Any sex therapist will tell you: it’s not what you’ve got, it’s what you do with what you’ve got. Exactly the same principle applies in economics. Economic headlines focus on the growth of Gross Domestic Product (GDP). The underlying assumption — rarely stated — is that if the economy is growing, we are getting better-off. In reality, however, the link between economic growth (what you’ve got) and human well-being (what you do with it) is fuzzier than that.

Don’t get me wrong: I’m not some kind of nostalgic, anti-growth hippie. We clearly need more of the goods and services that make it possible to live full, secure lives — including child care, public housing, and environmental rehabilitation (all of which add to GDP as surely as Hummers and iPods do). Indeed, most social problems — like poverty and inequality — get worse when the economy is not growing.

So economic growth produces resources which, hopefully, can be used to improve the quality of life. But growth, in and of itself, does not do the trick. It all depends on how growth is managed, directed, and distributed.

A striking indication of this truth can be found in the recent UN ranking of countries according to “human development.” Canada came fifth in the 2005 report (down one from last year). The ranking is an amalgam of three different measures: life expectancy, education, and material prosperity (proxied by GDP per person). So it’s a more concrete indicator of well-being than GDP — although there are still problems with the methodology (for example, it only considers average GDP, not income distribution).

There’s one especially fascinating segment in the UN report, which shows the difference between a country’s human development ranking, and its ranking according to GDP per capita alone. This measures how effectively a country translates what it’s “got” (in GDP terms) into actual well-being.

A positive number shows a country does better than average at translating economic progress into human progress; a negative number indicates the reverse. Canada’s score on this measure is +2: that is, we rank slightly higher on human development grounds (fifth) than according to GDP (seventh). The U.S. is -6: it is relatively ineffective at translating its vast material wealth into human well-being (a fact sickeningly obvious to anyone who watched TV in the past while). Compassionate Sweden scores +14: Sweden tied Canada in human development, with per capita GDP that is 15 per cent lower.

Here’s the real shocker: a small Caribbean island was best at converting economic output into social well-being. Cuba ranks 52nd in the world by social progress — a full 40 places above its position in the GDP ranks. In the human development sweepstakes, therefore, little Cuba hits farther above its economic weight than any other country in the world.

There are many visible indicators of Cuba’s success in turning mere output into genuine progress. Its health care and education record is comparable to developed countries, not the Third World (its life expectancy, for example, matches that of the U.S., and its infant mortality rate is lower).

Cuba’s response to natural disasters provides another, timely, contrast. Like the U.S. Gulf Coast, Cuba experiences many hurricanes. It suffered a direct hit from the Category 5 Ivan last year. Two million people were evacuated (to schools, public buildings, and private homes — not lawless sports stadiums); not one died.

Of course, free-market-lovers are spitting up their cappuccino by now. How could a country with central planning and Communist rule be effective at anything? And what about the virtues of “economic freedom” — that is, the right to be free from taxes and government intervention. Their argument, never convincing, is suddenly downright surreal. The residents of New Orleans were free, all right: free to be left to drown in a nursing home, or free to be robbed and murdered once the storm had passed.

Fidel Castro’s cheeky offer to send 1100 doctors to help the U.S. with its current humanitarian crisis was predictably rejected by the Bush government. But the island nation does us all a potentially greater service. Even when times are tough and material wealth is scarce (as it is in Cuba), a society that pulls together and identifies the right priorities, is a society that can still do an awful lot of good for its people.

Jim Stanford

Jim Stanford is economist and director of the Centre for Future Work, a progressive labour economics institute based in Vancouver. He has a PhD in economics from the New School for Social Research in New...