
Rich Countries Often Fail to Bolster Well-Being, Boston Consulting Says - antouank
http://www.bloomberg.com/news/articles/2016-07-20/rich-countries-often-fail-to-bolster-well-being-boston-consulting-says
======
Dwolb
There's a fundamental issue with this report. It doesn't provide insight into
why these indicators for well-being are important.

For example, Exhibit 2 in the linked report [1] shows 44 indicators that make
up well-being. These range from inflation volatility to carbon dioxide
intensity.

Now I have no doubt that those indicators may tell you something about
society, but how do we know these indicators tell you about well-being?

Put in another way, how can I tell that these indicators should be included at
the level importance this report gives them?

Kudos to the report authors for number crunching and making nice charts
though.

[1] (Warning: pdf) [https://www.bcgperspectives.com/Images/BCG-The-Private-
Secto...](https://www.bcgperspectives.com/Images/BCG-The-Private-Sector-
Opportunity-to-Improve-Well-Being-Jul-2016.pdf)

~~~
humanrebar
> Put in another way, how can I tell that these indicators should be included
> at the level importance this report gives them?

Absolutely. Also:

* What is the relative importance of the indicators? How much GDP growth is worth a crackdown on the freedom of the press?

* How sure are we that we can even assign a numerical value to these things? How do we compare American corruption to Mexican corruption, which clearly present differently? Can we even say one is worse than the other, let alone 23.2% worse?

~~~
jdavis703
Corruption is generally measured as people's perception of corruption, which
should help to normalize something that is culturally nebulous. Secondly if
corruption becomes really bad it'll bleed into other numbers like GDP growth
(see China), pollution (oil leaks and spills in Nigeria) and even life
expectancy (recent crisis in Venezuela).

------
lumberjack
Here's something interesting: The US has the second highest corporate tax
rates of all OECD countries, whereas most EU countries have much higher
personal income taxes.

Now this might be misleading. My roommate is a corporate/tax law student and
he was dumbfounded by this. He pointed out that the effective tax rate might
be quite different.

In any case it's not what you expect.

>[https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates](https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates)

~~~
dragonwriter
Tax rates are pretty meaningless to compare because of differences in credits,
deductions, and methods of calculating tax base. And, for that matter,
different sets of taxes affecting the same entity with different names.

~~~
sandstrom
In the US especially (and also a large extent in Europe) companies bribe/lobby
themselves to favorable laws, so in many cases the effective tax-rate is much
lower.

For example, Apple pays an effective tax-rate around 15% (US 'official'
corporate tax is at 35%).

Apart from tax-payers loosing out on revenue it also distorts competition,
since smaller firms cannot lobby and evade taxes to the extent larger firms
can, leading to lower ROE and thus less investment.

~~~
rayiner
While your points are true, the third does not follow from the first two.
Favored industries do get tax breaks, though more for garnering targeted votes
than lobbying. That's why Exxon pays 15% and WalMart pays 30%.

The tech industry, including Apple, largely does not benefit from targeted tax
breaks. They lay low taxes because they deal in IP and have international
operations, which allows them to easily shift taxes to lower-tax
jurisdictions. It's easy to look at Wal-Mart's supply chain, which involves
widgets, and see where costs were incurred and profits made. Much less so with
Apple.

And those tax rules tech companies take advantage of are not loopholes or tax
breaks. They're reasonable and sometimes intrinsically necessary tax rules
that can be arbitraged in an international system (often with the explicit aid
of legislatures in countries like Ireland).

~~~
sandstrom
I agree that Apple has international operatings allowing them to shift taxes
to lower-tax jurisdictions. That's partly how they evade paying taxes.

One trick is to park it abroad and lobby for tax-amnesty (a horrible name
btw):

\- [http://www.bloomberg.com/news/articles/2016-01-03/jokowi-
see...](http://www.bloomberg.com/news/articles/2016-01-03/jokowi-
seeks-2016-kick-off-for-tax-amnesty-plan-seen-as-flawed)

\-
[http://archive.fortune.com/2011/02/16/news/companies/repatri...](http://archive.fortune.com/2011/02/16/news/companies/repatriation_lobby.fortune/index.htm)

Another one is to use the money parked abroad (i.e. not yet taxed) to buy
expensive things and then write down most of the asset a year or two later.

