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So what? You're making the classic erroneous assumption of believing more economic activity is inherently good. A society that spends all its time and effort o

So what? You're making the classic erroneous assumption of believing more economic activity is inherently good. A society that spends all its time and effort on bad investments like building statues and blowing them up again, is a society with a problem, yet by the metrics used by conventional economics, it'd be doing great! Full employment! Tons of production! GDP increasing!

nickik 8y ago
Nobody in Switzerland is investing in useless stuff and blowing it up, so its not relevant. As long as economic activity is driven by individuals it is inherently better.
- repolfx 8y ago
  How do you know? My build-statues-and-blow-it-up example was deliberately exaggerated for clarity and effect. In the real world malinvestment tends to look like asset bubbles, the construction of houses that nobody needs, "airports to nowhere" (like the cases of that happening in Spain) and so on. It may look like beneficial economic activity when you're zoomed all the way in, but when the free money dries up, suddenly it becomes clear that maybe strippers shouldn't be allocated two houses, or maybe airports should be built near population centers, and so on. Anyone who can print money from nothing can essentially override the judgement of wider society about how best to allocate resources. Note that resources can also be allocated towards savings, but that tends to suppress economic activity, so people whose job performance is judged by measuring economic activity invariably end up attacking savings. Hence the frequency with which central banks try to push down interest rates.
  - olliej 8y ago
    I got that it was an exaggerated example, but sadly I’m 90% sure that you could make a kickstarter project to do just that and probably get it funded. Of course at that point people are actually treating the entertainment value as an asset rather than the statue and explosives themselves so maybe that’s also completely reasonable.
- growlist 8y ago
  This sounds like the Broken Window Fallacy to me
mseebach 8y ago
GDP might be a flawed measurement for the reasons you mention, but it's worth keeping in mind that for all it's flaws it has a very high correlation with "general goodness", almost regardless of which measure you choose.

nickik 8y ago

Nobody in Switzerland is investing in useless stuff and blowing it up, so its not relevant. As long as economic activity is driven by individuals it is inherently better.

repolfx 8y ago
How do you know? My build-statues-and-blow-it-up example was deliberately exaggerated for clarity and effect. In the real world malinvestment tends to look like asset bubbles, the construction of houses that nobody needs, "airports to nowhere" (like the cases of that happening in Spain) and so on. It may look like beneficial economic activity when you're zoomed all the way in, but when the free money dries up, suddenly it becomes clear that maybe strippers shouldn't be allocated two houses, or maybe airports should be built near population centers, and so on. Anyone who can print money from nothing can essentially override the judgement of wider society about how best to allocate resources. Note that resources can also be allocated towards savings, but that tends to suppress economic activity, so people whose job performance is judged by measuring economic activity invariably end up attacking savings. Hence the frequency with which central banks try to push down interest rates.
- olliej 8y ago
  I got that it was an exaggerated example, but sadly I’m 90% sure that you could make a kickstarter project to do just that and probably get it funded. Of course at that point people are actually treating the entertainment value as an asset rather than the statue and explosives themselves so maybe that’s also completely reasonable.
growlist 8y ago
This sounds like the Broken Window Fallacy to me

mseebach 8y ago

GDP might be a flawed measurement for the reasons you mention, but it's worth keeping in mind that for all it's flaws it has a very high correlation with "general goodness", almost regardless of which measure you choose.