For the first time, the U.S. is no longer one of the top 10 prosperous countries, as ranked by the 2012 Legatum Institute’s Prosperity Index. Legatum, a non-partisan, independent think tank based in the UK, uses eight metrics to determine their Prosperity Index that combine both hard data and survey results on how citizens feel. The eight metrics include: economy, entrepreneurship and ownership, governance, education, health, safety and security, personal freedom, and social capital. Taking these sub-indices into consideration, Norway is ranked the most prosperous country in the world and the U.S. has fallen to 12th place.
As detailed in a post by the Index’s Program Director, while the U.S. may have the greatest economy based on GDP, overall, the country is experiencing a slow decline. In addition to a declining economy, the U.S. fell in governance, personal freedom and entrepreneurship and opportunity. Among the greatest decreases, the U.S. fell eight places in the entrepreneurship and opportunity sub-index and fewer Americans now believe that hard work will get them ahead in life.
Yet, the results are more than just evidence to show the continuing declining stature of the U.S. The Prosperity Index, like other alternative metrics, shows us how important it is to move beyond GDP. The longer we have a blind focus on GDP as our primary measure of progress, the more we fall behind. If, however, these alternative measures are taken into consideration, we can begin focusing on the areas in which we are falling behind and begin to shift course.
For example, falling eight places in entrepreneurship and opportunity means there is a serious decline in opportunity and innovation.
This trend can be reversed through smart investment that provides necessary capital for emerging ideas, like the federal Small Business Innovative Research program, and supporting policies to reverse the increasing wealth divide. People feel like they don’t have opportunity when they continually work hard without getting ahead. Working families can find relief through simple policy measures, like increasing the minimum wage and providing paid time off so people can take care of themselves or others without risking their job.
Instead of seeing the new Prosperity Index’s ranking as reason for gloom and doom, we should see it as a harsh wake up call. The narrow view of GDP does not help us progress. Adopting alternative metrics can provide the information we need to enact smart policies and start to reverse our decline.