This page considers measurements of the types of harm included in our website. It will show various ways of measuring harm or concepts related to harm. They do not have the same methodology by any means. This will only give an approximate idea of harm and its components, one certainly that could be refined and discussed. But what will emerge is at least a first look at the issue and a better perspective on its importance. Click on the links below to go to a specific subsection.
Inequality and harm
Harm through the market
Obtaining income through the government
Discrimination against women
Control of land and natural resources
Slavery, forced labor
Inequality and harm
Income and its distribution
There is no overall measurement of harm. However, there is measurement of income inequality throughout the world. The operation of a harmful economic system causes inequality. Nonetheless there are other causes of inequality other than harm. Certainly, resource endowment and climate would be examples of two factors that could cause inequality between countries. This suggests that looking at inequality would give us some sort of outer bound for harm. Income inequality and harm.
Consider the following table.
Share in National Income by Percentiles/Average Income of Top 10% as Percentage of Bottom 50% 2016
|Country||Top 10%||Bottom 50%||Av. Inc. Top 10% /|
Av. Inc. Bottom 50%
We see a stark picture of income inequality. For each country listed and the world, the top 10 percent of income earners as a group obtain much more than the entire bottom 50 percent. The bottom half of income earners in the United States only receive 12.5 percent of national income, while the top 10 percent receive almost half of national income. Across countries, the average income of the top 10% is many times higher that that of the bottom half: 18.7 times greater in the United States.
Since 1980 there has also been a substantial increase in the share of the top 10 percent in national income. In the United States, for example, it has increased from 35 percent to 46.7 percent. It is alarming to see that 10 percent of the people of the people get almost 50 percent of national income.
Since 1980 there has also been a substantial drop in the share of the bottom 40% in most countries. In the United States it went from 14.5% to 8%. (The share of the bottom 40% in world income went up somewhat, because lower income countries such as China increased their income share relatively to developed countries such as the United States. )
The capabilities approach
The approach adopted in the UNDP’s Human Development Report (HDR), first begun in 1990, is that human development is a process of enlarging people’s choices. The most critical ones are to lead a long and healthy life, to be educated, and to enjoy a decent standard of living. (Additional choices, not gone into in the report or index, include political freedom, guaranteed human rights and self-respect). Development consists of the expansion of individuals’ capabilities or freedoms. This approach focuses on the essential reasons why we are undertaking something, rather than the means to get there. The goal is not increasing GDP, the goal is obtaining better lives, and increasing GDP is a means, and not the end. Levels of human development are not just dependent on income; there can be high levels of human development at modest income levels and poor levels of human development at high income levels. The HDR, in some basic way, is very similar to what we are looking at with harm. An important similarity is that it does recognize other important areas of capabilities/freedoms including political freedoms, human rights, and human dignity. The actual measurement of the Human Development Index (HDI) does not focus on these areas however but just on material well-being capabilities. Both take a “capabilities” or “freedom” approach. The capabilities approach focuses on expanding human capabilities. Productive + harmful economic systems work by limiting them.
The Human Development Index is an index of the three “capabilities” mentioned above. These capabilities are positive aspects of human life. The first is a long and healthy life, the second is knowledge, the third is a decent standard of living, which serves as a proxy/ability to obtain other capabilities such as nutrition. The indicators for these are respectively: life expectancy at birth, average of expected years of schooling and mean years of schooling, and Gross National Income per capita, adjusted for purchasing power parity. All are adjusted to form an index. The range for life expectancy is taken to be from 20 years to 85 years; the range for expected years of schooling is from 0 to 18 years; the range for mean years of schooling is from 0 to 15; the range for income is $100 to $75,000. The dimension indexes are calculated as actual value-minimum value/maximum value – minimum value. (See Technical Notes HDR 2016.)
The HDI is done for each country. Selected values for the HDI appear below.
