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WHEN asked about the increasing service-related public protests against the ANC government in South Africa, Frans Cronjé – the SA Institute of Race Relations’ chief executive – recently had an interesting answer.
The protests were the direct result of the government’s success in delivering services to the people, he intimated. In Business Day he was quoted as saying that the protests were part of “the revolution of rising expectations”.
“By handing out free and subsidised services you create expectations of future improvements in living standards without securing the growth and investment to meet those expectations,” he said.
Looking at the situation from Europe, I would think that Cronjé exaggerates the ANC’s success as one regularly reads accounts of how services are imploding, especially in the rural areas.
But he has a point which cannot be ignored. Cape Town newspapers recently reported that the participants in one protest were not satisfied with the houses provided to them – they wanted bigger and better houses. Which - at least partially - confirms Cronjé’s view.
Be that as it may, the revolution of rising expectations raises another interesting perspective, which economists and statisticians have been mulling over at an Amsterdam conference this week. The question is namely: how do you measure an economic policy’s success?
The normal answer would be easy. You measure things like economic growth, job creation, GDP and per capita GDP, which would easily be expressed in figures and graphs. Over and done with.
But, according to a report in the Dutch daily Trouw, the conference participants are not quite satisfied with this pat answer. And therefore they want to know if there are other, less easy indicators.
In an interview with the newspaper, Professor Marcel Timmer, economist at the University of Groningen, said a debate has been simmering of late whether indicators such as happiness, inequality, environmental pollution, and so on, have to be factored in as well.
It is a difficult discussion, Timmer admits. It has to be clear whether you’re talking about prosperity now or in the future. You have to decide whether you take objective or subjective standards – “do you ask people whether they are happy, or how they experience safety in their vicinity, or do you measure the crime in an area"?
Apparently, the British rather like subjective measures, but these are not very useful for fomulating policy.
“Happiness, for instance, does not always correlate with people’s material situation,” Timmer says. “In the US it was investigated what happened after people had lost a quarter of their pension money. In the long term, it had no influence on their experience of happiness at all.”
The debate, which has been simmering for several years, gained some momentum when the then French President Nicolas Sarkozy asked two renowned economists, Amartya Sen and Joseph Stiglitz, in 2008 to develop standards other than those usually used.
It is clear that the Amsterdam conference participants and other academics have their work cut out for them. To develop a new model of measuring economic success is not going to be easy.
Take for example the situation in South Africa. To be poor does not necessarily mean that you are dissatisfied – provided, of course, that you have that minimum required to keep your head above water every day.
But the revolution of rising expectations – a concept which became important already during the last apartheid years – is bedevilling that subjective feeling of contentment. The people no longer simply want houses, even though they had none previously. They want better and bigger houses.
And those still living in shacks want houses, they want them here and they want them now!
It will be clear that objective and subjective standards are not the same. People may be quite happy to get even small houses if they had been living in shacks before. But when they see how our head of state, one Jacob Zuma, builds a palatial complex for himself with taxpayers’ money, their perception changes.
It is then that they become dissatisfied. It is then that they become open to populists such as Julius Malema. They still don’t have enough experience to realise that any populist will drop them the moment he lays his hands on the levers of power.
In other words, working out a new set of standards will be an extremely difficult task. And it will not be finished tomorrow.
Apparently Eurostat, the European Union’s bureau of statistics, wants to have a new statistical handbook by the end of the year. This sounds wildly optimistic.
But even if it succeeds, any new model is bound to be highly controversial. As Trouw remarks, the present concept of gross national product was developed by the American economist Simon Kuznets in the 1930s, but it took more than 20 years to be universally accepted.
Don’t expect the new model to garner worldwide support any quicker.
- Fin24
The protests were the direct result of the government’s success in delivering services to the people, he intimated. In Business Day he was quoted as saying that the protests were part of “the revolution of rising expectations”.
“By handing out free and subsidised services you create expectations of future improvements in living standards without securing the growth and investment to meet those expectations,” he said.
Looking at the situation from Europe, I would think that Cronjé exaggerates the ANC’s success as one regularly reads accounts of how services are imploding, especially in the rural areas.
But he has a point which cannot be ignored. Cape Town newspapers recently reported that the participants in one protest were not satisfied with the houses provided to them – they wanted bigger and better houses. Which - at least partially - confirms Cronjé’s view.
Be that as it may, the revolution of rising expectations raises another interesting perspective, which economists and statisticians have been mulling over at an Amsterdam conference this week. The question is namely: how do you measure an economic policy’s success?
The normal answer would be easy. You measure things like economic growth, job creation, GDP and per capita GDP, which would easily be expressed in figures and graphs. Over and done with.
But, according to a report in the Dutch daily Trouw, the conference participants are not quite satisfied with this pat answer. And therefore they want to know if there are other, less easy indicators.
In an interview with the newspaper, Professor Marcel Timmer, economist at the University of Groningen, said a debate has been simmering of late whether indicators such as happiness, inequality, environmental pollution, and so on, have to be factored in as well.
It is a difficult discussion, Timmer admits. It has to be clear whether you’re talking about prosperity now or in the future. You have to decide whether you take objective or subjective standards – “do you ask people whether they are happy, or how they experience safety in their vicinity, or do you measure the crime in an area"?
Apparently, the British rather like subjective measures, but these are not very useful for fomulating policy.
“Happiness, for instance, does not always correlate with people’s material situation,” Timmer says. “In the US it was investigated what happened after people had lost a quarter of their pension money. In the long term, it had no influence on their experience of happiness at all.”
The debate, which has been simmering for several years, gained some momentum when the then French President Nicolas Sarkozy asked two renowned economists, Amartya Sen and Joseph Stiglitz, in 2008 to develop standards other than those usually used.
It is clear that the Amsterdam conference participants and other academics have their work cut out for them. To develop a new model of measuring economic success is not going to be easy.
Take for example the situation in South Africa. To be poor does not necessarily mean that you are dissatisfied – provided, of course, that you have that minimum required to keep your head above water every day.
But the revolution of rising expectations – a concept which became important already during the last apartheid years – is bedevilling that subjective feeling of contentment. The people no longer simply want houses, even though they had none previously. They want better and bigger houses.
And those still living in shacks want houses, they want them here and they want them now!
It will be clear that objective and subjective standards are not the same. People may be quite happy to get even small houses if they had been living in shacks before. But when they see how our head of state, one Jacob Zuma, builds a palatial complex for himself with taxpayers’ money, their perception changes.
It is then that they become dissatisfied. It is then that they become open to populists such as Julius Malema. They still don’t have enough experience to realise that any populist will drop them the moment he lays his hands on the levers of power.
In other words, working out a new set of standards will be an extremely difficult task. And it will not be finished tomorrow.
Apparently Eurostat, the European Union’s bureau of statistics, wants to have a new statistical handbook by the end of the year. This sounds wildly optimistic.
But even if it succeeds, any new model is bound to be highly controversial. As Trouw remarks, the present concept of gross national product was developed by the American economist Simon Kuznets in the 1930s, but it took more than 20 years to be universally accepted.
Don’t expect the new model to garner worldwide support any quicker.
- Fin24
