The title/article seems to be a bit of a strawman, AFAICT countries (or their governments / citizens) do not consider the GDP as the one and only measure of national success. Politics are driven by tons of different interest groups (in the broadest sense, ranging from corporate interests, environmental activists, minority representatives, medical or teaching professionals, farmers, retirees living on state pensions, etc, etc.), not by whether some policy might give a boost to GDP. I could argue that it would probably be better if they actually did, but that's for another thread.
In truth, pretty much nobody really knows for sure what policies actually will increase GDP, or what causes the short term fluctuations (business cycle / recession) or variation in long term divergense between different countries in the first place. The more honest academic economists will freely admit this. (I was explicitly thaught so in my graduate macro-economics courses). So I think it's a strawman to think that countries/governments are engating in some kind of myopic GDP maximization plan.
I think the appropriate analogy is household or personal income. (GDP is just all incomes in a country summed up and corrected for inflation.) It's probably not the most important thing in the world, and probably not the most important determinant of personal happyness or life satisfaction. But a severe lack of it (especially compared to the people around you) or an unexpected large drop will probably be considered problematic by most people.
> In truth, pretty much nobody really knows for sure what policies actually will increase GDP...
Have they tried securing access to large amounts of cheap energy? It is a bit of a win-win because either GDP goes up and case closed or they can sit back and relax in luxury mulling why GDP didn't go up despite massive increases in the general prosperity.
Energy isn't the entire story because there also need to be people around who know how to transform it into whatever you want, but it is a rather important part of the puzzle. After that, freedom and education are probably going to make up the rest. What else is there? I suppose land ownership.
The puzzle isn't that complicated. We all know what comfort looks like. Asking how to make GDP go up is the wrong question, it is just a tool to point out when policies are wasting resources. More waste -> less GDP -> notice that and waste less -> reorient to secure prosperity.
Not trivial, but there are a few foot-guns that can be avoided like not shutting down your nuclear power plants or not giving licenses to actually dig the energy out of the ground.
Every country tries securing cheap energy; that's what energy markets are for.
There is no such thing as a trivial win here. And trying to secure it could end up costing significant GDP, as demonstrated by wars fought over securing energy.
They aren't. The EU is in the news right now because they cracked down on nuclear and fossil fuels and - after succeeding - ended up in an energy crisis.
You can see what countries trying to secure cheap energy do by looking at China and India - lots of coal, lots of oil, bring on as much capacity in nuclear and renewables as they can. They're playing with effectively 4x as many sources of energy as the EU despite the Europeans having a wealth and tech lead! I say 4x because renewables aren't quite a big enough energy source to break up into components.
> The EU is in the news right now because they cracked down on nuclear and fossil fuels and - after succeeding - ended up in an energy crisis.
They allowed the fossil fuel lobby to severely curtail their renewable installations and had a quarter of their nuclear reactors fail. Then had a massive source of gas disappear.
The renewables are working exactly as advertised. Seems like a pretty good argument for more of them.
> do by looking at China
So at least half of new generation as renewables with a small increase in nuclear whilst keeping thermal plant capacity roughly constant (mostly by moving existing production to more efficient plants)?
That would be an improvement over the failure that they have managed.
The Europeans have shrinking access to electricity, so they effectively must have negative absolute growth on fossil fuels and I suspect negative or near 0 growth of nuclear (not going to check, so maybe someone is doing the sensible thing and building some nuclear plants and I haven't read about it). They have a long way to go to get towards the sort of success China is managing.
They need a lot of renewables to recover from their serious policy screw ups. They don't seem to have been able to build it that quickly! Hopefully they manage before there is a really bad winter.
GDP is a concrete measure that is difficult to fake. Once you start arguing about the economic value of volunteering, divorce, income inequality, and crime -- you've opened the door to never being able to trust GDP again.
Should we create new metrics to track progress? Sure. Should we stop tracking GDP? No way.
It is not difficult to fake (e.g. China for the last 20 years).
But I agree with you, we should add new metrics (and targets) but keep a GDP as one of them, also for the other indicators to mature (how they are measure, methodologies, transparency, etc...). Maybe one day GDP would be able to be left behind...
GDP is not what people randomly think it is. It is a measure of the economic output of a country. It isn’t about equality or productivity or did the money build a ghost town etc. If we had the magical mathematics to encode that much in a single number, we’d be traveling the stars.
GDP as it’s measured originally? Yes. It was a measurement of actual industrial strength. But since then it also includes made up stats such as investment risks and other ideological and fantastical things? No.
I disagree wholeheartedly with the sentiment that "traveling the stars" is a worthy goal, even more worthy than stewardship of the paradise we already have. We are living in heaven. We have a wonderful planet that nurtures us yet we continue to sabotage our favorable situation for the sake of growing worthless numbers like GDP, all while some people starve or are forced into lives of misery. And yes, I have read Parable of the {Sower|Talents}, who's primary lesson I take to be, we should prevent that terrible situation in the first place.
The earth is at best a temporary paradise, doomed to be burned up by a rogue asteroid or if it's exceedingly lucky its very own sun. Also incomprehensibly limited in the population and diversity of life it can support when compared with the universe.
How incredibly selfish of us to decide we shall be the select few that get to live on a single planet when the universe has the potential to support so many more lives.
Every second we delay, countless earth-like planets are being consumed by black holes, never to be seen again.
Given that humanity has only existed for ~200,000 years, and the threats you've mentioned are unknown but likely millions or billions of years in the future, is it fair to say it's a "temporary paradise?"
If we could live another ten, one hundred, or a thousand of humanity's lifetimes, that's not temporary in any meaningful sense.
To put it differently: making plans today for the earth's demise due to the sun's expansion is a rather extreme case of premature optimization.
It’s the next frontier and an area for expanding our technological prowess, even if we disregard the doomer psychology aspect of it. We have so much shit to do to even mine the asteroid belt that the next 100 years will look as different from now as we do from the Middle Ages. Not to mention when even further in the future we decide that interstellar travel must be attempted.
I think what's selfish is romanticizing "so many more [hypothetical] lives" while real lives now are smothered for the sake of malignant capitalism. Perhaps the fact the the former takes no self sacrifice makes it an appealing viewpoint.
People can track GDP without optimizing for it at the expense of the environment. Although, metrics do seem to hack the human brain in such a way that we can't help but try to optimize them, no matter how useless they are.
If you control the media like China does, you can fake every metric if you want. In any place with a free press, economists could easily approximate GDP and report it if it were fake.
They're probably referring to the rudimentary Martinez study that's making PRC collapists convinced PRC is over reporting GDP. For reference, much more sophisticated light study by NBER (staffed by FED economists) concluded PRC growth was higher than PRC reported GDP.
But more broadly, it's important to understand GDP in PRC is (and has always been) guestimate to appease foreign investers / media for comparison wank. It's well known PRC smooths GDP to show general trends, but internally they've used their own metrics like LKI index (proxy measurement using combination of rail freight activity, electricity usage, industrial activity etc) and total social financing to measure economic activity. A few years ago, the most rigorous western analysis of Chinese GDP I'm aware of was conducted by CSIS who comprehensively reverse engineered Chinese GDP reporting from ground up, sector by sector, and concluded China was (~1 trillion USD) larger than official numbers purported to be.
Also remember PRC has incentive to underreport GDP to keep developing economy perks. Ultimately, GDP like all statistics, is political. It's why internally PRC leadership is focusing on quality growth and "comprehensive national power" , a nebulous but (IMO) more useful composite index to guide development.
If one follows PRC econ news from subject matter experts (both PRC and western) who full time focus on PRC, they're common discussion points.
Li Keqiang index, Context from wiki:
>According to a State Department memo (released by WikiLeaks), Li Keqiang (then the Chinese Communist Party Committee Secretary of Liaoning) told a US ambassador in 2007 that the GDP figures in Liaoning were unreliable and that he himself used three other indicators: the railway cargo volume, electricity consumption and loans disbursed by banks.
Total Social Finance - do a quick google for summary, another composite indicator because up until 2010s PRC just had shit tier data reporting without even factoring in central gov lack of trust of local gov reporting. LKI became mainstream when he became premier in 2013, both LKI and TSF gets reported in domestic and foreign analysis on PRC econ since.
>There is a difference between smoothing data and totally fabricating it. Evidence suggests that China is guilty of the former (the lesser charge) but not the latter (the more serious allegation).
There's better academic writings in past decade that goes into why PRC smooths GDP, but TLDR circles back to GDP is more politically useful as setting a "target" for growth (for both local officials and to inform foreign media/investors) than actual "measure" for growth, which is better gauged with other indicators, that can still be gamed but less so than cells on a spread sheet.
>NBER study from 2017: https://www.nber.org/papers/w23323
Also discusses LKI and other background in PRC gdp reporting. As well as a country specific analysis vs Martinez let's crudely apply blunt metrics to every country generalist approach. Note this was published same year as Martinez study.
CSIS analysis: https://www.csis.org/analysis/broken-abacus
The reports seems to be removed/for pay now, but there's podcasts from author that summarizes the study and degree of potential underreporting.
As for incentive to under report, that's more conspiracy theory but IMO well justified. PRC benefits structurally from being treated as developing economy much than transient PR of reaching high income per capita. If one believes PRC is under reporting GDP, or overreporting population, especially by some of the higher end numbers, then PRC per capita GDP may have reached higher income, which has been a contentious issue by other (developed) countries at the WTO who wants to strip PRC from benefits reserved for developing countries.
The Economist recently reported on a study that used the brightness of countries' lights at night as proxy for GDP[1][2]. The study suggests China and other autocracies have significantly exaggerated their GDP growth over the last twenty years.
One of the things that struck me as weird after landing in the US - is how wasteful the lightning here is. If I was an autocratic ruler, I would definitely scaled it back a couple of times.
Or in general. Living in sparsely populated country with what in other places would qualify as towns. Driving motorway towards one of the at night. Like tens of kilometers out in middle forest you see a clearly lighted up horizon. The light pollution is real.
