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I agree with much of this article, but I think a larger point is that we need to rethink what economic growth means. The current measure of GDP has become a cud

by TSiege 6y ago

I agree with much of this article, but I think a larger point is that we need to rethink what economic growth means. The current measure of GDP has become a cudgel to promote destructive behavior. What's the point of GDP anymore beyond measuring economic growth and contraction? It doesn't say anything about sustainability of the growth. Nor whether or not citizens are well taken care of. A new measure that could replace GDP needs to do a better job of measuring environmental as well as human benefit. Imagine if instead of measuring how the economy grows in pure dollar amounts of economic output we also measure restoration of ecosystems and happiness, health of citizens and communities.

mikorym 6y ago
I don't think one necessarily has to redefine economic growth, but perhaps redefine what the kind of growth is that we want. Japan has not had much growth for 20 years now [1], and Japan is regarded generally as one of the most developed, safe and pleasant countries in the world. In South Africa, economic growth is a problem in the sense that it needs to be much higher in the traditional sense for sure, but there are certain aspects of the country that have dramatically improved in the last 20 years (and many that have unfortunately declined). The economic indicators don't properly take into account the informal sector, and specifically cash transactions within the informal sector. So for example, many low wage workers now have good brick houses, where only 20 years ago they would have had huts or corrugated iron shacks. There is also now electricity in most places, with the side effect of tree coverage getting better in some rural areas as firewood is not necessary to make food. I think the inability of the economic and financial sector in Johannesburg (considered the best in Africa) to properly quantify growth in rural areas certainly is a social problem as well, with the economy becoming an abstract concept further removed from many normal people's lives. I also think this is why populist movements gain traction as their vocalisations are easier to understand than the a more sober and reserved economist trying to explain carefully to a crowd why the informal sector isn't properly being quantified and that we need to develop new economic metrics. [1] https://en.wikipedia.org/wiki/Economy_of_Japan#Macro-economic_trend https://en.wikipedia.org/wiki/Economy_of_Japan#Macro-economi...
marcusverus 6y ago
GDP is an objective measurement of a (somewhat) tangible thing (the economy). The measurement has value--it lets you know how the economy is doing. This directs monetary policy and fiscal policy. You can add any new metrics you want, but 'replacing' GDP strikes me as a good idea only if you want to hide the economic impact of collectivist policies behind a veneer of vague, hand-wayvy 'measurements' like 'human benefit'.
crankylinuxuser 6y ago
> A new measure that could replace GDP needs to do a better job of measuring environmental as well as human benefit. Imagine if instead of measuring how the economy grows in pure dollar amounts of economic output we also measure restoration of ecosystems and happiness, health of citizens and communities. "When a measure becomes a target, it ceases to be a good measure." - Economist Charles Goodhart
clairity 6y ago
an economist would argue that you just need to place a dollar amount on those things of environmental value that need measuring, then include it in gdp. it’s less clear if that’s the best solution, but it’s probably better than a wholesale replacement by an entirely new valuation system (chesterton’s fence and all).

by TSiege 6y ago

mikorym 6y ago

I don't think one necessarily has to redefine economic growth, but perhaps redefine what the kind of growth is that we want. Japan has not had much growth for 20 years now [1], and Japan is regarded generally as one of the most developed, safe and pleasant countries in the world. In South Africa, economic growth is a problem in the sense that it needs to be much higher in the traditional sense for sure, but there are certain aspects of the country that have dramatically improved in the last 20 years (and many that have unfortunately declined). The economic indicators don't properly take into account the informal sector, and specifically cash transactions within the informal sector. So for example, many low wage workers now have good brick houses, where only 20 years ago they would have had huts or corrugated iron shacks. There is also now electricity in most places, with the side effect of tree coverage getting better in some rural areas as firewood is not necessary to make food. I think the inability of the economic and financial sector in Johannesburg (considered the best in Africa) to properly quantify growth in rural areas certainly is a social problem as well, with the economy becoming an abstract concept further removed from many normal people's lives. I also think this is why populist movements gain traction as their vocalisations are easier to understand than the a more sober and reserved economist trying to explain carefully to a crowd why the informal sector isn't properly being quantified and that we need to develop new economic metrics. [1] https://en.wikipedia.org/wiki/Economy_of_Japan#Macro-economic_trend https://en.wikipedia.org/wiki/Economy_of_Japan#Macro-economi...

marcusverus 6y ago

GDP is an objective measurement of a (somewhat) tangible thing (the economy). The measurement has value--it lets you know how the economy is doing. This directs monetary policy and fiscal policy. You can add any new metrics you want, but 'replacing' GDP strikes me as a good idea only if you want to hide the economic impact of collectivist policies behind a veneer of vague, hand-wayvy 'measurements' like 'human benefit'.

crankylinuxuser 6y ago

> A new measure that could replace GDP needs to do a better job of measuring environmental as well as human benefit. Imagine if instead of measuring how the economy grows in pure dollar amounts of economic output we also measure restoration of ecosystems and happiness, health of citizens and communities. "When a measure becomes a target, it ceases to be a good measure." - Economist Charles Goodhart

clairity 6y ago

an economist would argue that you just need to place a dollar amount on those things of environmental value that need measuring, then include it in gdp. it’s less clear if that’s the best solution, but it’s probably better than a wholesale replacement by an entirely new valuation system (chesterton’s fence and all).