The criticism of economic metrics is sound but the rest of the article reminded me of Politics and the English Language (the use of complex words where simple ones would do).
On the topic of economic metrics - I believe that at this point, in the UK at least, GDP, unemployment, median wage, inflation, and possibly more indicators are irrelevant, and the focus on them misplaced, primarily because housing (capital) costs have exploded whilst other (operational) costs have shrunk.
Our current inflation metric only captures prices of consumer goods. All the inflation that was intended to happen was actually absorbed by the financial market.
"All the inflation that was intended to happen was actually absorbed..." - do you have a source for this? That seems a whopper of an idea, and I'd like to explore it at length.
Not sure I can provide a source on this (it's a matter of inner workings of Government).
>> inflation [...] was actually absorbed by the financial market
In the UK the CPI is made up mostly of operational costs. I deliberately use the term 'operational' here as distinct from 'consumer goods' or something because I am philosophically opposed to partitioning humans into 'consumers' and 'producers'. A naive idealist. :)
I would like to produce a 'teardown' of the specification at some point, but haven't motivated myself yet. I actually have a comment somewhere here on HN that has gotten lost - that's a bit of a kick up the arse for me to produce something a bit more structured like a blog.
Mortage payments, both interest and capital, and rent are dealt with very badly by CPI. As I recall, they're basically not even included. I think legal fees on home purchase, maintenance, and some other related expenses are in there.
At the moment, for at least the median household and probably a large percentage of them, some combination of rent, mortgage payments, or imputed interest is the highest annual expense by a large margin.
In that context the CPI becomes a sort of analysis of 'inflation of items purchased by discretionary income', because it fails to account for well over half of the economy.
On the ground I think this is sort of obvious, which is why I've been reluctant to produce write-ups with proper citations, because it feels a bit like preaching to the converted.
(This is taking as axiomatic that housing costs are 'the financial market'. I'm considering it 'obvious', because housing is essentially the only valuable asset that the median, or even 75th percentile person owns. It functions as capital.)
I'd had basically the same thought, and I was more or less trying to reproduce how I got to it, hopefully with some references.
I completely agree that it somehow seems self-evident, but that's sort of weak tea.
If we've lost the ability to use inflation as a steering mechanism for the economy ( and boy does it look like we have ) then I think that explains much of our present pain and suffering. It is as if we've basically internalized inflation bad" back to our limbic system and we only react in the one direction now.
I don't know if this will help, but I read the rise of all the political ... unpleasantness in the 1930s - leading to the deaths of 4% of all humans in the 1940s - as a manifestation of this same phenomenon.
On the topic of economic metrics - I believe that at this point, in the UK at least, GDP, unemployment, median wage, inflation, and possibly more indicators are irrelevant, and the focus on them misplaced, primarily because housing (capital) costs have exploded whilst other (operational) costs have shrunk.