I want to say "this could be a false correlation" and recommend against believing the study's suggestion, but the damage is already done. Most of the thousands of people that read this article and the handful of people that read your comment have come away being convinced of something that could very well be false as if it were scientific fact because it was in the Economist and it's a "study".
Local government officials in China are promoted / demoted based on local GDP growth. This incentivizes them to increase local industry and also to fluff up estimates of local industrial output.
Repeat across the entire country for 20 years at every level of government, and as a result it is now estimated that China's actual GDP is half of its official GDP.
Not that I fully believe this, but the claims about Ghost Cities, for example. Infrastructure projects built to increase GDP and industrial activity without clear goals.
> Once you start arguing about the economic value of volunteering, divorce, income inequality, and crime
Who is saying we should do that? These items have value, that is not debatable. It might not be economic value, but that's not the point. The point is, these items are not being valued on a national scale, or at least extremely undervalued against GDP. If you have extreme wealth inequality, GDP is a pretty poor measure of basically anything.
Is it more unreasonable to assume the value of these things is >0, or to assume that the value of these things is ==0?
I don't think anybody is arguing that we should stop measuring or looking at GDP entirely. The article argues that we need to recognize that we can't just close our eyes to the value of these things.
It's kind of like talking about the value of a human life in dollars. We know this number is more than 0$, and we know this number is less than __POSITIVE_INFINITY__$, and we're probably never really going to agree on a number somewhere in the middle, but it's still an important number to consider.
Please don't do this. It's against the rules, doesn't contribute any new insight, and the answer is plain from the conversation: they did. (Divorce stats being included into new metrics of economic health was specifically mentioned in the article and AFAICT not previously in the comments.)
GDP is super easy to fake. Just sell something on the black market. Just trade a service for a service instead of paying for it.
Or, to push it in the other direction: sell a service back and forth. I sell you a message for 1 billion and then you sell me one for 1 billion. Now we’ve increased gdp by 2 billion (although you need to live in a zero VAT and zero income tax country to do that as a private person and still have it count)
Changing the included values and operands, then calling it a new standard, is common in the US. GDP has been an unreliable metric for decades.
I noticed when the multitude of chip fabs, across california, closed down had coincided with the president announcing the stockmarket gains were being rolled into the accounting. I thought it was obvious that it was not a meaningful metric for measuring production.
Actually we can get better metrics than GDP by measuring amount of light on satellite night images. It fits GDP more or less for western democracies, but it it better measure for other countries.
Additionally the modern trend, in many types of public lighting, is to reduce the amount of light which shines upwards in order to increase efficient and lower light pollution.
Possibly, but also assuming it's an actually sophisticated analysis and not an naive one, like the Martinez Democracy vs Autocracy study that western MSM loves to peddle. NBER (one of top eco think tanks) did a sophisticated night lights study of PRC in 2017 - same year as OG Martinez study using naive methodology as Henderson original work from early 2010s - and found PRC's reported GDP was actually _underestimated_ using night light data. But for obvious reasons this study by multiple staff economists at the FED doesn't get any attention in western MSM, but one by an assistent prof of public policy somehow does. Almost as if it's good self marketting considering Martinez keeps updating study with same rudimentary methodology every few years to get clicks.
> GDP is a concrete measure that is difficult to fake
The best counter to that I've ever heard:
"Let's say I pay you $10M to eat a pile of shit, then for kicks you pay me $10M to eat a similar pile of shit.
You know what the end result is? The GDP has increased $20M, and we both have huge shit-eating grins".
> "Let's say I pay you $10M to eat a pile of shit, then for kicks you pay me $10M to eat a similar pile of shit. You know what the end result is? The GDP has increased $20M, and we both have huge shit-eating grins".
If people were buying piles of shit for $10M, then that is what the GDP would be. That's not faking GDP.
This interpretation of GDP requires that price is equivalent to value. Good luck convincing anyone, even hardcore free market essentialists, of that notion.
LMAO I'm sure that sounded great in your head, but if that service was actually worth 10mm, both parties would have to pay taxes on that income when they report it to the gov't for inclusion in GDP. Yes this applies even if no money changed hands: https://www.irs.gov/taxtopics/tc420
And yes there are workarounds, but clearly it's not that easy to manipulate GDP. If anything, you want to underreport these numbers so you don't owe as much.
> GDP is a concrete measure that is difficult to fake.
I’m not sure how true this is. There are international standards, updated over time, with variable adoption by per-country agencies tasked with measuring GDP.
These agencies typically rely on surveys of industry specific activity to measure different metrics and at times imputation and inference of unmeasured or missing values to form a picture of overall economic activity, from which a single GDP figure is derived.
All of which is to say “measuring” GDP is nothing like measuring a concrete physical quantity such as temperature, and there is ample opportunity to fiddle with the standards or fudge the statistics, either innocently or nefariously.
See for example how incorrect construction data cleansing lead to Japan overstating its GDP for several years.
> GDP is a concrete measure that is difficult to fake.
It's trivial to fake. Just pull some asset values out of your ass, which Wall Street does a million times a day. GDP became a lot less useful when the economy shifted from mostly tangible goods to mostly intangibles (e.g. software) and services, then utterly useless with the over-financialization of our economy. There are many measures that are more informative than GDP (or GDP per capita), that enable more rational decision making. GDP is just a vanity number.
Go back 150 years, and what was tracked was actual production. Iron mined, boats produced etc.
GDP is a bad measure for all the reasons above, and because prices do not work the way GDP want's them too. As another poster alluded to, increase total production and cause prices to fall across the board, and the logic of the system is that GDP drops. The only reason we see GDP increasing is that there is an underlying increase in the measurement (money), and that feeds into the measurement data.
Seriously. If there was an obvious alternate metric, we'd already be using it.
Measuring well-being and happiness will never be straightforward and uncontroversial, despite what the authors of the article say.
You don't need to look much past the first few paragraphs of the article to see an obvious bias about income inequality. That reveals what attempts to find new metrics are really about: the authors want to use a set of metrics which have built-in left-wing assumptions about how society ought to look.
To think that such controversial metrics could serve as a replacement for GDP only reveals the authors' own naivete.
There is actually a lot of knowledge that's been built that shows many effects of inequality on societies. It might not seem obvious but inequality is actually a big driving factor in people's feelings of dissatisfaction in their everyday lives.
But to argue the point a bit more, and this is something that Thomas Piketty (an economist that studies inequality) always brings in his books: one measure is not enough. GDP is one measure, we need to look at many more measures. GDP does say something, it's not meaningless, but we need other measurements to get the full understanding of the picture.
And we actually have lots of them, GDP sadly fails to capture a lot of externalities, so it doesn't really capture very well for example environmental damage; think of china, their GDP is growing a lot but we can all see it's not growing in a sustainable manner. Or think of the USA, highest GDP in the planet but this isn't being reflected in life expectancy for example which actually has been declining for a while now.
And as I said in the beginning, inequality very much affects people's well being and the well being of an economy as a whole as well. So it is definitely a measurement that we ought to take seriously. It seems silly to me to say "these are left wing metric". These are metrics that have a reason of being, inequality has real effects on our economies and there is a lot of work, and good work at that, that you can read on why precisely this is the case.
> a set of metrics which have built-in left-wing assumptions
Introducing political statements on HN and feeding them is frowned upon, but I will bite: the right wing also needs an answer to the problems caused by inequality. Solving issues caused by inequality can easily be a right wing objective: for example when fixing an issue also helps the middle class or the rich.
A metric for inequality can be politically completely neutral, yet it will trigger partisans on the left or right. I do agree that metrics and solutions often have covert political biases.
I think that regardless of your political inclination, the core message of the article remains the same.
The real issue is simply that, a lot of the things we want to convert to simple metrics can't be. Suppose I hand you a list of the exact rate each crime in a country was committed, and I ask you to convert that list to a single number, how would you do so? You could assign a weight to each crime, but how would you know which weights to use? What's the "true cost" of each crime?
Of course, in reality we won't know the real rate of any crime. We will have estimates, which are likely quite far from the truth.
Same here. These well known drawbacks of the GDP measure are covered in a standard Dutch VWO high school economics textbook (comparable to UK GCSE A-level).
Hypothetical; somehow the total dollar impact of the divergence from an ideal timeline, including the cost of detection, correction, and the related punishments / restitution etc is totaled. For figures that are emotionally priceless the actuarial figures used in major disaster calculation will be used.
However the crime example also isn't very useful. Crimes aren't discouraged based on money cost, but a cost that is emotional and related to maintaining order and stability for society.
Reading an earlier thread on Perl I was thinking about how concepts,
language and behaviour relate (as Wittgenstein and Ayer might have
it).
Someone mentioned how, as a Python user, they barely had to think
about pointers/references. Things get magically referenced when
needed. Seems like progress.
When concepts get coded into a language, in this case "economics"
(which is a tool for trying to see the world), they put down roots.
Other concepts "hang off" them. So, we could certainly try to supplant
GDP as a metric. But then what of all the other economic structures
that people have built on GDP? Who will let go of those?
You have to tear down entire branches of thought and replace them with
new utility concepts that make using old ones as anachronistic as
using pointers in Python.
> So, we could certainly try to supplant GDP as a metric.
This is very apparent, because it was only about 30 years ago that GDP itself replaced GNP as the preferred metric for the same purposes in the US. The article mentions the use of GDP internationally for longer, but the US preferred GNP until 1991.
Its also worth noting that the creator of the GDP, a decade before it became dominant (internationally), also warned against overfocusing on it as a measure of welfare, in terms that really apply to any simple unidimensional measure:
“The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification” [0]
The state of the economy is complex and multidimensional, and we need a set of measures which reflect that.
GNP and GDP are very close measures. If people spend a few minutes reading instead of trying their hardest to comment first with what little knowledge of economics they have rattling around their skull, they’d know that GNP does not make any sense in the modern economy.
A a set of measurements is required in many places and sadly it's missed in those places too. Humans love simple explanations, simple measurements, simple models, simple stories, anything which fits in our tiny brains without too much effort. Whether or not those measurements/explanations/models/stories represent reality sufficiently to be useful appears to be beside the point.
"Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.
It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.
It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.
Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.
It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.
And it can tell us everything about America except why we are proud that we are Americans."
Another historical "fun fact", is that MLK wasn't assassinated while pushing for civil rights. He was killed once he shifted his focus to financial injustice and wealth inequality.
Two might not be a pattern, but it's no accident these historical figures were both challenging the deep pockets status quo and they both died prematurely.
Story told which might even be true, maybe RFK, maybe JFK, maybe Teddy Kennedy, campaigning for office, visited a factory, somebody asked "Is it true you've never worked a day in your life?", and which ever Kennedy it was starts to stammer a reply, and factory worker says "Don't worry, you haven't missed much".
This was back in the day when someone wealthy could run for public office without backing of fellow zillionaires and succeed.
The Democrats were anything but a bloc in the days of LBJ and RFK. The progressive wing was, with LBJ, forcing through the Civil Rights Act and the Voting Rights Act, over the objections and filibuster of the Dixiecrats, who were soon to flee the party in droves. Meanwhile, LBJ was terrified that RFK would primary him and win.
It is fundamentally meaningless to try to differentiate someone from "the Democrats" when the party was fundamentally split between warring ideologies.
That's not how this works. You're the one peddling a conspiracy theory. If you want to be taken seriously, you need to provide better evidence than him delivering a populist speech once.
When did I say he was a sinner? It's just really odd to characterize the a member of arguably the most powerful political dynasty in US history to be "challenging the status quo".
Son of a billionaire equivalent who clibmed and made his money running illegal drugs. JFK became president on drug money. (Is that status quo money? Dunno...)
Are you saying the assassins were tools of the true conspirators who ordered their assassinations? John Hinckley was unsuccessful, was he another (failed) tool of a nefarious group that sets out to off public figures "they don't like"?
While RFK sometimes got help from Edwin Guthman and Peter Edelman, he also spoke extemporaneously sometimes, most famously when he had to announce the death of Martin Luther King to a crowd that hadn't yet heard the news:
That was a result of an elite education in the Latin and Greek classics. We don't do this anymore because most of us are not middle-class private boarding school-educated British people (where it was mandatory), not because we're dimwits.
It seems like it coincided with differences in attitude about education. I’ve forgotten the exact stats, but in decades past college students overwhelming said the purpose of college was to develop a philosophy of life whereas now the predominant answer is to find a good job.
I think this is the wrong way to characterize this change. What changed isn't the attitudes of individual students, but rather the demographics of the students themselves. In the ages past most people did not go to college, and most jobs did not require a degree, so only those who could afford to (upper class) went, and for those people, getting a job simply isn't that big of a concern.
You’re right, but I was making a statement about society more than individual students. It’s been a slow march. The demographic shift can be traced all the way back to the Morrill Act which started the wheels in motion for college to become a vocational endeavor rather than a cultural one.
I do feel that a large swath of jobs don't really need the college degree they seem to require. That sort of college-as-a-credential business model seems like a self-licking ice cream cone.
The Onion once joked that this may be more due to the public they’re appealing to than inability:
> In a serious miscalculation that may prove devastating to his bid for a second term, President Barack Obama neglected Tuesday to simplify a statement to the point where it could readily be grasped by anyone with the vocabulary of an 8-year-old. "Instead of saying, 'There are many global variables at work here, and unless they all fall into place, we could find ourselves back in a recession,' he should have just said, 'Times are hard. We gotta be strong,'"
Boris and Jacob strike me as politicians that understand how to play the UK system masterfully.
Doubt either of them are the solution for the country but neither is anyone in labour.
The corruption precedes them by centuries, and anyone who tries to fix things - like remove the special status of the City of London now will get a shorten career.
Kinda like in the US to even have a chance to be the presidential candidate, you need the monetary support of several billionaires.
Same answer as always, evolutionary socialism. Tackling the Russian money would be a good first step today. Find something that works a little and is possible today, and change that.
If you mean specifically quoting Greek poets and philosophers I would imagine Obama could (and has in speeches) but hard to tell which he wrote himself of course.
To be fair, that kind of speech would alienate a lot of the public. An intelligent politician wouldn't even if they could-- unless they were running a very specialized campaign.
It's informative to look up some very old videos of George W speaking-- he sounds much more educated than he did when in office.
Now that speaking in a highly educated manner has become a signal of elite indifference (however that came to pass), I can't even say that the segment of public which is offended by it is wrong to be offended by it: Since anyone who could do it could turn it off, and they should turn it off-- the only reason they wouldn't is indifference to the people it might offend or ignorance of the norms in politics.
> Since anyone who could do it could turn it off, and they should turn it off
I sincerely hope you mean they ought to turn it off for the campaign trail, and even that's a depressing recommendation for those seeking public support.
Words matter. The language we use to discuss the world around us has a distinct influence on how we see, interact with, and frame both problems and solutions. Lowering the level of discourse helps nobody. That's why it's ill-advised to speak only in babytalk to young children - we want to help improve their language skills through practice, and by leading by example.
The English language (and I'm sure others) is a sprawling mess, but different words do have different connotations and histories that can have a practical affect on those you're speaking to. For example, speaking informally about firearms has left the Conservatives under the impression that legislators are drafting laws they don't really understand - and it's hard to fault them for that.
For those whose parents won't be paying the indenture, college has been priced to the point where ROI on the degree has to be the primary consideration for most of those going. And the return on Aeschylus is low, at least until you're giving speeches.
Just wait till the illiterate, misogynistic rap, tik tok, 6ix9ine, WAP, Onlyfans, and other generation starts coming into office and demanding UBI and nuking of Russia while you work your ass off. We'll all be labelled Nazis and clutching our collective pearls at that point trying to make sure our families survive.
The speech in your link sounds very different stylistically from the speech in the parent comment. In my opinion, the one in the parent comment doesn't sound like it was extemporaneous.
This is a BS political speech and it is very politically motivated. When you can't fix the economy (get GDP up), just claim the GDP doesn't matter. My country's president just claimed we should focus on National Happiness Product. Of course, when all your economical policies fail, economy is just numbers.
And no, having an accident doesn't increase GDP. If the passengers dies, that will remove their GDP from society. Riots are bad for business. The pandemic brought the GDP down even though Pfizer & Friends made record money.
GDP is the best measure of the size of an economy. Nominal GDP is the best measure of the power of an economy in its standing in the world, comparing to its at parity GDP.
There are cases where GDP can be gamed. For example, constructing a building generated GDP, so does tearing it down. In fact, building it and tearing down even if the building is never used are both GDP positive operations. If it can be measured, Goodhart’s law reigns supreme.
The GDP was expanding at a fantastic rate, at the time. The 1960s were the last decade of strong economic growth, the USA has not seen anything like it in the last 50 years. Only the end of the 1990s seemed to briefly revive the golden years of the post-war boom.
Well, imagine you're campaigning in a Democratic Party primary against an incumbent president from your own party who keeps bragging about how much GDP increased during their administration.
That's a really strange portrayal of Lyndon Johnson. Under Johnson we had numerous efforts to improve society that went beyond GDP - the creation of Medicare, creation of Medicaid, the Civil Rights Act, the Voting Rights Act, the Public Broadcasting Act, the Higher Education Act, the Economic Opportunity Act, etc. He was also instrumental in getting many of these passed.
Here's what he said when signing the Public Broadcasting Act:
> It announces to the world that our nation wants more than just material wealth; our nation wants more than a 'chicken in every pot.' We in America have an appetite for excellence, too. While we work every day to produce new goods and to create new wealth, we want most of all to enrich man's spirit. That is the purpose of this act."
And here is Johnson talking about his "Great Society" goals[1]:
> The purpose of protecting the life of our Nation and preserving the liberty of our citizens is to pursue the happiness of our people. Our success in that pursuit is the test of our success as a Nation.
> For a century we labored to settle and to subdue a continent. For half a century we called upon unbounded invention and untiring industry to create an order of plenty for all of our people.
> The challenge of the next half century is whether we have the wisdom to use that wealth to enrich and elevate our national life, and to advance the quality of our American civilization.
> Your imagination, your initiative, and your indignation will determine whether we build a society where progress is the servant of our needs, or a society where old values and new visions are buried under unbridled growth. For in your time we have the opportunity to move not only toward the rich society and the powerful society, but upward to the Great Society.
> The Great Society rests on abundance and liberty for all. It demands an end to poverty and racial injustice, to which we are totally committed in our time. But that is just the beginning.
> The Great Society is a place where every child can find knowledge to enrich his mind and to enlarge his talents. It is a place where leisure is a welcome chance to build and reflect, not a feared cause of boredom and restlessness. It is a place where the city of man serves not only the needs of the body and the demands of commerce but the desire for beauty and the hunger for community.
> It is a place where man can renew contact with nature. It is a place which honors creation for its own sake and for what it adds to the understanding of the race. It is a place where men are more concerned with the quality of their goals than the quantity of their goods.
> But most of all, the Great Society is not a safe harbor, a resting place, a final objective, a finished work. It is a challenge constantly renewed, beckoning us toward a destiny where the meaning of our lives matches the marvelous products of our labor.
**
> Will you join in the battle to build the Great Society, to prove that our material progress is only the foundation on which we will build a richer life of mind and spirit?"
"Gross domestic product is a misleading measure of national success" -- that is the original article on Hacker News, under which we are having this conversation.
It kind of feels like this comment is the straw man.
There’s nothing wrong with GDP as a metric, especially if you want to know the economic horsepower of a nation. The argument being made is that it’s not a good metric when measuring success of a nation.
Exactly! Metrics aren't a problem, it is when they become targets (Goodhart's Law). It is when they become the primary focus instead of a useful tool in a whole toolchest.
> All metrics of scientific evaluation are bound to be abused. Goodhart's law [...] states that when a feature of the economy is picked as an indicator of the economy, then it inexorably ceases to function as that indicator because people start to game it.
