Mahbub ul Haq Reflections on Human Development. New York and Oxford: Oxford University Press, 1995, Pp. 252.
by Michael Kevane
Every teaching economist confronts the problem of justifying the fixation on GNP as a measure of national well-being. Students always anticipate the practical problems of valuing ‘bads’ like pollution, crime, suicide and poverty. They resist theoretical browbeating (With these household-specific shadow prices, national income is the right measure...") At the end of the day, everyone is happy to move on with the apology that there is no reasonable alternative. Mahbub ul Haq offers a way out of this unsatisfactory dilemma. He led a team of economists at the United Nations Development Programme in developing the Human Development Index (HDI). Produced annually since 1990, the HDI aggregates GNP per capita, literacy levels and life expectancy. The power of the index is not its theoretical rigor, but rather its practicality. It has become a reasonable alternative to GNP in ranking countries according to well-being, and is used extensively in classrooms. This book, a collection of short magazine-style essays, presents some of the development and welfare issues suggested by the HDI.
Half of the essays are proposals for a more human-oriented and sustainable development. Few will argue with the thrust of these appeals to decency: every child should have the opportunity to drink clean water and attend a primary school to learn to read and write. The specifics, however, are a hodgepodge of ideas (e.g., an Islamic Science Foundation, increased reporting of military transactions), some of which border on the utopian (p. 120: "What we must insist on today is a compensation package from rich nations for imposing immigration controls..."; and Chapter 16, a call for an Economic Security Council to match the present U.N. Security Council). The lack of focus is unfortunate: the author has a serious and modest proposal to have donors and developing countries alike target twenty percent of their budgets to human development. This ‘20:20 vision’ should have been the central concept of the book, bolstered by an analysis quantifying the improvements in the HDI, especially in terms of the tradeoff between possibly slower GNP growth and faster progress in literacy and life expectancy. Instead we find it buried in Chapter 15, almost an afterthought.
The core of the book explores three propositions: (1) GNP growth alone will not satisfy the basic needs of the world’s poor; (2) implementation of a basic needs agenda is feasible through reallocation of spending; and (3) an unholy alliance of ‘shock therapists’ and Bretton Woods institutions is impeding redistribution and provision of basic needs. Two chapters use the HDI to demonstrate the lack of close correlation (assumed in so many classrooms) between GNP and a country being ‘better off’. Countries with relatively high GNP per capita often have low levels of basic needs (Gulf States, Iraq, Brazil) while countries with low GNP may have high levels of basic needs (Sri Lanka, China, Cuba). The HDI also reveals the enormous change in real living standards in developing countries. GNP statistics show relative stagnation, but literacy and life expectancies are improving at a rapid rate. According to Ul Haq, basic needs indicators are now 66%-85% of North levels, but income is still only 6% of the North. While the world remains miserable for many, the nature of the misery is changing.
This fact poses a paradox that Ul Haq does not seem to want to recognize or address. The numbers show that the basic needs problem is improving rapidly, while the income issue seems more intractable than ever. We have, however, Ul Haq arguing that creating new institutions for satisfying basic needs is more urgent than ever, and a "Washington consensus" that proclaims that the problem of raising incomes has been solved. Should we not have the reverse? Should we not have Ul Haq consolidating the lessons learned in providing for this most remarkable transition in human potential, and arguing for the urgency of an alternative to the "Washington consensus" solution of no budget deficits, no government intervention except for basic needs, and no restrictions on trade and multinationals? It is almost as if Paul Streeten’s caustic aside, in his forward to the book, is coming too close to the mark for comfort: life expectancy and literacy are becoming quite high in a well-managed prison of relative poverty.
In this context Ul Haq misplaces his blame of the World Bank the ‘shock therapists’. He argues they have taken only tentative steps in the direction of effective poverty alleviation. (The Bank, in his view, ignored the military expenditures of borrowers, took an overly legalistic approach to the Charter’s injunction against ‘political’ considerations, and lent more to small poor countries than to the handful of Asian countries with the most poor people.)
The problem was not that aid and conditionality did not generate improvements in basic needs. Indeed, if Ul Haq’s brief discussions of his experience as Planning and Finance Minister in General Zia’s government in Pakistan are to be believed, exactly the opposite seems to be the case. Even under that repressive and corrupt regime, in the middle of an era of heavy military expenditures, basic needs continued to improve.
The problem, in this reviewer’s opinion, was that the World Bank and other international advisers, and Ul Haq himself, seem to deliberately avoid discussing or acting upon the political economy problems of rent-seeking, ‘wars-of-attrition’, struggles over meaning, corruption, etc., and the frustrating theoretical concepts of multiple and path-dependent equilibria. Instead they continue to characterize countries in the developing world as nations with elites lacking political will and poor people unable to mobilize for their own interests, all of whom deviate from the unique path to development. The World Bank should concentrate on growth, but in a way that acknowledges, learns from and corrects mistakes much more rapidly than has been the case.
Is the book worthwhile? It certainly does not live up to its potential. The essays are useful as introductory material for undergraduates, but Ul Haq eschews analysis of the deeper philosophical issues of human well-being, the technical issues of how to construct an index summarizing well-being, and the political economy issues of how a society actually and historically improves well-being. On the other hand, chicken soup never lives up to its potential and that doesn’t stop it from being useful, especially when you have a cold.