The votes are in, and Americans have had their say. They are angry about a lot of things and they wanted their President to know it. So, they packed the House with more Republicans than this venerable institution has seated in the last 70 years. The public has spoken, its anger has roared, but now what?
There is something called the “Legatum Prosperity Index,” with its data collected and analyzed by the London-based Legatum Institute, which is argued to be the best gauge available today for assessing the world’s wealth and well-being. Apparently, the Index is a mesmerizing reader’s digest that blends macroeconomics with public opinion and paints in broad strokes the picture of national wellness and personal happiness around the world.
In earlier years, the Legatum Prosperity Index findings were that, as long as the economy keeps growing, people will remain happy. The relationship was positively correlated and it was the kind that creates the so-called “virtuous cycle” of increasing prosperity without being too vulnerable to the laws of diminishing returns. The category of prosperity is also approached in a holistic manner, gauging a wide range of thematic categories, ranging from the economy, to health care, to citizens’ freedoms.
Last week, the Legatum Institute released its 2010 report, finding Norway, Denmark and Finland to be the highest scorers and seeing the U.S. drop to 10th place overall. As the Institute approaches its Index holistically, it also provides for an interesting read on how, from one country to another, the public perceive its societies and themselves within them.
After the Tuesday elections, it is clear that President Obama did not bother with yet another Index measuring what people at home or half way around the world think. But, if he did, he may not have spent the first year of his presidency, and an enormous amount of his political capital, on overhauling the U.S. healthcare system, which the Legatum Prosperity Index had measured as number one in the world in 2009. Americans thought so, too, the concept of universal health care completely escaping them, and perhaps the country’s lawmakers, too. Instead, the end result was astounding anger at the Big Government that resulted in the loss of House of Representatives when President Obama may need it the most.
While the Legatum Prosperity Index is likely an excellent gauge of macroeconomic factors and the public mood, I’m not so sure that one of the variables in this equation—the U.S. public that is—got it right. Northern European countries have found a way to have their welfare states and prosperous economies, too. The way they managed to mesh it all so well is the fact that they are also the highest taxed countries in the world. But Northern Europeans do not complain about the Big Government or that huge chunks of their paychecks get sliced off every payday. So, what gives?
Take the number one country in the world—Norway. It has the highest GDP, which is not surprising considering the country’s fossil fuel resources. Norway’s unemployment rate is also something we can only dream of—2.6%. Norway ranks high in personal freedoms, too, holding the second place, after Canada. In comparison, the U.S. holds 14th place in per capita GDP, it is 25th when it comes to safety and security, and, as for personal freedoms, it holds 9th place. What perhaps keeps the illusion going in America is that over 90% of its citizens believe that, as long as they work hard, prosperity will come. Such notions of the times past are admirable, for sure, but mass delusion is never good, either in politics or in economics.
Americans and their politicians-elect must realize that national prosperity is as much tied to social welfare as it is to macroeconomic factors. Do you know how Scandinavian countries can have their cake and eat it, too? About 15 years ago, they have started reducing welfare spending, trimming services that cost too much, but without which the society as a whole could go on, keeping those that are building the country’s future and not just alleviating temporary hurts, and, finally, investing in children, their education and well-being. This is the kind of insightful and protective frugality that could have saved our society from so much hurt in the past two years. It is also something that takes more time to bear fruit than one President’s two years in Office.