— Mario Biagioli
We see Goodhart's playing out all throughout our society. Thus our duty is to add nuance to the conversation and speak as experts. Because experts can see through the measures, understanding their limitations but also what they are good at too. It is also our duty to recognize the limitations of our own knowledge and to not perpetuate this system. To not look down on others that acknowledge their limits, but to hold them with regard. To replace the fear of not knowing with the gleeful pursuit of finding the answer.
a strawman would be trying to claim that he was trying to say those things should be included as part of GDP. It seems he is saying GDP is a poor measure of a nations success and it doesn't measure a lot of the things we actually value.
I think the real point is that an alternative measure should measure things that are reliably measurable. Pull in more externalities, sure. But it's really hard to derive a metric that won't be gamed. (Not impossible though; see "proper scoring rules".)
> why can't GDP measure the amount I rolled my eyes while reading this speech?
Because nobody cares about how many times you rolled your eyes. Presumably some people care about the other things, which - I think the speech was pointing this out - the oft-cited GDP does not measure
> Who exactly thinks GDP should measure our courage, wisdom, and learning?
If you haven’t encountered this attitude, so much the better for you. But it isn’t a straw man. It isn’t so much they believe that GDP should measure those things, but that economic metrics are more important than any other concerns.
"The philosopher John Stuart Mill noted more than 200 years ago that, once decent living standards were assured, human efforts should be directed to the pursuit of social and moral progress and the increase of leisure, not the competitive struggle for material wealth"
Yes, we took the wrong turn. Most people are subjected to a life long rat race of economic relevance/volatility where most of their waking hours are spent just trying to make a living, by any means necessary.
What makes the state of humanity extra sad is that all this raping of the planetary resources that we do still does not elevate us out of this misery.
It's unclear who this destructive machine is serving. Consider the point of view of an ordinary citizen. Who genuinely has your best interest at heart?
Your ancestors 200 years ago were malnourished, working the fields all day to eke out a miserable existence, never enjoying a single luxury in life. They didn't know how to read or write, and in any case wouldn't have had time for such luxurious activities.
Human progress has brought us to the point where we have the free time to complain about how disadvantaged we are and how unfair life is, without giving a thought to the fact that our daily lives are far more luxurious than those of kings who lived 200 years ago.
"decent living standards" are a moving target; the definition is always relative to what is currently possible. in mill's time, this might have amounted to having a roof to sleep under and a reliable source of calories. germ theory of disease was just starting to gain acceptance in the latter part of his lifetime. today we seriously consider providing free healthcare to all, and in some countries this is already a reality.
In any major city in even the wealthiest of nations it isn't hard to find people who don't have a roof to sleep under and a reliable source of calories. For large portions of the population, things are definitely better than they were 200 years ago. But we are still a long ways away from decent living standards being assured to everyone.
Literacy rates in Western Europe and North America were quite high. There was an bustling trade in almanacs, pamphlets, periodicals and Bibles. Go read about Charles Dickens' career and how he succeeded by appealing to the tastes of the common man.
The system crushed us so bad that people like you think we're living in the utopiest of utopias, even the idea of a better future disappeared, even suggesting it could have been better seems to trigger an allergic reaction, the cogs are willing to die for the machine that grinds them, and they seem happy about it. You focus on material goods while completely ignoring what came with it and what it took away from us, as if accumulating goods was a goal in itself. The bed of a min wage worker might be more luxurious than a king's bed from 200 years ago I very much doubt his life is anything luxurious, especially in comparison of a king's life
> Compared to what?
Compared to what it could have been
I have a worse life than my grandparents by almost any conceivable metrics besides the fact that I own and consume more useless shit. They had no degrees, five kids and could afford to live in a city center. I have 0 kids, a master's degree and will never be able to afford 5 kids, let alone in a city center
> Human progress has brought us to the point where we have the free time to complain about how disadvantaged we are and how unfair life is
I work more and will work longer than my grandparents, I don't expect I'll be able to retire before 70, if not more. In France 25% of the poorest already die before reaching retirement age.
> that our daily lives are far more luxurious than those of kings who lived 200 years ago.
I'm still sitting a desk desk 8 hours a day, probably for the next 40 years, while technocrats of the 60s promised automation would bring the 3 days/15 hours workweek
> The more he contemplates, the less he lives; the more he identifies with the dominant images of need, the less he understands his own life and his own desires.
> The pseudoneeds imposed by modern consumerism cannot be opposed by any genuine needs or desires that are not themselves also shaped by society and its history. But commodity abundance represents a total break in the organic development of social needs. Its mechanical accumulation unleashes an unlimited artificiality which overpowers any living desire. The cumulative power of this autonomous artificiality ends up by falsifying all social life.
Guy Debord, 1962
> The necessity of production is so easily proved that any hack philosopher of industrialism can fill ten books with it. Unfortunately for these neo-economist thinkers, these proofs belong to the nineteenth century, a time when the misery of the working classes made the right to work the counterpart of the right to be a slave, claimed at the dawn of time by prisoners about to be massacred. Above all it was a question of surviving, of not disappearing physically. The imperatives of production are the imperatives of survival; from now on, people want to live, not just to survive.
> The distance has not changed between those who possess a lot and those who possess a small but ever-increasing amount; but the intermediate stages have multiplied, and have, so to speak, brought the two extremes, rulers and ruled, closer to the same centre of mediocrity. To be rich nowadays merely means to possess a large number of poor objects.
You're assuming zero population growth and that people "over there" who look and/or talk different that it separately doesn't matter if they starve.
When we make things more efficent it is reasonable to remember this is the /world/ economy getting more efficient and the most important thing we are making efficent is growing enough food for 7b people through specialisation and trade and espeically technical progress. The second most important thing is making it so that parents don't routinely and commonly watch their children die in pain.
In Mill's time at the height of the biggest empire ever known, right at its centre of wealth children starved. Their parents watched them die from what we now refer to as "preventable disease" and are outraged when any child in the world dies of it.
I'm taking that faustian bargain we took as a species every f*king time. No we did not "take the wrong turn." There remains plenty to discuss on how to do it better going forward.
The idea that the the current economic order is the most efficient is... idealistic
> "over there" who look and/or talk different that it separately doesn't matter if they starve.
The global economy is about expanding the wealth and consumption of the.01% while maintaining a standard of living well enough that the next 20% won't murder them and guard then from the bottom 80%
> is growing enough food for 7b people
We're well well beyond this capability. Westerners need to eat less meat, waste less electricity (more fuel for fertilizer etc).
Most westerner economies are rentier economies. They need more wealth taxes and more antitrust.
Rishi Sunak, the billionaire banker, conservative leader of the UK himself said that cutting corporate tax doesn't result in more productive investment
>The idea that the the current economic order is the most efficient is... idealistic
Nope. It's a fact that the current world economy is the most efficient yet seen. Imagination is not implementation. There remains plenty to discuss on how to do it better going forward.
>The global economy is about expanding the wealth and consumption of the.01% while maintaining a standard of living well enough that the next 20% won't murder them and guard then from the bottom 80%
Not worth arguing with it goes nowhere interesting, the gloabl economy isn't designed. Billionaire influence is quite limited for we rail that it exceed our own. Whatever. And yet somehow, despite what you think and I think about the global economy structure the bottom %80, hell the bottom 20% are objectively much better off in terms of food and health than Mill's time. While the sheer numbers of people have expoded. We've never had so many in absolute numbers and perecentage lifted out of sickness and poverty. That isn't nothing. Continue hating billionaires by all means. I do.
>We're well well beyond this capability.
So by design or accident even you acknowledge it has "worked" for those who would otherwise be sick and hungry.
>Westerners need to eat less meat, waste less electricity (more fuel for fertilizer etc).
Maybe? Why not? This has absolutely nothing to do with feeding 7billion and treating their diseases. Really. Nothing at all.
>Rishi Sunak
Who? Be careful whose leadership you follow. I somehow doubt you'd accept him as an authority on anything you didn't like the sound of. Myself, I sure wouldn't on anything at all... Billionaire by marriage or not adds nothing to the quality or thought.
I'm not saying we haven't progressed. what I mean to say is that, at the moment, we could have an _even more_ efficient economy if we had more competition and less rent seeking. Less propping up of 'zombie companies' and more 'creative destruction'
> isn't designed
You're right. A more nuanced way to say this is 'emerged' from power structures and incentives. Economics is the study of a world where all political problems have been solved. e.g. a convoluted and overburdening tax system ... not properly managing negative externalities ... money in politics
> the bottom 20% are objectively much better off in terms of food and health than Mill's time.
I agree but 'what got us here, wont get us there' especially if we wind up in a 'distributed tech neo-feudal system' where 'lords' own so much of the means of production (was land now IP stocks etc) they cannot be outcompeted / supplanted without violence.
> percentage lifted out of sickness and poverty.
China?
> I somehow doubt you'd accept him as an authority on anything you didn't like the sound of.
I'm no economist but I have a sense that too much capital going to 'capitalists' inflates asset prices without increased productivity/growth/efficiency.
In a modern democracy, only one of those three could conceivably have your interests at heart. Lumping them all together damages participation in democracy, which exacerbates the problem.
Democracy absolutely does not care about you and thinking it does is damaging to democracy. Democracy is just executing the will of the majority. If your interests don’t align with thah majority, the country is not acting on your behalf.
Knowing that an participating in democracy without tying up your identity in the outcomes is critical.
> Democracy is just executing the will of the majority.
Only if you’re a dictionary. Democracy as practiced routinely resists the will of the majority (eg attitudes towards climate, reproductive rights), and also routinely reinforces minoritarian protections once established (eg accessibility for people with disabilities).
Democracy is ultimately the same thing as any other governing philosophy, except it’s more malleable by people without concentrated power than most other systems. Certainly more than a bank or whatever.
You’re quibbling over the layers of indirection a representative democracy adds, but it doesn’t fundamentally change. If the majority of people wanted to strips rights for those with disabilities, they would be well within the constitution to do it.
> Democracy is ultimately the same thing as any other governing philosophy, except it’s more malleable by people without concentrated power than most other systems. Certainly more than a bank or whatever.
