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(subtracting various “bads” such as pollution, congestion, and resource depletion from the standard GNP accounts), starting with the Measure of Economic Welfare (MEW) pioneered by William Nordhaus and James Tobin. The Genuine Progress Indicator (GPI) is a similar initiative to correct GNP for several factors such as inequality, congestion, and pollution. In 2005, the Economist Intelligence Unit demonstrated that “quality-of-life” across countries is reasonably well explained statistically by a combination of measurable economic, political, health, job security, and community indicators. Many scholars have confirmed similar results in recent academic studies.27 Recently the French government convened a commission headed by Joseph Stiglitz and Amartya Sen to propose a new set of indicators, and in 2010 the U.K. government announced that it would directly monitor subjective well-being in annual surveys.28

It is time for the United States to take seriously the measurement and monitoring over time of Americans’ well-being. Two key facts—that self-reported happiness has been stuck or even declining as income has grown and that the United States is falling behind many other countries in happiness and its underlying determinants—make this new effort especially urgent. Table 10.2 illustrates the kind of well-being measures that would be collected each year in addition to the standard national income accounts. Gallup International, for example, uses opinion surveys to assess the average “life satisfaction” in 178 countries by asking “All things considered, how satisfied are you with your life as a whole these days?” The OECD has created an index of child well-being that aggregates over six dimensions: material conditions, housing, education, health, risk behaviors, and quality of school life. Other indicators might include variables such as life expectancy, student test scores, and the poverty rate, all shown in the table. Clearly, the United States has its work cut out for it to raise its standard of average well-being compared with what other high-income countries are achieving.

Table 10.2: Indicators of National Well-Being (Rankings, with 1 = “Best”)

Source: Gallup, OECD Statistical Databases, World Health Organization.

CHAPTER 11.

Paying for Civilization

In fiscal year 2011, the federal government covered around 39 percent of its spending, roughly $1.4 trillion of $3.6 trillion, by borrowing.1 Each year’s borrowing adds to the total public debt. In 2007, the government debt held by the public amounted to around 36 percent of GDP.2 By 2015 the debt is expected to soar to 75 percent of GDP.3 Some economists try to tell us not to worry as we rack up the debt. They pitch tax cuts today as a demand stimulus (according to the Democrats) or a supply stimulus (according to the Republicans), without telling us about the long-term costs. I have my serious doubts about such shortsighted arguments.

As the debt rises, the burden of paying the interest on it will rise as well. Today we spend around 1.5 percent of GDP to pay the interest.4 By 2015, it could be around 3.5 percent of GDP. By 2020, it could reach 4 percent of GDP or more. This interest servicing will crowd out other vital spending, for example for infrastructure or help for the poor. Or it will require a hugely contentious tax increase, with revenues that instead should have been used for essential public goods. Or it will cause a future financial crisis as global lenders lose confidence in the capacity and willingness of the U.S. government to honor its debts other than by inflation (printing money to pay them off). It’s better, therefore, to try to stabilize the debt relative to GDP and then begin a process of gradual reduction in the debt-to-GDP ratio.

This chapter, then, is about our government paying its bills on time through adequate tax collections, rather than borrowing from the future. As the great Supreme Court Justice Oliver Wendell Holmes, Jr., wrote, “I like to pay taxes. With them I buy civilization.”5 It is a sentiment utterly unrecognizable in