Vive le Fluff

Bhutan is a small, landlocked kingdom in the Himalayas. Its peaceful inhabitants keep to themselves, but welcome a small number of visitors each year from the outside world. Their government measures what it calls The Gross National Happiness to determine if things are going well. All this adds up to an image of quaint charm.

Quaint charm was not, however, what French President Nicolas Sarkozy had in mind the other day when he announced that the world should shift from measuring each nation’s relative success in term of Gross Domestic Product (GDP) and instead factor in happiness, long holidays and a sense of well being.

He was serious. He had just unveiled a report from a commission he had created with the American economist Joseph Stiglitz as its head. Stiglitz is no newcomer to public policy. He served as head of the Council of Economic Advisers in the Clinton Administration and was once chief economist at the World Bank. He also hold a Nobel Prize in economics and he is a professor at New York University.

The Stiglitz Commission concluded that GDP is a flawed way to measure economic output. It its place it proposes to create two tracks, one measuring the state of a country’s economy and natural resources and the other measuring “net national income” (including profits exported and imported) and “household income” (including taxes, social benefits and bank interest). It would also find a way to measure the value of such subjective things as leisure, happiness, health, education, social connections, the environment, insecurity and political systems.  How the Stiglitz Commission intends to do this was not revealed by Mr. Sarkozy.

What is the purpose of all this drollery?  Like Sarkozy’s speech, it’s serious. He announced that the French government would begin to incorporate the new “indicators” in its accounting system. The Stiglitz Commission’s report concluded that one result of adding the proposed “enhancements” to GDP data would be to–voila!–immediately “raise France’s economic performance by taking into account its high-quality health service, expensive welfare system and long holidays.”

It also noted that, at the same time, such changes would lower measurement of economic output of the United States. Indeed, the report noted that if GDP accounted for health system outcomes and not just monetary inputs, the U.S. GDP would be cut by one-third.  Professor Jean-Paul Fitoussi, co-author of the report, says that taking into account France’s social safety net, especially its generous unemployment insurance, would reduce the gap between the U.S. and France by another fifth.

According to Henry Guaino, Sarkozy’s speechwriter, the president is fixated on raising the trend of France’s growth rate by a full percentage point. Sarkozy, in his speech, decried what he calls “the cult of figures.”  He added, “Behind the cult of figures, behind all these statistics and accounting structures, there is also the cult of the market that is always right.”

By European standards Sarkozy is seen as a conservative. Most Americans would see him as a quasi-Socialist. He presides over a country with permanently high unemployment, low productivity and growth, but oodles of cradle-to-grave social services. It’s no wonder he wants to glorify the state, since competing effectively in the markets of the world seems not possible.  Like Charles deGaulle, he thinks France is the only country that counts, so he pursues Gloire–glory–however he can.

This pursuit still comes out fluff.