Human Development Index and Inequality Adjusted HDI
|Country groupings||HDI||IHDI||Loss (%)|
|East Asia & Pacific||0.741||0.618||16.6|
|Europe & Central Asia||0.779||0.688||11.7|
|Latin America & Caribbean||.0758||0.589||22.3|
I think it is most valuable to look at the relative values for country groupings, picking developing countries, OECD representing richer “developed” countries and Sub-Saharan Africa as the least developed area and perhaps World as average progress for this indicator. So, OECD HDI – DC HDI/ World HDI = 28.5 percent. And for sub-Saharan Africa, Similarly, Sub-Saharan Africa is 48.4 percent behind OECD countries. So the HDI can give one measure of inequality between countries, and, as an outside limit of how harm affects the distribution of capabilities can be considered a as an outer bound for harm that translates into “between country” differences.
The HDI is calculated based on the average values of each of the three indicators for each country. When inequality within each country is considered, the HDI goes down. This is the IHDI and the percentage loss for each region appears to the left. Due to income inequality, world HDI is 20.2 percent lower than the value unadjusted for inequality. So if we take the OECD HDI value as what might be without inequality and as the denominator too, and taking the World IHDI value as where the world is now, we have .895 -.584/.895 = 34.7 percent.
Thus, these indices can give possible estimates of world inequality. They are not entirely caused by harm, nor are they by any means conceptually perfect, nor are they the only estimates that can be constructed. But they can can help to give an idea of the magnitude of inequality and thus harm.
Harm through the market
In The Great Reversal Thomas Phillipon took a detailed look at corporate market power in the United States, and arrived at an overall estimate. He provided the following summary :
“In my research on monopolization in the American economy, I estimate that the basket of goods and services consumed by a typical household in 2018 cost 5 to 10 percent more than it would have had competition remained as healthy as it was in 2000. Competitive prices would directly save at least $300 a month per household, translating to a nationwide annual household savings of about $600 billion.
“And this figure captures only half of the benefits that increased competition would bring. Competition boosts production, employment, and wages. When firms face competition in the marketplace, they also invest more, which drives up productivity and further increases wages. Indeed, my research indicates that private investment—broadly defined to include plants and equipment, as well as software, research and development, and intellectual property—has been surprisingly weak in recent years, despite low interest rates and record profits and stock prices. Monopoly profits do not translate into increased investment. Instead, just as economic theory predicts, they flow into dividends and share buybacks.” – T. Philipon The Atlantic
So $600 billion + $600 billion =$1.2 trillion. Current dollar US 2018 GDP = 22.49 trillion, so estimated monopoly power = 5.3 percent of United States GDP. This of course is not the only estimate possible, but as one estimate, does give us an idea of the order of magnitude of market power harm.
Obtaining Income through the Government
We consider two major studies: Transparency International’s Corruption Perception Index and Freedom House’s Freedom in the World.
Transparency International defines corruption as the abuse of entrusted power for private gain. This definition encompasses corrupt practices in both the public and private sectors. The Corruption Perceptions Index (CPI) ranks countries according to the perception of corruption in the public sector (only). The CPI ranks 180 countries and territories by their perceived levels of public sector corruption, drawing on 13 expert assessments and surveys of business executives. With a scale of zero (highly corrupt) to 100 (very clean), more than two-thirds of countries score below 50, with an average score of only 43. It is fair to say that corruption is significant in most countries of the world. Nor has there been, on balance much overall progress in reducing corruption.
Freedom In the World is an annual global report on political rights and civil liberties. The 2020 report covers 195 countries and 15 territories. The report’s methodology is derived in large measure from the Universal Declaration of Human Rights, adopted by the UN General Assembly in 1948. Its assumption, which might be questioned, is that freedom for all people is best achieved in liberal democratic societies.