Sure, but the point is that regardless of governing mechanism, the government is not acting in your interest (unless you’re an authoritarian dictator and even then there is internal resistance).
You must have misunderstood my comment. Only one of my examples might conceivably be delayed. One is explicitly being reversed, and the other is protection of a vulnerable group regardless of majority status. My point isn’t that democracy fails to represent the will of the people. Democracy is more complicated than that, in some ways more flawed and in some ways better.
> One is explicitly being reversed, and the other is protection of a vulnerable group regardless of majority status.
The “reversed” case is because people don’t actually care enough to elect representatives that reflect those views. There is a Democratic majority house, senate, and president. Why isn’t abortion protected?
> and the other is protection of a vulnerable group regardless of majority status
It’s protected because the majority decided to protect it. The majority could easily remove that protection. They aren’t constitutionally protected.
> The “reversed” case is because people don’t actually care enough to elect representatives that reflect those views. There is a Democratic majority house, senate, and president. Why isn’t abortion protected?
Because voters aren’t prone to magical thinking, and they don’t elect unicorns. Why don’t we vote for the candidates who don’t exist? The world may never know.
"Democracy" is just the latest invention of the ruling class, frustrated by such events as the French revolution, or more recently, the fates of individuals such as Nicolae Ceausescu.
In practice, it causes the rabble to redirect their grievances from a formerly monolithic leadership to each other, increasingly turning a blind eye to mounting corruption and abuses of privilege within their own ranks, while blaming all the evils of the world on the other side.
Well it does care about you, just that the level of care you receive is roughly what hundreds of millions of others also get. 1/250000000 is a pretty small amount in the grand scheme.
We typically round down small fractions to zero so a very niche opinion with a few hundred folks is still approximately zero.
No, that math isn’t correct. If you are in the minority, there is no compromise in democracy. The level of care you receive is exactly 0 if the majority voted against you.
20 years ago you couldn’t have 40% of a gay marriage, it was just no gay marriage.
People typically live for more than just a single issue. Averaged over many thousands of issues, some of which you end up enjoying benefits from and some of which you end up suffering penalties from, and after many years of residence, it does work out that way.
It might, if we didn't split votes by district, then by county, then by state, and bundle them.
It might if our representation weren't purposefully skewed to favor states with let populations.
It might if there were runoff voting.
It might if there weren't an electoral college, circumventing all that already miserable voting procedure.
It might if voting we're a national holiday.
It might if we had a choice that wasn't "this pile of shit over here" versus "that mass of excrementt over there". Really, they're different!
It might if, after the elections were over, there wasn't a whole industry, made up of politician's former colleagues, making truckloads of money to peddle influence on behalf of big business and billionaires.
To believe that our democratic process does anything to connect the political zeitgeist of the people to actual policy is to believe in the tooth fairy.
Yes, the things you believe in are ostensibly 1/250000000th the importance of the sum total of what everyone in the U.S. believes in.
For example, if the 'political zeitgeist' your referring to is comprised of 50 million eligible voters, and if the other 200 million are fence sitters on believe in another 'zeitgeist', then it's in fact correct for the U.S. as a country to completely ignore the 50 million. i.e. to block it from having any effect on 'actual policy'.
After all, minority rights are only guaranteed up to the 3/4 threshold, after which a constitutional convention could do anything, such as reinstating slavery, prohibition, or even abolish the existing constitution and all laws passed by Congress entirely, etc...
You've sort of missed my point. I'm not pushing a particular political agenda, here.
I'm talking about how many roadblocks there are between a vote and a policy change, of any stripe.
The fact is, if we all agreed on something, it still wouldn't matter. The process of voting would not see that idea through to any meaningful realization - which sort of defeats the purpose of voting, doesn't it?
Democracy is incompatible with freedom. As soon as enough people decide I should die or lose my possessions or do some other thing I don't want to do, I am forced against my will with violence.
So we are stuck relying on the intelligence and wisdom and foresight of the masses. No wonder we're screwed.
I imagine you've never really engaged in political philosophy very thoroughly?
Much like any political system you can imagine, a democratic system requires a complex web of rules and regulations to function properly. For one, so-called democracies always require more specification. Are you talking about direct democracy? Are you talking about deliberative democracy? Are you talking about representative democracy?
Democracy does not mean, by the way, the "rule of the majority" because "demos" does not mean majority but people. And for the common people to rule you need a system to encompass it. Of course, over time there have been a lot of criticism and a lot of work done in deciding which rules and which structures are the most appropriate to make the necessary compromises for our political systems to work.
To put things on perspective, in Switzerland for example they have decided that the will of the swiss people is above international treaties. And this does pose a problem, for example there was a referendum a couple years back for the banning of face covering; a policy which affects everyone, yes, but affects most a particular group (muslim women). But in most cases, swiss people have a very full participatory democracy and their political system is incredibly stable. It's not perfect, and a lot of experts in the field consider countries should never be above international treaties such as the human rights treaty that most countries have signed.
When you say "we are stuck relying on the intelligence and wisdom of the masses" you're making a pro-elitism argument. In that the masses ought to be ruled by people better than the masses; and in many ways, this is the approach countries like China have taken. To me, a big problem with this approach comes from the ego of individuals. Is it really possible to change someone's mind who happens to be in a position of power such as that? Is it easy? Personally I believe this to be a much more dangerous prospect. A good example of this can be seen, I think, in Meta (the company) where Zuckerberg is pretty much destroying the company and everyone but him can see it. Yes, this man build the company, but does that expertise translate to every future challenge? It is why we tend to prefer collective decision making, usually smaller bodies, but could there be space to make better use of bigger collectives? I think so.
So in short, I think you should probably read a little more about political philosophy to be able to say something as big as "Democracy is incompatible with freedom". It's a pretty big statement.
I imagine you've never really engaged in political philosophy very thoroughly?
The opposite, I grudgingly came to this conclusion after decades of believing (or I guess, hoping) differently. Not that it's an original conclusion, many philosophers called it out long before I was even born. Took me awhile to see it.
When you say "we are stuck relying on the intelligence and wisdom of the masses" you're making a pro-elitism argument. In that the masses ought to be ruled by people better than the masses
Yes, and again I always hoped this not to be the case. But the reality is the majority of people either can't be bothered to think logically or simply aren't capable.
So in short, I think you should probably read a little more about political philosophy to be able to say something as big as "Democracy is incompatible with freedom". It's a pretty big statement.
It's the only logical conclusion though. Government only grows. And with that growth comes more and more taxation to fuel the growth and more and more laws/restrictions/regulations on individual freedoms to justify the growth.
But, say, in western Europe, a ton of things used to be run solely by the government (water, energy production, steel, carbon, telcos, radio, tv, train, local transport, air transport, postal services) and have now moved out of the government purview, isn't that the opposite of "government always grows"?
Yet in the European country I live in, taxes have not stopped growing throughout the last 20 years. The government just finds different ways of spending the money, not necessarily related to the welfare system.
And given the degradation of the postal service and passenger rail system since privatization, one might accept growing government as the lesser of two evils.
One could argue that liberal democracy offered a solution by making everyone have the same rights and focusing on making sure every one individual's right are protected in front of the majority.
The idea that everyone has the same rights and noone can legally break them was the pre-political basis of our democracies.
One could argue that, as of late, we've been focusing more on collectives and less on individuals.
Collectives can't be all equal (i.e. per definition they might have different size, us vs. them) leading to them causing an unhealthy imbalance in social power dynamics, that wouldn't happen if we focused our attention to the individual.
I was expecting some sort of pivot to "but of course all government is incompatible with freedom, and democracy is better than most, and anarchy doesn't scale well, so democracy it is!"
If there are no systems of government compatible with freedom, does that indicate there is a problem with the idea of freedom or a problem with the idea of government?
It would seem that groups of people getting along always necessarily involves some compromise between these, whether structured ("government") or the law of the jungle.
>human efforts should be directed to the pursuit of social and moral progress and the increase of leisure, not the competitive struggle for material wealth"
What about not directing anything and maintaining a free world where any individual can pursue what goal he or she sees worthy?
I grew sick of governments or groups of self appointed elites trying to tell people how they should live their lives.
> human efforts should be directed to the pursuit of social and moral progress and the increase of leisure
For better or worse we gave up on slavery a long time ago. We decided that humans shouldn't be directed but rather be left to choose their own direction. This means that they are likely to choose, literally and metaphorically, junk food over vegetables. While vegetables may be better for you, it turns out humans like to taste the competitive struggle for material wealth. If it wasn't obvious 200 years ago, we have learned that helping your neighbour live a good life doesn't spark the same desire as striving to have something to show that you are better than your neighbour.
> It's unclear who this destructive machine is serving.
Those who participate in it. This "machine" you speak of is nothing more than the aggregate of choices made by a population of people. They could change, but what's the incentive? Leisure isn't the top priority of the human. Mating is. And displays of "being better" help attract higher quality mates. We have yet to figure out how to provide decent mating options for all so competition is still required.
Id suggest this is what is fueling the political craziness across the globe, people lost faith in the system and politicians, instead of fixing the issue, use peoples anger to advance some agenda.
As long as there is scarcity there will be competition and a "rat race"
I would say we have two real scarcities left remaining: energy and the conjoined pair food/water.
It can be argued that that the latter is entirely dependent on the former and the failure of modernity was our collective inability to adopt/secure nuclear power in the period between 1940-1970, the global adoption and security of which would have pushed us very close to a post-scarcity economy and the major cultural (re)evolution that would entail.
Instead it was weaponized resulting in its demonization by reactionaries and the poisoning of it as "toxic" in the public discourse and we are now stuck in Adam Smith style economies of warfare that will eternally just create new scarcities in new cycles. I would imagine major warfare will soon begin towards the middle/end of this century over habitable space and water scarcities all problems of our own creation.
