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Chapter Summary

Folbre, Nancy 2001. Measuring Success, in The Invisible Heart. New York: The New Press. Pp 53-82.

Folbres central point in this article is that economic pressure can reduce quality and we need to re-evaluate, and substantially revise, the ways we use to measure and reward success in the economy. Singular reliance on dollars as a measure and financial profit as a motive can undermine intrinsic motives like civic responsibility an unforeseen long-term cost.

Discussing issues of quality in care industries health, child care, elder care, education and social services - she illustrates that competitive pressures can have perverse effects, particularly in areas of the economy that have to do with intangibles. Since personal and emotional inputs are difficult to measure and monitor and therefore add to a bill - they are usually left out when there are incentives to minimize costs. But they are important components of the service that add to, or even define, quality. The ways in which these care industries are structured under competitive pressures to reduce costs therefore have significant implications for the welfare of those being cared for, and obviously, for the women workers who constitute a significantly larger proportion of workers in these sectors.

Cheapening Care

Costs of health care have risen sharply and need to be brought down, but privatization may not be the answer. The notion of competition in care industries is problematic as non-profit/public providers often have to play by different rules (e.g., private hospitals must provide emergency care to indigents, provide learning opportunities for interns and residents; public schools cannot refuse admission to any student, etc). A study found that several indicators of care quality are significantly lower in for-profits than non-profit HMOs. The pressure to cut costs has

  • in hospitals, squeezed out empathy, emotional support and a personal relationship with the health-care provider, which have significant therapeutic effects. Reduced hospital stays shifts costs to family and friends (without pay) with potential negative health impact.
  • In health management organizations (HMOs), negative incentives have been created - limited amount of treatment for mental illness, encouragement for doctors to reduce diagnostic procedures and hospitalization, exclusion of unhealthy people from membership, elimination of coverage for seniors on Medicare, less time spent on clinical examination and patient education.

Elder and Child Care

Private nursing homes and child-care institutions also provide cause for anxiety about quality

  • Nursing-home residents almost two-thirds are indigent and rely on Medicaid to pay expenses have no choice about where or how they will be cared for; their complaints about abusive behavior are often ignored. About 40% of nursing homes repeatedly fail to pass the most basic health and safety inspections. In the cost-cutting effort, wages of workers are low, working conditions difficult with understaffing, there are high turnover rates, high rates of injuries and high levels of stress and burnout. Regulation of staffing ratios exists in only eighteen states. - Child care is somewhat better though wages are very low, workers relatively unskilled (few states require training qualifications) and turnover rates high. High quality care can improve childrens development, but physical and emotional environments in many child care centers remains inadequate due to poor regulation.

Doug and Dow Jones

We need to rethink what the economy really means. The Dow Jones index reveals little of the fluctuations in wages, unemployment or costs of essential services for the ordinary people. An overall average of what people are earning she suggests naming it the Doug Jones index- would better serve the purpose of describing what was happening to ordinary people.

The Gross Domestic Product (GDP) supposed to represent the market value of all goods and services bought and sold within a country is seriously distorted.

  • Doesnt take depreciation of buildings and equipment into account
  • Imputes values when some services do not fit into the accounting framework used, e.g., owner-occupied housing for which no rent is paid.
  • It is too low as no attempt is made to include even the imputed value of domestic work preparing meals, washing dishes or caring for children. The usual reasons proffered for not including these are that its just too difficult to estimate their value, or putting a price on such would demean its essential character, they are a moral responsibility rather than a calculated exchange. Without advocating that everything should be reduced to a dollar value, Folbre says its important to have even a lower-bound estimate for this, as it represents socially important activities; and constitutes much of the work that takes place outside the labor market- this amounts to about half of all work. By imputing values, some estimate that non-market work amount to between 30-60% of the value of all goods and services sold.
  • It is therefore not only too low, but inaccurately reflects changes in the economy over time. For e.g., as married women moved into market work, they reduced the time spent on not-counted work making economic growth seem more rapid than was what it actually has been. The proportion of time spent by men and women in different kinds of work over time, their shifts from and into the market. Folbre suggests systematic time-use data would help reflect this (and can be used to calculate the Dolly Jones index!).

