Lately we’ve been bombarded by statements regarding purchasing power from pundits on behalf of important economic stakeholders in the country. But is purchasing power really a correct metric to measure nations’ development?
Indonesia is a vast country of thousands of islands with one of the most diverse population. That fact alone poses a big challenge to collect data needed to construct proper statistic. But assuming Central Agency on Statistics (BPS) had done great job gathering economic data, has it done enough?
There is no doubt that there is a need to have some metrics to measure the level of nations’ development, mainly to hold all the nations’ stakeholders accountable. Another important usage of this metrics is to justify (and attract) foreign and domestic investments, government spending, adjust tax rate, and so on. Obviously the quantitative metrics are the easy ones to come by. GDP, inflation, Consumer Price Index (CPI), unemployment, and manufacturing output are the most commonly used.
What about buying power?
The writer noticed that there have been some disagreements between pro-government and the opposition. First of all, it’s not easy to reconcile two opposing side when neither agree to use the same source of information. One came from tax revenues of logistic and courier service providers, and the other one came from ‘traditional’ retailers and some alleged sentiments from some people.
Buying power is derived from CPI and personal income adjusted to inflation. Why the opposition chose buying power, a metric that is derivative, difficult to verify, and not easily calculated at best, instead of CPI and/or inflation? The writer will never know.
The writer remembered over a decade ago there was a small country suddenly came into the limelight when it topped the Gross National Happiness index. It was Bhutan. Many since questioned the credibility of this index, but dispute aside, by traditional economic measure, this nation did not really tick all the boxes. Have we all done wrong by measuring less than relevant things? Their economic numbers were not wrong. Shouldn’t we ask the question: don’t we all want to be happy?
It is unfair to blame the current practice to measure the nations’ progress using economic numbers. With proper practice, numbers do not lie. At minimum, economic numbers provide crude but good approximation of the nations’ progress. But many countries are now more than ever interested to look beyond economics to measure their success. For many years, several indexes have been used to supplement the economic figures. United Nations releases Human Development Index and Annual World Happiness Reports. OECD releases Better Life Index. It is true that rich people tend to be happier, but it is not always the case for society in general, and of course in countries. At least that is what those indexes shows.
As societies (and nations) grow up, so does the awareness of the importance of quality of life beyond the economics. Everybody would be faced by questions about what really matter most in life, has freedom to find out what those are, has the fair opportunity to achieve them, and decides how to share their success with others and most importantly with the environment for generations to come.
Barcelona, October 9, 2017.