>As long as there is scarcity there will be competition and a "rat race"
That makes no sense. Human wants are infinite only at zero marginal cost. The moment there is a positive marginal cost wants become finite. Even a gift that costs you nothing has a marginal cost to receive and store it in your house. So even if the entirety of humanity gave Jeff Bezos a gift he would refuse those gifts at some point.
What western societies suffer from is not scarcity but abundance relative to our quite limited wants.
We give up an unreasonable amount of resources to buy something that is already there, land in a popular location. One thing that is special about land is that humans didn't create the earth. Suddenly there is an infinite demand for land because you own anything that happens on it, even the labor of other people working the land. The marginal cost of land is negative because of income taxation. But here is the thing. One man's land abundance is another man's land scarcity. So if you really wanted to solve this problem you would have to divide the earth equally among all humans.
I don't know, there's plenty of people competing over social progress, competing over moral progress, and completing over leisure. I suspect that Mr Mill would take a dim view of this.
Ouch. This hits close to home as I feel exactly in that "rat race" you mentioned. And I was thinking about this very topic few weeks back after rewatching "into the wild".
Before stopping thinking about this I "converged" on an overall happiness score combined with a sustainability index. In this context sustainability is in a wider sense like: are the policies of a government sustainable long term? This is to avoid a government game the system by borrowing a bunch to improve citizens happiness short term to stay in power longer.
On the other hand, our progression has allowed us to overcome challenges that could have been extinction-level events otherwise. Who’s to say what happens if we stagnate and don’t get a COVID vaccine out in time to largely stunt the disease? What sort of knock-on effects might that have had on other areas of progress?
I hate this law. There is no example of a good measure that does not become a target, nor should there be. The only question is who does the evaluating.
The typical example is: hospital emergency room wait times were made a "target" and therefore hospitals stopped admitting ambulances (literally having them circling around the block) before they had the staff freed up. But there's nothing wrong with emergency room wait times being kept low. The obvious locus of evaluation, however, was moved from the patient (who is evaluating his whole end-to-end emergency care on many metrics, including but not limited to emergency room wait time) to some bureaucrat who assesses the hospital only on the wait time.
I'd argue that "free market" pricing in general is. The attitude that "something is valuable if people are willing to pay for it" is being increasingly overfitted.
Overfitted to what? If the whole point of economics in a moral sense is to get people more value, than what does the question of if person A will buy item 1 at a higher price than person B for item 2 for better or worse reasons get the average person/company except for a distraction from their goal? Make item 1, sell it to person A, and go enjoy your more prosperity than you would have gotten for selling item 2 to person B. This proposal needs to be much more concrete to mean anything.
Overfitted to the current legal context, market conditions, regulations, etc.
A classic example would be a company which outcompetes its rivals by working around regulation that companies in that sector are subject to. That enables it to gain a competitive advantage within the system it's operating in, but is pessimisation rather than an optimisation when looking at the bigger picture and longer timescales.
I don't know about "ultimate", but it sure is a good example of one.
In fairness though, if a politician stands at a stump and says, "see, I'm doing great with GDP", but it's because they've been serving the metric rather than the underlying principles, they're likely not going to be well received.
A common example is "lines of code". If you pay by lines of code, then coders will bloat up code to pad their metrics, making it verbose and redundant.
More common is some mostly pointless (or annoying) new feature that an overzealous project manager wants to get users to 'use' (thus boosting some metric they can point at to secure a promotion), so they have the engineers implement a gigantic popup pointing at it. Or worse, they put the entrypoint to the feature in some high touch area so all of the power users accidentally click on it, thus logging an interaction and making the line go up. https://en.wikipedia.org/wiki/Goodhart%27s_law
Yup. There is simply no way we can replace GDP with another metric. There's always a thousand smartasses who say the unemployment rate is fake. It's not fake, it's an indicator and can never tell a complete story. Employment, economic activity, inflation, trade are all drowning in data points that inform some specific minutiae.
The solution is to not base policy on indicators but politics needs to keep things simple.
No it wouldn’t. It would be bloated by the number of people with serious disabilities, health conditions and retirees. As your population ages you would get a bump in unemployment that tells you nothing about the demand for labour.
In my first Economics subject in high school they told us to never look at unemployment without looking at the participation rate with it.
I think it would be useful to know if a country has a much higher dependent population than another country. It could highlight dynamics that get ofuscated when some countries put large parts of their populations under the "unemployable" label or quietly pushed into black markets, making official unemployment numbers impossible to compare with other populations.
That's called employment-population ratio and it is tracked by the BLS. It's actually a bit more valuable to track prime age employment-population ratio to factor out students and retirees. But it's still a broad indicator.
GDP, like many economic metrics, is of course not an absolute indicator of anything significant. You can set up two shell companies and have them buy and sell the same paper clip between them thousands of times a second, for a million dollars each. It will boost GDP by quite a lot.
Of course historically, such deception has not always dominated, and the apparent GDP has been a good proxy for total genuine economic activity. Economic activity is in turn a proxy for confidence: If everyone is spending more money, it means they're confident they see value being produced that they want to capture. Consumers presumably feel they'll be comfortable for years to come. Businesses think it's time to hire staff, increase production and focus on growth. These things by themselves can be seen as positive effects, but also it means GDP is effectively a crowdsourced predictor of future economic outlook. So GDP by itself isn't that interesting, but it correlates with many economic phenomena that are of interest, which is why it's been a popular measure.
I'm sure the article's authors are well aware of this. If you look at the title closely, there's a bit of sleight of hand: It is not common to claim (save perhaps for uneducated laypeople) that GDP is a measure of national success. It is commonly understood as a measure of economic health. Most people will readily grant that economic health does not necessarily mean national success, since they can decouple in crucial ways. For example, if your previously poor country suddenly becomes colonized by major imperialist powers, the GDP will certainly be bolstered, but the social and geopolitical effects may be detrimental. But when you attack the idea that GDP measures economic success, of course it sounds insightful, since it's the kind of misapprehension that is tempting to ascribe to others and not yourself. "Everyone has made a mistake- but not me!"
> You can set up two shell companies and have them buy and sell the same paper clip between them thousands of times a second, for a million dollars each.
In the case of used goods, the only effect on GDP comes from the transaction fees paid to the broker. Same with buying an already existing house: the GDP contribution is the real estate and legal fees.
And with the stock and bond markets: a trillion dollars' worth of stock changing hands only affects GDP to the extent of the brokerage fees, maybe a billion, maybe less.
And in the case of new goods, only the final product sold to consumers or held in inventory at the end of the accounting period counts towards GDP. Intermediate inputs do not count. So one paper clip sold one million times counts as one paper clip.
"GDP is only a measurement of how reliant a place or country is on the global economy. Self-sufficiency has a GDP of 0. Wasteful consooomerism has an extremely large GDP."
I have no idea who Luke Smith is but none of that article makes any sense. GDP is the measure of economic activity. A self-sufficient community would not have a GDP of 0 because they would still have transactions among themselves. Perfect self-sufficiency would actually generate a very high GDP number because of how diverse and specialized the community would have to be to take care of itself.
Outside of that everything in it is just a generic "companies are bad" "fiat currency is bad" "government is bad" spiel that has been said a billion times already.
Initially, he means that a single self-sufficient person contributes 0 to the GDP. Then it seems like he means people in this village don't trade with each other, but I'm not sure. If they trade without money, first of all that's very inefficient, secondly there's still a GDP of sorts but maybe he means it's not measured.
But he doesn't care about efficiency. He's not saying GDP is a poor indicator of economic growth. He's more saying that economic growth is bad, globalism is bad, and maybe hinting that *skims other article on site* an ancient, simple life according to Orthodox Christianity is the true path to happiness. And this is too off-topic for me to discuss, I'm just laying out what the dude is saying.
>Initially, he means that a single self-sufficient person contributes 0 to the GDP
There is probably an argument that for accounting purposes a person should bill themselves at market costs for self-work. E.g. mowing the lawn, changing one's own oil, doing one's taxes -- all are economic activities with a value associated which is 'lost' in a traditional GDP calculation.
Yeah, if it were possible to do that, it'd make sense. Best people can do is mentally bill themselves for their time and factor that into personal decisions.
> A self-sufficient community would not have a GDP of 0 because they would still have transactions among themselves. Perfect self-sufficiency would actually generate a very high GDP number because of how diverse and specialized the community would have to be to take care of itself.
And all this is assuming that the community uses money. A self sufficient community would have 0 GDP iff no money was exchanged.
I'd agree. Pedantically, though, this wouldn't be GDP by definition.
I do think you can substitute "sum of numerical value" for GDP in most non-technical contexts and have them make sense.
In this case it could be that an economy doesn't trade 'rationally', so summing numerical values doesn't make sense. E.g. I'll trade you 1 chicken -> 2 shoes, someone else will trade 1 shoe -> 2 chickens.
I guess there would still be some numerical measure, but it'd be more of a matrix than a single number.
Wasteful consumerism, if it's truly wasteful, will also lead to lower future GDP growth. It's not a bad long-term metric. But I won't care if the US president claims to have moved the GDP by X%, even across two terms. The market can stay irrational for a long time.
To use Luke's example, say buzzsaws introduce planned obsolescence. People buy more saws for no good reason, which is "good for the GDP." More fixed income goes to buzzsaws instead of eventually being spent on something more useful. The buzzsaw industry expands a bit, pulling people and resources from other endeavors. Society is collectively spending its effort producing then throwing away buzzsaws when it could have created future growth through technology etc, which the GDP would eventually measure.
Having visited Bhutan and spent a considerable amount of time there, I've noticed the locals aren't that much happier than most other places in the world. It's difficult to be happy when you have to constantly worry about how to put food on the table. I've gotten swindled enough times in Bhutan, however not as much as in certain "shit-hole" cities that I shall not name.
The whole "GNH" concept was created by McKinsey, contracted by Bhutan - I know the leads on that project. While it does bring in some level of national identity to rally around, I think the primary benefit it brings is in marketing. There are some meditation centers in Bhutan that charge more than $5K/day, targeted towards the extremely rich who have lost a sense of peace in their pursuit of wealth. This, of course, is a grand con - there's no happiness you're going to find in Bhutan that you can't find in your immediate surroundings.