GDP vs. MEWs

There is also the need to reevaluate the meaning of all these measures. The GDP is cannot effectively show up relative development across countries as it does not include the value of the natural resources, so no account is taken of their loss or depreciation due to pollution. The value of timber logged is included, but no deduction is made for loss of natural capital and the value of all other species ecologically dependent on the trees. More accurate measures measures of economic welfare (MEWs) - are necessary. The success story of Indonesias 7% GDP growth in the 1970s looks different when depreciation of natural stock is factored in closer to 4%. The picture of our rising standards of living also look very different if we consider Sustainable Economic Welfare (SEW), which adds the value of non-market services and subtracts the costs of pollution, resource depletion, and long-term environmental damage it turns out per capita SEW was lower in 1990 than 1966.

Investing in Human Capital

Though human capital defined in terms of levels of education and experience is considered an important factor of production, the GDP calculations take no account of how and where it is produced and nurtured in families and communities. Contributions both to the quantity and quality of human stock are ignored. Though emotional skills have been shown to have a significant impact on economic success, contributions of families and communities in maintenance and development of emotional skills are ignored.

Also, investments in health and education as counted as expenditure rather than investments. Even though such investments have been acknowledged to have a high rate of return, increased spending on health and education often is viewed as slowing down growth ! Better ways of measuring the hidden time and effort of families and communities in nurturing and developing human capabilities are necessary, in addition to changing the ways that economists include them in the calculations.

The Human Development Index

However, there are limits to thinking in terms of costs and benefits economic development is only valuable to the extent it helps us pursue human development. A list of conditions for happiness could include to receive from birth the best cultivation of our natural powers physical, mental, moral and practical and to know how to give this training and education to others. Rise in incomes is often argued to be a reasonable indicator of our ability to develop our capabilities, but health, education, etc can be very unevenly distributed. (E.g., life expectancy of black men in Harlem, NYC, is lower than that of inhabitants of Kerala, India.) The HDI is an average of life expectancy at birth, child enrollment ratios and adult literacy rates and is adjusted to per capita income. Comparision of countries over time using this indicator reveals that higher GDP does not necessary imply a better performance in other aspects of human development, especially for developing countries. Other indices, which measure quality of life, are the Gender Development Index, Gender Empowerment Index and Human Poverty Index.

Social Concern

The social context in which markets operate is also important, as the way that individuals work together can make a group more or less than the sum of its parts. Love, trust and reciprocity are important variables in this, and pursuit of short-term self-interest can lead to opportunistic behavior that undermines long-term relationships. These aspects of our social and moral environment, which contribute to positive economic outcomes, need to be measured. Efforts have been made to measure the degree of civic participation, for example but more research is required. . The term social capital is often used to refer to the productive elements of a social environment, but Folbre finds the term misleading, as different people use it differently to denote extent of social networks, good cultural values or other aspects. Also, it is rarely defined to include feelings or emotions, though feelings like empathy and concern for others are critical to developing trust, cooperation and a fund of goodwill.

The Dow of Wa

Whatever it is called, this feeling is important to productivity particularly where work is difficult or expensive to monitor such as in care-giving. The Japanese notion of Total Quality Management based on a culture of cooperation, which has enabled global dominance in some industries, is similar to their traditional cultural emphasis on wa or harmony wa builds on amae, a familial affection between associates. Though recent Japanese economic problems have been much discussed, it is important to remember that if we redefine our conventional notions of success, the picture changes crime rates in Japan are only about 1/4th that in the US. The concept of social concern, similar to old-fashioned notions of solidarity may be a more representative term.

Folbre concludes with a reiteration that we cant continue to visualise the economy in terms of things that can be easily counted and weighed we need to devise measures for the kinds of things and successes we really care about. Without this there will be no reward for the behaviors we value most and which are important for a better life and economic success.