This measure is a simple addition of the unemployment and headline inflation
rates. It gained attention during the 1970s stagflation.
The theory is that when these two basic measures of economic well-being worsen
simultaneously, the people’s patience snaps. Democratic regimes lose
elections; autocrats suffer revolutions. It might therefore help to indicate
where high food prices could turn into political unrest.
Supporting this, Société Générale shows that Tunisia and Egypt had elevated
misery indices of 20 per cent at the end of 2010. Conversely, Asia-Pacific
should be the world’s happiest region, followed – with some exceptions – by
Latin America.
Four large developing nations are more miserable than Egypt: Venezuela, South
Africa, India and Pakistan; the governments in the last and perhaps the
first are looking weak.
Quite developed Spain, which has a higher misery index than India or Pakistan,
is more puzzling. But a large black market probably means the 20 per cent
unemployment rate is overstated. SocGen points out that Spain’s misery was
even greater in the early 1990s.
Of course, Spanish voters have a democratic option, so they do not need to
take to the streets. But the figure suggests that the eurozone’s periphery
is suffering the kind of misery that might yet create political instability.
As for the US, the index peaked last year at 13 per cent (when the Tea Party
movement was gaining traction); it is now at 11, below its pre-Lehman level.
The level is high, but inflation remains in check and unemployment seems to
have peaked. Given that the misery index stayed in single figures for 15
years before 2008, however, the Obama administration will surely want it to
fall further before facing the voters.
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