen et al., 2007) I’m convinced that this is a better indicator of growth and development of a country than is sole use of GDP. 

I’m amazed at how quickly China can build and develop areas.  My amazement parallels my concern in how quickly things are developing.  It seems as though China is gunning to be developed in 30 years, and I think that could happen by GDP standards.  My concern is that it took the U.S. 150 years to reach the point it’s at with its meager population (compared to China) and we have many places that are environmentally problematic now, even in a 150 year development cycle.  We used GDP as an index for a long time and that doesn’t take many things into account. It’s unfair to measure China against criteria such as these, because there is a huge need to develop and bring the standard of living up.  I don’t know what the answer is, but I’m concerned.   

The philosophical question is, “what is development and what does it look like?”  I think as you work toward a more simple and efficient society, you look more developed and begin to come into a “harmony” with the world around you.  Although I have discussed some of these things, my opinion is definitely not the only one.  This is a question that has many different viewpoints and many potential answers.

Developing a country like China with such a large population who have the goal of living like more “developed” countries, is going to have to overcome some real hurdles.  I think, however, that more developed countries need to take an initiative to change their living behavior and learn how to WANT LESS.  I’m not talking fewer life goals, I’m talking fewer materialistic items.  I’m talking about wanting to do more in life, learn more, experience more, but want fewer material things.  Many more “developed” nations, I believe, have set an unsustainable example and level of requirement for living.  In terms of developing China, I think the analogy still fits, “White cat ? black cat.  Which one is the best?  The best one is the one that can catch the mouse.”  This is still true, but the question becomes, what is the mouse, and what will the process of catching that mouse do to the cat?
 

I guess we’ll see how this makes things pan out for me.  It is a hard thing to discuss, especially because we, as Americans, both don’t  have to confront many of these problems, but also because we are the instigators of many of these problems in China.  This is due to our movement of factories over to a much cheaper worker base, and not making sure there aren’t things like toxic substances in our cars, electronics, etc. that are made and “recycled” here in China. 

The need for elevation of the mass of people is dire, but many don’t have a choice but to be subject to very bad environmental and working conditions in order to make even a meager living.  The place I’m staying is an exception.  Hangzhou was voted the best place for business in China by Forbes in 2005 and continues to be a very nice place (even though I can see a visible problem in river water quality and feel a difference in air quality compared to where I live).  

Well, I hope this spurs some interesting discussion.  Because if he’s angry about any of it, I may be walking to Shanghai?J