New Zealand, on the other hand, I feel is doing a lot better. There's a general acceptance that communing with nature is important, while at the same time, they readily embrace modern comforts and continue building their economy. They're also attempting to build a better way to interact with natives and are creating programs such as EHF (ehf.org) to attempt to tackle the grand planet-wide problems, with impact as a focus.
True impact is impossible to measure with just any one number. Anyone who attempts to put a number to this will run into the trouble of that number getting gamed.
>The whole "GNH" concept was created by McKinsey, contracted by Bhutan - I know the leads on that project.
source? I searched around couldn't find anything resembling that. The closest I found was one source[1] which stated the king of Bhutan used the phrase "Gross National Happiness" in a 1971 speech, and that the country paid McKinsey $9M for a report in 2009[2].
As an aside, I still can't beleive we're using 'shit-hole' in this way because that man said it once. I myself am guilty, even referring to my own home country at time as such without realizing it.
But back to the topic, I think you're right about GNH and it's implications, especially when compared to Aotearoa and their efforts in establishing a more genuine level (rather than measure) of a literal 'national happiness'.
As a last touch, your comment (both words used, and in what it discusses) is comically ironic in that McKinsey is currently under investigation in my country for advising in a project that ended up landing us a few million dollars poorer and without a functioning public transport system that we could genuinely really benefit from right at the moment.
As a New Zealander, I can say that the one thing NZ does really well is marketing, both externally to foreigners and internally to our own citizens. While it is true that NZers love getting out in nature, when it comes to protecting it we're frankly pretty terrible (see here: https://interactives.stuff.co.nz/2021/this-is-how-it-ends-ex...). We have the highest proportion of threatened native species in the world, our fishing industry is out of control, and intensive agriculture is destroying our natural environment (65% of our rivers are considered unswimmable). Our climate record is appalling and not getting much better (see: https://climateactiontracker.org/countries/new-zealand). Jacinda Ardern gets a lot of press for her climate-friendly rhetoric, but the fact is that the UK under Boris Johnson did immeasurably better on climate action than we have under her.
Our ruling Labour party (supposedly-but-not-really left-ish) does talk a lot about wellbeing budgets, but both our major parties are stuck in a neo-liberal trap where they refuse to allow national debt to get over 30% of GDP (crazy low by international standards), and also refuse to allow the tax ratio to get over that figure. This has meant that all our public services have been systematically underfunded for three decades, which has had a terrible impact on our poor. We like to smugly think that our Aussie neighbours are run by a bunch of knuckle-dragging troglodytes, but they have a vastly fairer tax system (see: https://thespinoff.co.nz/politics/07-09-2022/lets-copy-and-p...) and welfare system. The British High Commissioner recently said it very well (see: https://www.stuff.co.nz/environment/climate-news/300178615/o...): "You have Scandinavian ambitions in terms of quality of life and public services, but a US attitude to tax. The brand 100% Pure New Zealand lulled many into a false sense of security, when the environmental reality is far more challenging". Add to that the least affordable housing in the developed world (which politicians of all stripes refuse to touch), and the wellbeing of our less well-off is in a terrible state. If you are lucky enough to own a house, and have some money, you can live in a little bubble and pretend it's not happening to others here, but sadly you would be mistaken. God forbid you might need some of the dustier corners of the health or education systems, like having a kid with special needs.
Is this happening everywhere? Yes, it is, but I think there's a general perception that New Zealand is somehow better than a lot of other places, when in a lot of concrete, tangible, measurable ways it's actually significantly worse than most countries that we would like to compare ourselves to. I would struggle to recommend NZ as a place to move to for expats.
I don’t personally like it. It measures input factors rather than outcomes. I think surveyed happiness multiplied by life expectancy is a better measure.
I would think that life expectancy is a poor metric, because: (1) the differences become smaller as it rises so it becomes dominated by noise, (2) it overvalues the last few years of life compared to the rest of a life, and (3) expectancy is highly dependent on how it is calculated along with parameters such as input factors, similar to those that you dislike!
In summary: intuition can often be a very poor substitute for research, and before relying on your intuition it is a good idea to look at the basics.
Thing with this is that causality is so much harder to prove so any type of evidence-based policy is reduced to stabbing around in the dark hoping that the odds of the next happiness poll are not diluted by some random corruption scandal.
The whole point of having measurable metrics and models is that they allow the use of the scientific method in policy making, whilst asking random people in the street might just get different answers whether you are asking them during or after their lunch break.
> causality is so much harder to prove [...] The whole point of having measurable metrics and models is that they allow the use of the scientific method in policy making
A happiness index is hard to measure, agreed... but that's also not how GDP is used.
Policy-makers will say "our research shows lowering taxes will do X and increase GDP", or "our research shows raising taxes will do Y and increase GDP". That happens now. I don't think we usually actually manage to tie an actual law or policy, as implemented, back to a change in GDP pretty much ever. It's not really the scientific method.
What GDP gives us is a way to frame policy.
If our number were "National Happiness", policies would be framed in terms of that. "Increasing taxes lets us make this work better, and increases happiness" and "Decreasing taxes gives people more money, which increases happiness". The same policies, but framed differently, and with different arguments as a result.
That framing seems better to me, and how measurable and "scientific" it is seems like it would barely change.
>Policy-makers will say "our research shows lowering taxes will do X and increase GDP", or "our research shows raising taxes will do Y and increase GDP". That happens now. I don't think we usually actually manage to tie an actual law or policy, as implemented, back to a change in GDP pretty much ever. It's not really the scientific method.
Strong disagree on this. Policies aren't just framed on "GDP goes up, we should do it", they're framed on "GDP goes up by $x at the cost of $y, so we should do it". A policy that claims to increase GDP, but where $x is smaller than $y is going to get shot down even if it sounds good.
With GDP there's at least some way of checking your estimates. You can fudge your estimates up or down by changing your assumptions, but in the end you're still trying to pin down how much economic activity will occur and that can be cross-checked with tax records or government statistics. How are you going to do the same with GNP?
It’s the usual tension between an easy measure of something highly misleading and a harder to measure actually meaningful index.
IMO going the easier route invariably brings along many other dangerous shortcuts.
For instance here you mention “scientific method” for GDP when the measure in itself isn’t that reliable: what fits inside GDP isn’t fixed nor objective, and a lot of decisions happens upon survey. We have countries (most countries ?) regularly reshaping how they measure GDP to fit the narrative they need.
To use an ecological analogy, it's about as meaningul as the gross biological productivity of an ecosystem, which in the vast majority of systems means the amount of carbon converted to biomass by plant photosynthesis.
However this tells you very little about the health of the system - it could mean a river choked with invasive weeds and toxic algal blooms, or it could mean a river full of insects fed on by trout that local humans harvest regularly as a local source of protein.
Additionally, some ecosystems (like deserts) have low gross productivity, but as deserts go, are healthy ecosystems that just support less life than tropical rainforests do.
Hence, you just need a lot of other numbers besides GDP to make sense of how an economic system is doing overall. Proably about a dozen at least, but that's too many for simplistic propaganda and click-bait headline purposes.
Tell that to the Canadian government. It currently considers massive deficits fine because of our debt-to-GDP ratio, despite GDP being driven by a real estate bubble for the last several years.
It is not just Canada. The US and other countries justify their debt levels by this and it is used by bond traders to measure health of bonds issued. Military spending as percentage of GDP is also cited. So if military spending and borrowing ability is pegged to GDP, you can see why we pump it up as much as we can as distorted as it is on a nation's internal well being.
Is there a requirement to keep the debt-to-GDP ratio below some cap or something? Or is this just the reason the give when questioned about it by the media, etc?
That's so laughable a statement I don't know where to begin. Maybe the private sector cares about it less (questionable in itself given how the stock market obsesses over recession signals) but governments absolutely use GDP for policy decisions.
Deficit spending, as other posters have pointed out is perhaps one of the biggest policy decision all governments take every year. Its always presented as a percentage of GDP to make it palatable.
Voters respond to GDP prints. See the hand wringing and pearl clutching around whether or not we're in a recession. If voters care about it, politicians do too.
Here in the UK, the previous prime minister Liz Truss introduced a raft of policies based on stimulating economic growth. I don't know what this means, if not boosting GDP, but perhaps someone can show me otherwise. It even got to the point that less right-wing parties were labelled as the "anti-growth coalition".
The gig economy boosts GDP. If I work as an employee, I am just an expense to a company. If I setup an S corporation and contract my services to that same company, I am now growing the services sector and increasing GDP. I am still doing the same amount of work but just increasing transactions. I seem to be incentivized by pay and taxes to work as contractor, and this may be because the government is trying to pump GDP.
No, if you contract your services to that company, your contribution to GDP gets cancelled out by the intermediate consumption of that company purchasing your services. The GDP is the same either way.
How does it get cancelled out? Take this example: Company A has $1M revenue from creating services or products. Then my company B invoices company A for $250K. GDP is $1.25M. I do not report who I billed to the government who compiles GDP. So I don't see how they can not include my services as part of GDP.
Company A reports $250K in non-employee-compensation expenses to the government. This intermediate consumption gets removed from their share of the GDP, so the total is ($1M-$250K) + $250K = $1M.
As the article correctly mentions, GDP is analogous to a company revenue. It doesn't directly reflect the profit, but it is an objective metric which is relatively easy to reason about.
Also, I am baffled that this is apparently a Nature publication, sounds more like an op-ed for a newspaper. What was the research result that was communicated in the article? It's barely exhaustive enough to count as a literature review.
It's a "comment" for Nature, not a journal article. They are basically the op-eds of the journal, along with "correspondence" and "column" pieces, as far as I understand - and very much not held to the same standards as the journal articles.
GDP is a poor metric. Of course it's not going anywhere. They'll be measuring GDP 1000 years from now; but perhaps we have a better metric that gets the spot light instead. It's upon folks like nature to find the new metric. After this movement in 2014, there was a even worse attempt to use 'happiness' as a measurement but that sure fell on its face badly.
