Gross Domestic Pain

▪️ Gross Domestic Pain ▪️ Robbing Peter to pay Paul ▪️ Autism challenges

All over the world, and particularly in Malta, people have been asking why we continue to focus policy on economic growth instead of things like wellbeing.  Well, despite the inadequacy of Gross Domestic Product (GDP) as a measure of progress, it remains deeply rooted in the way that economists and politicians think.  That is exactly the problem, some would say: it is a symbol of just how broken our system is.  We might as well call it the Gross Domestic Pain.

Money, of course, isn’t everything, but it has long been pretty much the only thing to measure something.  The specific metric is the dollar value of a country’s economic output   ̶   the GDP. The metric has been reinforced by the huge rise in living standards and in wealth associated with a growing GDP.

I am reminded of something which Robert F. Kennedy said on the presidential campaign trail as long ago as 1968. “It (the GDP) counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts air pollution and cigarette advertising and ambulances to clear our highways of carnage  …  Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play.”

Although Kennedy’s critique got little attention at the time, it has since become famous, and deservedly so, because it gives succinct voice to almost all the major criticisms of GDP. The three main strands have been these:

(1) GDP is, even on its own terms, a faulty measure;

(2) it takes no account of sustainability or durability; and

(3) progress and development can be better gauged with other metrics.

Many of the drivers of poor wellbeing are ingrained in our neoliberal economic system.  Designed in the 1980s, the system has been maintained by the wealthy mainly for their own interests, the toiling masses being kept happy by crumbs trickling down to them from the rich tables.  Inequalities have grown, but sometimes it seems that the disadvantaged do not care.  Perhaps their preoccupations do not leave them with enough time to ponder why it should be like that.

Fifteen years from the financial crash, the mask of benign neoliberalism has slipped. The rich in the EU and elsewhere survived the biggest economic crisis in a generation with barely a dent to top incomes, while poverty rates, homelessness and personal debt have soared.  At the same time, we are beset by a new authoritarianism built on stoked fears of immigration and offering another, very ugly, alternative to the failings of the neoliberal project.

At the moment, GDP is embattled. Economists and national leaders are increasingly talking about measuring a country’s status with other metrics and even with a squishy-seeming concept like “happiness”.  A 2009 study on alternatives to GDP, led by the economists Amartya Sen, Joseph Stiglitz, and Jean-Paul Fitoussi, became a global wonk sensation.

In 2011 the Organisation for Economic Co-operation and Development (OECD), a club of the world’s wealthy nations which Malta will be joining shortly, followed with a ‘How’s Life?’ report on ‘well-being’ in its member countries – four years before the private Legatum Institute had started publishing a global Prosperity Index, a sophisticated mix of economic and other indicators.  There is also the United Nations’ Human Development Index and the Kingdom of Bhutan’s insistence that it is out to maximise not GDP but GNH   ̶   “gross national happiness”.

Indices like these were seized upon by many thirsty for a dramatically new economic vision. The vision gained traction from findings from wellbeing research that social relationships are more of a predictor of wellbeing than income.  It explained why the last decade’s modest income growth, but high inequality and apparent individualism, just didn’t feel like progress. 

If wellbeing were to be adopted as a primary indicator, then the economic implications would be radical: evidence of diminishing returns to income, and the importance of security of work and housing, all pointing away from neoliberal orthodoxy and towards a transformative, redistributive economic agenda. In this way, wellbeing presents a new direction, away from the burgeoning materialism of the 1990s and towards a wellbeing economy that works for people and the planet.

We now have a tonne of research demonstrating the damaging effects of insecure work, poverty, and personal debt. We also have well-developed alternative indicators to replace GDP. The reason that policy has not changed is not because there isn’t enough research. It’s because the current system   ̶   that is, the Establishment, of which the government is a part   ̶   serves those who run it.

Robbing Peter to pay Paul

Berkshire Hathaway chairman Warren Buffett   ̶   the ninth richest man on earth, with a net worth of $132bn   ̶   wants to be prepared.  When asked at a recent annual shareholder meeting why he sold 115 million shares of Apple over the past quarter, the Oracle of Omaha predicted companies like his could find themselves handing over more of their earnings to Uncle Sam. And he, for one, is fine with the idea.

“With present fiscal policies, I think something has to give. And I think higher taxes are quite likely,” he said, lecturing other companies for constantly scrutinising the tax code for the smallest loopholes that can reduce their tax burden.  Under the previous Trump administration, the statutory rate for corporations was reduced to 21% in 2017 from a previous 35%.

Buffett has repeatedly advocated that those who can pay more taxes should do so, famously saying his secretary paid a higher tax rate than he did.  He has been advocating for a minimum tax on top wage earners – those like himself who benefit from the fact that capital gains are taxed at a lower rate than regular earnings.  He has been joined by some 260 millionaires and billionaires who signed a letter, directed at political leaders attending the World Economic Forum in Davos, saying they would be “Proud To Pay More” in taxes.