Freedom in the World uses a two-tiered system consisting of scores and status. A country or territory is awarded 0 to 4 points for each of 10 political rights indicators and 15 civil liberties indicators, which take the form of questions; a score of 0 represents the smallest degree of freedom and 4 the greatest degree of freedom. The political rights questions are grouped into three subcategories: Electoral Process (3 questions), Political Pluralism and Participation (4), and Functioning of Government (3). The civil liberties questions are grouped into four subcategories: Freedom of Expression and Belief (4 questions), Associational and Organizational Rights (3), Rule of Law (4), and Personal Autonomy and Individual Rights (4). The political rights section also contains an additional discretionary question addressing forced demographic change. For the discretionary question, a score of 1 to 4 may be subtracted, as applicable (the worse the situation, the more points may be subtracted). The highest overall score that can be awarded for political rights is 40 (or a score of 4 for each of the 10 questions). The highest overall score that can be awarded for civil liberties is 60 (or a score of 4 for each of the 15 questions).
The combination of the overall score awarded for political rights and the overall score awarded for civil liberties, after being equally weighted, determines the status of Free, Partly Free, or Not Free. Because the designations of Free, Partly Free, and Not Free each cover a broad swath of the available scores, countries or territories within any one category, especially those at either end of the range, can have quite different human rights situations. For example, those at the lowest end of the Free category (with lower political rights or civil liberties scores) differ from those at the upper end of the Free group (with higher political rights or civil liberties scores). Also, a designation of Free does not mean that a country or territory enjoys perfect freedom or lacks serious problems. (Freedom in the World Research Methodology)
A country or territory’s Freedom in the World status depends on its aggregate Political Rights score, on a scale of 0–40, and its aggregate Civil Liberties score, on a scale of 0–60. The total Political Rights and Civil Liberties scores are equally weighted in this calculation and each divided into septiles, resulting in the table below.
Freedom in the World 2020 Scoring Table
Numbering the ranges on each axis from 1 (lowest) to 7 (highest), we see that, for example, if a country falls into the lowest range for civil liberties it will be classified as not free even if its political rights score is as high as 4. With scores measured in this way a combined septile rank of less than or equal to five will classify a country as not free. Similarly, with 14 the top score possible (7 in each category) countries with combined septile ranks in the 11-14 range wiIl be classified as free.
Freedom status by population and country
|Country||Status by Population (% of World Population)||Status by Country (% of 195 Countries)|
Thus 43 percent of the countries of the world are evaluated as free, while 57 percent are classified as either Not Free (25 percent) or Partly Free (32 percent). Freedom House’s statement is couched using the terms countries and freedom. It could also be couched using the terms governments and repression. These scores indicate that many countries have repressive governments and some degree of repression extends to a substantial number of countries. So, returning to the discussion above about human development being a process of enlarging people’s choices, we see that governments restrict these choices, Thus, an important part of human development consists of increasing the freedoms that government allows, or alternatively phrased, reducing repression.
Remember our distinction between the income obtained through harm and the harm caused, which can and usually does go beyond the income lost to harm. Thus we have a significant level of corruption worldwide, and a significant restriction of people’s freedom.
Considering these two together, what is the relationship between freedom and corruption/repressive governments and corruption. The basic model of an oligarchic government is that it uses the resources of the government for its own ends, two important ends being enrichment of those in control as well as staying in power. The first end mentioned is essentially the TI definition of corruption: the abuse of entrusted power for private gain. And repression/limitation of freedom is a fundamental means of staying in power for oligarchic governments.
Discrimination against women
We discuss two indices in this section, both from the Human Development Report: The Gender Development Index (GDI) and the Gender Inequality Index (GII).
GDI The GDI measures gender gaps in human development achievements by accounting for disparities between women and men in three basic dimensions of human development—health, knowledge and living standards. The GDI measures the same capabilities and the same indicators as the Human Development Index (life expectancy at birth, average of expected years of schooling and mean years of schooling, and Gross National Income per capita). It is a direct measure of gender gap in each country showing the female HDI as a percentage of the male HDI.
Gender Development Index: Dimensions and Indicators
GDI and GII for selected country groupings
|East Asia & Pacific||0.962||0.310|
|Europe & Central Asia||0.953||0.276|
|Latin America & Carib.||0.978||0.383|
Thus, we can see that, according to the GDI measure, world-wide, women are about 6 percent worse off than men, while South Asia has the worst disparity between women and men at 19 percent.
