At an event at Washington's St. Regis Hotel today, the Legatum Institute unveilled its 2011 Prosperity Index. The keynote speaker at the event was author, broadcaster, and American decline prophet Fareed Zakaria. Not surprisingly, Zakaria was pessimistic on the future of U.S. prosperity, though generally optimistic on economic growth in Asia and Latin America and political reform in the Middle East. Without major political
reform and investment in both education and infrastructure, Zakaria
argued, the U.S. ranking in indices like Legatum's would likely soon begin to slip.
Comparing the relative effectiveness of the TARP program, enacted
quickly as an emergency measure in the wake of the initial stock market
crash, with Congress's seeming inability to find longterm solutions for
U.S. economic growth, Zakaria ended on a downbeat note: "We're very
good at dealing with heart attacks. We're not so good at dealing with
cancer. ... The problem is, cancer can also kill you."
The counterintuitive Prosperity index, was somewhat more upbeat on U.S. fortunes. The index strives to provide a"global assessment of prosperity based on both income and wellbeing," mixing together both empirical measures and survey data. The rankings are based on eight factors including economy, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom, and social capital.
No. 1 is Norway followed by perennial development overachievers Denmark, Australia, New Zealand, and Sweden. The U.S. sits comfortably at no. 10, where it's been since the first version of the index in 2009.
There are a couple of things that are likely to surprise readers, particularly the U.S.'s no. 1 ranking on health, contradicting other commonly used measures. This despite the fact that as the authors themselves note, the country is ranked 27th in life expectancy, 60th on respiratory disease, and 36th on infant mortality. The report seems to place a high value on the fact that the vast majority of Americans report being in good health with no debilitating conditions, but I'd say this might be one area where numbers like obesity rates and the number of uninsured should outweigh self-reported data.
The other big shock of the report is India, which not only comes in at an abysmal 91st out of 110, trailing countries like Mali, Guatemala, and Namibia, but has fallen 13 places in the rankings since 2011. India's economy has been growing pretty steadily over that period. I realize GDP isn't everything, but has life for Indians really gotten that much worse in the last two years?
Legatum is more bullish on China, which has jumped six places to 52nd place this year. I was interested to see the index puts the Middle Kingdom roughly neck-and-neck with Mexico, given that I wrote a piece comparing the two countries' growth earlier this year.
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