\---

    
    
        "[they] are not loopholes or tax breaks. They're reasonable and sometimes 
        intrinsically necessary tax rules that can be arbitraged in an 
        international system"
    

Sounds exactly like tax-evasion to me! :)

\---

Also, to be clear, I love capitalism and happen to think that 35% corporate
tax is a bit too high (~25 feels reasonable).

What I don't like is larger firms having lower rates (unfair) and many
countries loosing out on tax revenue with a few 'tax havens' getting loads of
tax-revenue while producing nothing of value -- Luxembourg, Lichtenstein,
British Virgin Islands, Ireland (to some extent) etc.

~~~
adrianratnapala
No. That's tax avoidance. Evasion is when you actually don't pay taxes that
you legally owe, e.g. by hiding your income.

There is some idea that people and companies have a moral duty not to organise
their affairs in a tax efficient way. But the laws they lobby for are just
what create the distortions.

~~~
sandstrom
I think it's besides the point to discuss the specific definition of
avoidance/evasion/planning/etc.

Also, many countries has a law that basically says that anything a company
does to reduce their amount of taxes without serving a business purpose is
illegal. In other words, if don't have a very good reason for why your taxes
are paid in the Bahamas when 99% of your sales is outside the Bahamas, it
won't fly in court.

I think the responsibility is with governments (though I _do_ think many
companies act immorally) to provide a fair, simple tax-system and to prohibit
and persecute tax evasion/avoidance/etc.

------
hackaflocka
For me, the red flags that this is a BS study are:

1) They're comparing countries like India and, say, Denmark (Source: Indian
here). In India, about 60% of the population shits on the streets, and injured
(lame) cows and dogs hobble around in middle of the roads in cities (where
they get food and water from is a mystery). In India there are hundreds of
cities with over a million people in them, and with not a single public toilet
maintained by the city government. I have a cousin who is a lawyer in a big,
supposedly "modern" city (Gurgaon). I once went to the courthouse with him.
There was 2 inches of standing water every where in the building. You simply
cannot compare India and, say, Denmark.

2) The reference point effect. Kahneman talks about this extensively. If the
local police are constantly harassing me so that they can be bribed (India),
and one less policeman harasses me to be bribed, my well-being is considerably
more "bolstered" than if I'm living in, say, Denmark, and instead of 0%
sustainable electricity being fed into my home, I now have 10% sustainable
electricity being fed into my home.

3) Boston Consulting is going to fund studies (and shape outcomes) that make
bureaucrats in rich countries go, "hmmm... maybe we should hire them to
'bolster' our well-being".

Sorry for being so cynical. But consultants are not exactly neutral parties in
my opinion.

------
marcusgarvey
Interesting to read the actual report (edit: actually BCG's summary of the
report) and compare it with the Bloomberg article. BCG's using this report to
make the case that private sector involvement, especially from financial
services, leads to high social benefit. But this must not be a linear
relationship, or it can be strongly offset by other factors. Otherwise the
U.S. -- with all its private enterprise and as home to some of the world's
biggest/most influential banks -- should be top of the list. But per the
article:

>The United States' ability to convert both wealth and growth into well-being
is below par globally, while Germany manages to perform above par on both
fronts.

[https://www.bcgperspectives.com/content/articles/growth-
glob...](https://www.bcgperspectives.com/content/articles/growth-
globalization-private-sector-opportunity-improve-well-being-2016-economic-
development-assessment/)

------
mrweasel
At a certain point, in order to increase well-being, you will have to do
things that could limit growth in a country. For instance, I believe that the
Nordic countries are at a point, where the best way to improve well-being (in
terms of health and quality of life) would be to reduce the work week to 30
hours.

Sadly that not really consistent with a desire for increase customer spending
and financial growth.