GII The Gender Inequality Index reflects gender-based disadvantage in three different dimensions—reproductive health, empowerment and the labor market. The female empowerment index is constructed by averaging the percent of the female population that has at least a secondary education and the percent of female shares of parliamentary seats; similarly for the male empowerment index. The female labor market index is the female labor force participation rate; similarly for the male labor market index. Reproductive health indicators are measured differently.
“Reproductive health indicators used in the GII do not have equivalent indicators for males. In this dimension, the reproductive health of girls and women is compared to what should be the societal goals—no maternal death and no adolescent pregnancy. The rationale is that safe motherhood reflects the importance society attaches to women’s reproductive role. Early childbearing, as measured by the adolescent birth rate, is associated with greater health risks for mothers and infants; also, adolescent mothers often are forced out of school and into low-skilled jobs” (FAQs -GII).
Gender Inequality Index: Dimensions and Indicators
The GII ranges between 0 and 1. Higher GII values indicate higher inequalities between women and men and thus higher loss to human development. The GII measurement shows much higher degrees of female inequality than does the GDI. Women’s Inequality measured this way for the world is 43.9 percent, compared to 6 percent measured by the GDI. For the OECD GII, women’s inequality is measured as 18 percent, while the GDI measures it as 8 percent. This inequality measure is above 50 percent for three regions of the world: Arab states, Southern Asia, and Sub-Saharan Africa. (See individual country measurements for the GDI and the GII.) The GII has been criticized by Iñaki Permanyer for a confusing functional form, and combining relative man-women indicators with women-specific indicators. Nonetheless, it is a measurement of striking inequality using three reasonable and important indicators.
Discrimination is practiced against particular groups, which can vary from country to country, making measures of discrimination country and group specific. In looking at discrimination, orthodox economics begins with two difficulties according to critics including stratification economists. First, for many years a central idea was that of Gary Becker who believed that “a taste for discrimination” on the part of a firm was inefficient, and would be reduced by the greater profitability and production of non-discriminatory firms. This ignored the social constraints that firms operated under. Secondly, the basic model was a “human capital model” of measuring income. Just adding a discrimination variable such as race to human capital variables such as years of education did not capture the full measure of discrimination, which reached across several important dimensions including years of education. Stratification economists have given particular importance to wealth transfer between generations as a means of maintaining inequality. Whites have a great amount of wealth to transfer, African Americans much less, due to many generations of systemic oppression, and the wealth and the opportunities it provides are used to maintain position.
Control of land and natural resources
Control of land and natural resources has always been a central part of harmful economic systems. Throughout recorded history conquest has established harmful economic systems with a key goal control of productive assets including land and natural resources as well as control of labor and the government. Thus, the broad outlines of the elite or oligarchic group holding a large share of the land has had a long hisory. For example, in Latin America, the Spanish conquest established the Spanish and their successors as large landholders, with native Americans reduced to working the land owned by others, often with feudal obligations, or pushed on to small parcels of land ill-suited for cultivation. In the United States, slavery excluded African Americans from land ownership, and Native American land rights were violated repeatedly as Native Americans were pushed to very marginal lands. In Africa, the “Scramble for Africa” put most African countries under European control. Imperialism was also widespread in Asia, and countries such as China and India often had feudal systems of their own. Governments play a large role in the control of land and natural resources as they assign and maintain land ownership. This can lead to unfavorable treatment of indigenous inhabitants. In Brazil, the constitution offers protection for indigenous inhabitants, but local enforcement is weak, leading to encroachment on native lands by those who wish to farm. There have been large scale land deals made between private investors or external governments and the country government where the land is located. Estimates of these vary. The Land Matrix database says that 1,850 large land deals have been signed, covering 51,882,633 hectares.
