Living standards describe the level of economic freedom of individuals within the jurisdiction of a government.
Living standards, like human rights, apply to the status of individuals, not governments. However, in contrast with human rights, which deal with equal and inalienable rights, living standards are concerned with alienable commodities (goods and services that are bought and sold), and the ability of individuals to purchase those commodities.
FOUR CRITERIA ARE USED TO DEFINE LIVING STANDARDS:
1. the level of individual disposable income in terms of the government’s currency
2. the purchasing power and stability of the government’s currency
3. the level of individual net worth
4. the cost of consumer goods and services
Living standards are a crucial measure of the performance of the laws of that government. If the living standards, i.e., economic freedom of the people, are low as compared to other governments, that government would need to take measures to identify and amend or repeal the laws that contributed to low living standards.
A Caveat: The economic rating of governments is frequently expressed in terms of the gross domestic product (GDP) of a government divided by its population count, i.e., GDP per capita. However, GDP per capita is unacceptable as a measure of living standards because GDP includes the operations of government institutions, which do not contribute to individual net worth or income, and it omits the negative effect of taxes.
For example, government-owned military installations, museums, courthouses, and libraries are needed to maintain human rights and provide high quality-of-life standards -- but they add nothing to individual net worth or income and, to the extent that the operation of these assets is supported by taxes, they decrease individual disposable income. While GDP per capita may be a convenient indicator of a nation’s economic activity, it is an unacceptable measure (i.e., an overstatement) of living standards.
The goal of quality programs for laws is to enable the people as a whole to realize the highest possible levels of human rights, living standards, and quality of life.
Proceed to the next Quality of Laws goal, quality of life.