After a certain level of "well-being" the cost of reaching the next level
becomes prohibited and the measure of success hard to judge.

~~~
maxerickson
I wonder how much impact changing employment laws to use a shorter work week
would really have on productivity.

I bet the US could change regulations around the 40 hour work week to a 36
hour work week with almost no impact on productivity. Per hour productivity
might even go up (if the amount of non productive hours dropped).

Of course jobs with a more direct relationship between time spent and
productivity would see some reduction in the output of their full time
workforce, but they could make this up with a modest amount of overtime.

------
known
"The greater the diversity in a community, the fewer people vote and the less
they volunteer, the less they give to charity and work on community projects;
In the most diverse communities, neighbors trust one another about half as
much as they do in the most homogenous settings."
[http://www.boston.com/news/globe/ideas/articles/2007/08/05/t...](http://www.boston.com/news/globe/ideas/articles/2007/08/05/the_downside_of_diversity/)

~~~
fdsaaf
And it's sad that acknowledging this reality is something you can't do in the
workplace or in polite company. If we're to get ahead in life, we have to say,
through gritted teeth, "diversity is our strength".

------
objectivistbrit
"The SEDA, or Sustainable Economic Development Assessment ranks more than 160
countries across 10 areas including economic stability, health, governance and
environment."

A country's SEDA score could easily go up or down drastically based on the
weighting of those 10 different areas.

The purpose of GDP is to give a precise measure of our intuitive notion of
"prosperity". This is an inherently flawed goal. GDP roughly corresponds with
what we want to measure -- countries with higher GDP usually match those we
intuitively regard as more prosperous. But, having citizens buy foreign
holidays and plasma screen TVs with credit card debt boosts GDP. New
technology which cuts the cost of some good can lower GDP. It's a flawed
measure.

As with "Gross National Happiness", SEDA strikes me as an attempt to find an
alternative to GDP which measures "what we really want to get at". The thing
is, "happiness" is both personal and complicated.

I'm sure the society depicted in Brave New World would have both a high GDP
and high SEDA score but it's not what I'd regard as bolstering "well-being".
Conversely, I'd be pretty happy living in an Anathem-type society (monasteries
filled with scientists and philosophers), even though they lived in material
poverty.

------
yyyuuu
Internet has played an important role in developing countries. The
western/rich countries may have already reached a kind of plateau of
streamlining of services facilitated by Internet, but for the large part of
developing world, Internet has started to emerge as a major force only in the
last decade or so.

E-commerce, easy/free availability to information/knowledge etc .. are all
changing the social and economic landscape in developing countries rapidly and
this change is going to continue where there is even a partial political will
for it do so.

------
bsbechtel
When GPD growth slows, the only way to net personal gain is through another's
loss. If you assume well being does have some sort of financial price tag tied
to it, then this makes sense that someone's well being would go down as
another's goes up, as the net for the whole economy doesn't change.

~~~
cashmonkey85
That's a strong case of what I like to call the zero sum delusion. There's no
reality to that you are saying

~~~
bsbechtel
The zero sum delusion assumes someone only gets rich by taking from another.
The delusion is that this is the ONLY way to generate wealth. When you create
new markets and new products, the economy grows and everyone is better off.
When the economy doesn't grow, the only way one person is better off is
someone else is less well off. These are two different cases.

------
legulere
It's easier to catch up, than to rise ahead, so this is hardly surprising.

~~~
fauigerzigerk
I doubt very much that catching up is easier to do. If it was so easy we
wouldn't see huge differences between different countries.

There are a lot of self reenforcing factors that keep countries back for a
long time. Bad governance, corruption, violence, bad investment decisions,
inefficient legal systems, debt, terrible infrastructure, bad health and
education, smart people leaving the country, etc. It all feeds on itself and
its very difficult for a country to escape that spiral.

~~~
eeZah7Ux
Having to compete against more powerful countries might very well be the
biggest factor.

~~~
icebraining
How do you figure?

------
paulpauper
The reason seems obvious: diminishing marginal returns.