“The state plays a key role in completing a land deal process, by generating a hegemonic narrative on why large-scale land deals are necessary and desirable, by defining what marginal and available land is, by reclassifying, rezoning, and quantifying such lands, by expropriating these so-called marginal and available lands, and through (re)allocation or dispossession processes. In many countries where large land investments occur, only the central state usually has the absolute authority to take the necessary legal and administrative steps in land deal making.”Land Grabbing and Human Rights, p. 8, 2016
Other areas are illegal trade in wildlife, fishing, logging, minerals, and crude oil theft, with estimated values given in the transnational crime table below.
The value of transnational crime
|Transnational Crime||Estimated Annual Value (US$)|
|Drug trafficking||$426 billion to $652 billion|
| Small arms & light weapons|
|$1.7 billion to $3.5 billion|
|Human trafficking||$150 billion|
|Organ trafficking||$840 million to $1.7 billion|
|Trafficking in cultural property||$1.2 billion to $1.6 billion|
|Counterfeiting (of goods)||$923 billion to $1.13 trillion|
|Illegal wildlife trade||$5 billion to $23 billion|
| Illegal, unreported and |
unregulated (IUU) fishing
|$15.5 billion to $36.4 billion|
|Illegal logging||$52 billion to $157 billion|
|Illegal mining||$12 billion to $48 billion|
|Crude oil theft||$5.2 billion to 11.9 billion|
|Total||$1.6 trillion to $2.2 trillion|
Slavery, forced labor
The International Labor Organization estimates that 40 million people are victims of modern slavery. This includes 25 million people in forced labor and 15 million people in forced marriage. This means that there are 5.4 victims of modern slavery for every thousand people in the world, or 0.54 percent (about one half of one percent). There were 5.9 adult victims of modern slavery for every 1,000 adults in the world and 4.4 child victims for every 1,000 children in the world.
Those in forced labor were being forced to work under threat or coercion as domestic workers, on construction sites, in clandestine factories, on farms and fishing boats, in other sectors, and in the sex industry. They were forced to work by private individuals and groups or by state authorities. In many cases, the products they made and the services they provided ended up in seemingly legitimate commercial channels.
Most victims of forced labor suffered multiple forms of coercion from employers or recruiters as a way of preventing them from being able to leave the situation. Nearly one-quarter of victims (24 per cent) had their wages withheld or were prevented from leaving by threats of non-payment of due wages. This was followed by threats of violence (17 per cent), acts of physical violence (16 per cent), and threats against family (12 per cent). For women, 7 per cent of victims reported acts of sexual violence.
Those in forced marriage were living in a forced marriage to which they had not consented. That is, they were enduring a situation that involved having lost their sexual autonomy and often involved providing labor under the guise of “marriage”.
Women and girls are disproportionately affected by modern slavery, accounting for 28.7 million, or 71 per cent of the overall total.
One in four victims of modern slavery were children. Children represented 18 per cent of those subjected to forced labor exploitation and 7 per cent of people forced to work by state authorities. Children who were in commercial sexual exploitation (where the victim is a child, there is no requirement of force) represented 21 per cent of total victims in this category of abuse.
(All of the above taken from ILO 2017.)
Tax havens facilitate important types of harmful activity: money obtained from crime, from corruption, money sent abroad to avoid taxes, and for corporate tax avoidance schemes which falsely but often legally enable corporations to transfer profits earned in higher tax destinations to these low tax destinations, thus reducing or avoiding taxes. Tax havens are a vital part of these types of harm.
According the estimates of Gabriel Zucman (The Hidden Wealth of Nations) , money in offshore destinations, with ownership obscured from the public, amounts to about 8 per cent of the global financial assets of households, equivalent to at least $7.6 trillion. The figure is much worse for developing countries. For Africa, Zucman estimates that tax havens hold about 30 percent of Africa’s financial wealth, and in Russia, 50 percent or more. Fifty-five percent of all the foreign profits of U.S. firms are now kept in tax havens.