Illustration: ALEXANDRA CITRIN-SAFADI/WSJ; PHOTO: GETTY IMAGES, ISTOCK

A poll of the millionaires concerned found that: 74% support higher taxes on wealth to help address the cost of living crisis and improve public services; 75% support the introduction of a 2% wealth tax on billionaires, as proposed by the EU Tax Observatory in October 2023; 58% support the introduction of a 2% wealth tax for people with more than $10 million; 72% think that extreme wealth helps buy political influence; and 54% think that extreme wealth is a threat to democracy. 

How about introducing the Buffett rule in Malta?  We have a few millionaires of our own, not counting those whose wealth is hidden. In fact, how about making taxes somewhat more progressive?

The chart, based on information given by the Minister for Finance in Parliament recently, shows that over 60,490 (almost 22% of full-time workers) do not pay any tax at all, being on the minimum wage.  This is already too high a percentage, in my opinion   ̶   how about paying them better?  Another 16% (44,040 workers) are only paying €395 in tax on average, indicating that their income is low, above the minimum wage but probably below or around the median.  The tax revenue from them amounts to just €17.4m.  Foregoing this revenue is not going to break the bank, but it would make a significant difference to the workers concerned.  Were the government to increase by one percentage point the rate of those who currently pay 25% or 35% tax   ̶   probably by €0.5-€2.8 per day   ̶   it would fully recover the foregone revenue.

I do not believe that taxing the better-off slightly more will constitute a disincentive to work in their case, but it would surely incentivise those who earn less.  Robbing Peter to pay Paul makes sense in this case.

Autism challenges

In a recent programme on RTK103, Pauline Grech, head of a school in Sannat, claimed that there has been “an explosion” in autism cases in recent years, so much so that all schools now have children suffering from autism and services are not coping with the demand for help.  Malta has the 13th highest autism rate out of 198 countries, at 535.95 per 100,000.   Compare this to the highest and lowest rates in the world: the UK’s, with 700.07, and Taiwan’s, with 199.  That means that we must now have something like 2,900 autistic people.

It is difficult to understand the real extent of the problem in Malta.  According to a parliamentary reply by the Education Minister recently, no less than 2,004 students in Malta’s state, church, and private schools have been diagnosed as being on the autism spectrum.  On the other hand, a report commissioned by Parliament, quoted by the Times of Malta last year, gave a figure of one in 60 to 70 children as being affected in Malta   ̶   that’s around 1,100 children below the age of 15. Apart from the difference between these two figures, the figure of 2,900 cases probably includes adults with autism.

Autism (ASD) is a neurodevelopmental condition that affects 168 million people around the world.  It ranges from communication difficulties through impaired social skills to restricted and repetitive behaviours. People with autism experience difficulty in understanding the perspectives of others and often struggle to connect with people on an emotional level.  They may be hypersensitive to sensory input such as noise or light. And they may have difficulty expressing their feelings due to a lack of verbal communication or reduced non-verbal language.

The genetic component of ASD can range from 40% to 80%.  Advanced parental age has been implicated and could therefore be a material factor in Malta where women are giving birth at an average age of 31.2 years, compared to 28.9 some 32 years ago.  The prevalence of autism in other members of the family also seems to contribute.  Some researchers have posited that a moderate genetic component may combine with considerable environmental factors – toxic substances and particulate matter in the air or even other medicines   ̶   to increase the risk of autism.

The claimed explosion could also be a statistical issue.  According to a research paper by Sana Mubashir et al the University of Malta in 2020, only a limited percentage of people in Malta had some knowledge of the symptoms, age of onset, potential causes of autism and treatment options.  As people become more aware of this, the number of reported cases would increase.

People with autism often require additional support throughout their lives to help them become more independent.  These supports may include speech therapy, occupational therapy, psychological counselling, educational coaching, and specialised behaviour support.

According to a report commissioned by Parliament and carried out by the University’s Faculty for Social Wellbeing over a year ago, children diagnosed to have autism and ADHD face long waiting lists that sometimes exceed a year for state-provided service, with the alternative being hefty private costs.  The report also highlighted the lack of trained staff.

The study found that, although services have improved over recent years, 30% of service users reported being unsatisfied with the diagnostic process, whereas levels of dissatisfaction rose to 61% for access to services, with many saying they had not received any services at all in the last six months.  Services were severely lacking when it came to adults.

There is a National Autism Plan in place, but two years into its implementation, I could find little about what has been done to achieve its worthy objectives.  We also have a law about empowering autistic persons; again I could not find any assessment of its impact.  There is some anecdotal evidence of improvements   ̶   for example, in training of much-needed professionals   ̶   but the din seems to be dominated by complaints about shortcomings.

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