Legatum Prosperity Index

Andrew Layman:  PCB CEO

The Legatum Prosperity Index advertises itself as the “world’s only global assessment of wealth and well-being”.     Its philosophy is that prosperity is about more than just money and includes a range of circumstances that add to people’s happiness and well-being.   Among these are health, democracy, entrepreneurial opportunity, safety and freedom.      To be more specific, eight indices are explored by seeking responses from a sample of citizens in each of the one hundred and ten countries surveyed.    These indices are the economy, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom and social capital.    Where do you think South Africa ranks?    The answer is an unflattering sixty-sixth out of a hundred and ten.   This needs to be put into some perspective.   Top of the list are three Scandinavian countries, Norway, Denmark and Finland, and Sweden comes in at number six on the list.   This must be more than a coincidence – there must be something about the Scandinavian circumstance that is common to these countries, none of which, by the way, is well-endowed with natural resources.   Australia and New Zealand occupy fifth and sixth places, respectively.   The USA is tenth and the UK thirteenth.   This, a fall by one place since the last Index was published, has occasioned a fair amount of media comment in that country.    The highest-ranked Asian countries are Singapore (17^th), Japan (18^th), Hong Kong (20^th) and Taiwan (22^nd).   Tunisia at forty-eighth heads the countries in Africa and it is nine places better than Botswana which is the next African country in line.  Morocco (at 62nd) is also ahead of us.   China is fifty-eighth, India eighty-eighth and Brazil forty-fifth.    At the very tail of the list is Zimbabwe.

Brazil is often likened to South Africa as being at a similar stage of development.    Brazil’s economy is much stronger than South Africa’s and it ranks thirty-second in this category by comparison with our seventy-seventh.   We fared better in entrepreneurship and opportunity and governance being ahead of Brazil in both and also comfortably within the upper half of the ranking table.   As may have been expected, South African weak points are education (seventy-eighth against Brazil’s seventy-fifth), health where we sit at a lowly eighty-eighth and safety and security which is even lower at ninety-seventh.   Another aspect which dragged us down badly – it is reflected in the health position – is the comparatively low life-expectancy age.   The latest data (2008) suggests this is only fifty-one, far behind the Western world whose medical traditions we strive to emulate, and twenty-one years lower than Brazil.

Not much of this information is a surprise, especially as far as South African weaknesses are concerned.     There is no doubt that prosperity, in terms of the Legatum philosophy, would improve if we had better education, better public health service and less crime.   To some extent, these have all enjoyed priority for a number of years, but improvement has been slow, if there has been any at all.    What is more significant about the first two issues in particular is that they contribute towards the sort of chronic poverty which afflicts so many of our people.    It is challenge enough to find the way of helping people to be free of poverty, but it is even more pressing for the country to ensure that children do not have ton inherit poverty from their parents.     All too often the deprivation of parents, either in material terms or in relation to other capabilities, is passed on to the younger generation which cannot liberate itself from this prison.  

It is for reasons such as this that development cannot be seen simply in terms of GDP growth, or in any other common economic statistic.    It is equally invalid to relate development to welfare grant funding, for increasing the grants, as we are doing year by year, is not sustainable without significant growth.     The so-called ‘trickle down’ effect seems to me to be a myth, but in any event, a trickling down will not solve our social problems – we need a cascade at least.    We have to find a way to spread prosperity and while it is unpalatable to speak of wealth redistribution, we can make an effort to ensure that the inequalities in health and education are not perpetuated on the basis of material wealth.       

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