“A tax haven provides facilities that enable people, corporations and other entities escape (and frequently undermine) the laws, rules and regulations of other jurisdictions, using secrecy as a prime tool. Those rules include taxes, but also criminal laws, disclosure rules (transparency), financial regulation, inheritance rules, and more” (Tax Justice Network). “A global industry has developed involving the world’s biggest banks, law practices, accounting firms and specialist providers who design and market secretive offshore structures for their tax- and law-dodging clients” (Tax Justice Network)
He estimates that governments lose about $190 billion of yearly tax revenues from hidden ownership offshore accounts: $125 billion income tax, $55 billion inheritance tax, and wealth tax $10 billion (Hidden Wealth of Nations, pp. 48-49).
In addition, he considers tax avoidance by multinational corporations. The main way this occurs is transfer pricing. Multinational corporations with branches in many countries arrange the prices that each branch receives and is charged, so that profits are switched to countries with little or no profits tax, while profits are reduced, and even losses established, in countries with high profits taxation. While this transfer prices are supposed to represent “arms length” or market prices, there are billions of intragroup transactions each year, and apparently this type of mispricing does occur. It appears to be especially important in the case of intangible assets like trademarks and algorithms for which no market price exists. Zucman estimates that tax avoidance through transfer pricing for U.S. firms (only–not other multinationals) is $130 billion a year.
As part of his overall estimate, he does not, however, add in what one would consider to be the substantial losses from corruption that occur each year. An example would be a government official skimming off money from a government service and sending it abroad. African countries have $150 billion in Switzerland, more than the United States, though the United States has a GDP that is 7 times larger. His view of the problem is tax evasion on this money. But it may well be that a large share of this $150 billion was obtained by government officials taking government funds, a substantial harm, and one that is in addition to tax evasion. (See How Malaysia’s 1MDB Scandal Shook the Financial World as an example.)
Nor is non-financial wealth considered: ownership of real estate, valuables, art and other non-financial assets. When non-financial wealth is considered, financial wealth held in tax havens is about 10 percent of world GDP (See Alstadsaeter, et al).
Tax Justice Network. Financial Secrecy Index 2020
________. Corporate Tax Haven Index 2019
Alstadsaeter, A., Johannesen, N., & Zucman, G. 2017. Who owns the wealth in tax havens? Macroevidence and implications for global inequality CEBI Dept. of Economics University of Copenhagen
Alex Cobham and Petr Jansky 2020. Estimating Illicit Financial Flows A Critical Guide to the Data, Methodologies, and Findings Oxford University Press (Can be downloaded without charge.)
Conflict, even narrowly defined, is an important activity. The Stockholm International Peace Research Institute estimates world military expenditure at $1739 billion in 2017, or 2.2 percent of global gross domestic product (SIPRI 2018). As with other types of exploitative activity, a broader look at costs and benefits is necessary. The SIPRI measure is expenditure. But what are the benefits? The standard economic approach would say that it is “national defense” expenditure, which implies that the threat is coming from elsewhere, and that the gain is protecting the country from this threat. (This is done for every country in the world, which implies that there are a lot of chickens, but no fox.) Nonetheless, there is an alternative view, expressed in conflict theory and theories of imperialism, and seen in history, that conflict/military expenditure can be used for specific country gain, not just protection against others.
What is certainly true is that with conflict, not only the military expenditure must be counted, but also other costs.
There is a substantial amount of conflict in the world, most of it in developing countries. In 2019, there were 54 state-based armed conflicts; 67 non-state conflicts; and 31 actors undertaking one-sided violence for a total 76,500 deaths. The deaths were mainly state violence (68%), with non-state violence (e.g., by drug cartels or between ethnic groups or rival militant groups) representing 26 percent and one-sided violence (violence by a state or organized group against civilians that results in at least 25 deaths) representing 6 percent. (Uppsala Conflict Data Program 2019 as reported in Petterson and Oberg 2020).
According to the U.N. High Commissioner for Refugees (2020), at the end of 2019, 79.5 million were forcibly displaced, with 46 million displaced within their own country, 26 million refugees displaced to another country, 4.2 million asylum seekers, and 3.6 million Venezuelans displaced abroad.