THE HUMAN DEVELOPMENT INDEX

The UN associated Human Development Index report uses a three factor formula to rate nations according to their performance in… what else, human development. Presumably, being top on the list means your country is doing the most to make a good life for its citizens.

The commission that produces the report made some interesting changes in the criteria this year. One of the criteria that had been used was per capita Gross Domestic Product (GDP), a measure of economic activity per person. This year they announced a shift “from Gross Domestic Product — what a country produces — to Gross National Income, what a country earns [on the basis that income] is a more human alternative”.

In measuring National Income they credit a country as having earned money received as financial aid and remittances back into the country from citizens living abroad. This is not small potatoes for some of the less developed countries. The Atlantic reports that “remittances back to Mexico are larger than Mexico’s income from oil exports. In the Philippines, they are the largest source of foreign exchange.” The effect is the more a country’s citizens leave their homeland for work elsewhere the higher their country rises on the Human Development Index because the money they send home is counted as National Income.

And what about that phrase “what a country earns”? The Index is purported to be a reflection of government. Governments don’t earn money, they levy a tax.

Changes in the other two criteria equally skew the output in favor of the Mexico’s of the world. We’ll save you the angst and leave you with this quote about unintended consequences from William Orme, spokesperson for the report. “The unintended consequences of these new variables was that the United States, which had never been in top ten, entered the top five”.