To me there are a few immediate problems with GDP that if addressed and measured may start showing a different picture of the world.
RAW GDP in 2021 for the USA is about 23 trillion; an increase from 21 trillion. You have to exclude unfunded debt. Which is roughly 2 trillion in 2021. Then you also have to exclude, NOT include public administration. So a 4 trillion shift. We are roughly at 15 trillion.
Then you also have to exclude inflation; which at these measurement points was roughly 7%. So we're about 14 trillion from the original 21 trillion.
So in 2021, the claim was 6% gdp growth, but true GDP was more along the lines of -30%. This is shocking, but mainly because we're looking at a fake 21 trillion. So we would have to do the same transform on the 2020 numbers.
Basically what I'm illustrating is government deficit spending, real gdp, and public administration are some significant negatives to GDP.
>GDP measures mainly market transactions. It ignores social costs, environmental impacts and income inequality.
But GDP's role was never to measure income inequality, environmental impacts, diversity, affirmative actions. It was always an economic tool, not a SJW tool.
As an economic tool it just measures how well a country is able to produce and sell goods and services. And for that purpose I know no other better tool than it and it's derivative, GDP per capita adjusted for PPP.
I've found personally this is the part that cause confusion. The per-capita makes it look like each person is equally participating in the gross production and receiving an equal income from it.
Obviously that's false, the distribution is very uneven, so I've always wondered why we want it per-capita?
If 1 out of 100 people produces 100% of the GDP and it's the same total GDP as some 10 person neighbor country, why adjust it by capita?
But what if capita doesn't map to efficiency? I feel the idea of making it per-capita seems a bit dubious, I really doubt that you get an even per-capita distribution, it's probably very skewed.
So if passive income is the rational goal, shouldn't that be the measure of national success - numbers that express the shape and scale or aggregate passive income. It's also worth assuming that the equity barons (to borrow a term from The Diamond Age) hire capable administrators close to home, who get cushy office jobs and even small profit to invest and get a little equity themselves. One can also discuss more and less desirable distributions between the equity barons and admins. The rest of the world gets nothing, or as little as is necessary to keep the peace, and America remains in undisputed charge until some natural disaster ends human life. And absent any particular reason to spread life beyond our thin and fragile biosphere, we won't.
Rather than paper over the ugliness I think we should accept it and see what can be made of it. A nation will have succeeded if it can spread life beyond Earth. It will have succeeded if it can protect it's citizens capacity for a calm, creative, productive life filled with wonder and joy long enough for enough people to realize this, and get to work. It's not going to be easy, and our time is limited.
Is that the reason GDP is silly though? Under the assumption that the car will attempt to go as fast as capable (not usually true for cars, plausibly true for an economy) and that the capability is a measure of quality (true for both), GDP serves as a nice proxy for something we do care about.
Right, and usefulness (however defined - hauls cargo, go fast, fuel efficient, looks sexy) determined demand which influences market prices (assuming supply isn’t overly restricted).
So market price tends to be a pretty good proxy for usefulness.
People who complain about GDP as a measure are usually just complaining about things they don’t like that go into GDP like pointless (to them) consumer goods.
> Right, and usefulness (however defined - hauls cargo, go fast, fuel efficient, looks sexy) determined demand which influences market prices (assuming supply isn’t overly restricted).
> So market price tends to be a pretty good proxy for usefulness.
That's quite a jump; market price can reflect usefulness, but it can reflect a lot of other things too. "This car must be useful to someone because it's expensive" is already questionable logic (at least without stretching "useful" to the point of meaninglessness), and "this car is more expensive than my current car, therefore it would be a good upgrade for me" is blatantly absurd.
It’s not absurd. Usefulness is purely the decision of the buyer. You may think buying an expensive car to impress others is stupid, but so? All car sales don’t have to fit within your definition of usefulness.
Unless you want the government to step in and define appropriate “usefulness” it’s always going to be up to the Buyer.
> Usefulness is purely the decision of the buyer. You may think buying an expensive car to impress others is stupid, but so? All car sales don’t have to fit within your definition of usefulness.
Exactly. So saying that a more expensive car is always more useful is crazy. Maybe the more expensive car is too big for the roads where I live, or has worse fuel economy, or has less interior space.... Price and usefulness are not completely unrelated, but assuming they're equivalent is absurd.
Of course they are equivalent, in aggregate across all purchasers.
You aren’t the only buyer, but if they are selling cars someone thinks it’s worth the price.
That’s the beauty of free markets - multiple products for different tastes and different perceptions of value.
I can go out and choose from a small or large, basic or luxury, fuel efficient or not, large capacity or small.
If I don’t think the price is worth the offering, I don’t buy and that impacts the price in some small infinitesimal way. In aggregate across all car buyers manufacturers price for certain segments.
Each product has a subset of buyers who buy the car based on their own interpretation of value.
Even in aggregate, there's a great deal of slippage between the two things. Making a small number of cars for very rich people might attract more revenue than making a large number of cars for regular people, even if the latter would be more useful overall. Manipulative advertising and predatory salespeople might mean you can sell cars for more even if those cars are less useful. A car that pollutes less, or is less likely to kill pedestrians, is certainly (all other things being equal) more useful, but since the buyer doesn't benefit they are unlikely to pay much extra.
In a theoretically perfect free market, prices might be equivalent to usefulness. But very few real-world markets achieve that, and the differences are important.
I’m not sure how making a small number of cars for the ultra rich is “slippage” it sounds like value for specific buyers. You may not like people spending money on it, but you’re not the buyer.
And I don’t buy the predatory advertising idea. People aren’t as stupid as you think and if they’re happy that’s value, if it’s for something you put no value on. I mean hell, Apple is clearly offering “cool in crowd” as value for their products.
> I’m not sure how making a small number of cars for the ultra rich is “slippage” it sounds like value for specific buyers.
Because the rich can pay a huge amount for a marginal increase in usefulness. So you can increase prices more by delivering the same amount of value for the rich than for the non-rich.
> if they’re happy that’s value, if it’s for something you put no value on
And if they're not happy, just numb? An addict will pay to get their fix but it doesn't make them happy, and even they themselves would tell you there's no value or usefulness in it.
> And clearly people buy green cars.
Some people buy cars that are marketed as green, sure. You only have to look at the increasing pedestrian fatality rates in the US to see that there's some kind of market failure going on.
It is only one measure of success, but it is not misleading. You can just use it and 6 other measures. Then if infant mortality goes way up you can still say let's figure out how to manage that and if it costs some gdp, that's fine. In fact real policy is saying we should spend more of that gdp on prenatal care for example. Doing that will neither make gdp go up or down.
And it's unclear who they're even talking about here. In the democracies politicians hardly talk about it at all. It's usually healthcare, some group is bad, or something should be regulated differently (like energy).
Of course. that's the meaning of politics. GDP is not a natural law. Economics it
s not a hard science it is full with ideology.
The configuration space allowing a functioning society, while constrained, is still very large. we make choices to navigate that space. These choices are based on preferences.
It's been a while since a very specific ideology gained a hegemony in economic thinking. As hegemony often does, it pretends to be a natural law, inevitable and unchangeable.
GPD is also personal choice. There's no Grand Law of the Universe which says GDP should be the primary metric. Its importance is an invention of human minds, out of either human nature and/or historical happenstance.
It's funny to argue on one hand that GDP is broken because it tracks only economic metrics and not social ones, and then push another index (GPI) which claims that "genuine progress" peaked in the 70s and went only downhill from there.
If "back in my day..." was an index this would be it.
Nope economists may not, but politicians often do (when it suits them), and many "corporate bean counters" use similar measures of "success" (when it suits them), and "Average Joe" takes whatever their favorite politician or corporation tells them as "Gospel Truth"…
This whole question of 'are material things really all that matters' is kind of boring, but the article does provoke an interesting question: how do you handle bubbles?
If you have a colossal GDP, but it's all hinging on a very hot tulip (or housing) market, does that really do all the things a colossal GDP that's, say, service economy based?
One of the things people like about GDP is you can sort of get a good guess about how, when the rubber hits the road and countries start pushing and shoving each other, or a calamity like COVID occurs, how it's going to turn out. I wonder how the extremely bubbly (almost foam-like) post-70's economy factors into this.
Does anyone think GDP is a measure of national success?
What it is is an indispensable measure of the strength of a nation's market economy - which is a major limiting factor in tackling actual end goals such as the well-being of the population.
I don't think there is any agreed upon measure of "national success". GDP as a measure pretty closely tracks the economic condition of a country, and that is what it is used as.
IMO the main limitation preventing GDP from being a much better indicator of national success is due to its inability to show how growth - or more importantly - wealth is distributed. Obviously, wealth distribution is critical part of making progress and comfort more distributed and this is what in fact makes nations more successful than others in long term.
GDP was never ment to be used as tool for measuring anything other than how fast the British economy grew after the recession. A lot has happened since then, almost 100 years ago. GDP has unfortunately stuck as a tool.
I am sure the Afghan Taliban and the Iranian Mullahs agree:
You can't put a price on female virtue/modesty/chastity. So while keeping our women locked away at home depresses the GDP, it is a misleading measure of national success anyway.
I accept that fiat money is entirely supported by the notion of perpetual growth, but in the abstract it's hard to come to terms with the idea our society is so fundamentally committed to, and reliant upon, growth.
An economy can function without growth. Stagnation is perfectly viable. But why should a society not be fundamentally committed to growth and aspire to increasing greatness?
Relying on growth generally means taking on debt and risking large sums of capital on projects with the hope that it brings a return.
Some projects will work out, and some won't. When you're a company this is largely fine -- the worst case is that the company goes under, dissolves, and employees move on to new positions at new companies.
When you're a city, failure is not an option. Chicago officials can't simply say "welp, that investment didn't pay off like expected", shut down the water lines, and ride a golden parachute into the sunset while its citizens fend for themselves.
What's more, at the local level, the city's revenue is largely unaffected by successful growth-targeting projects. Any revenue that comes from GDP is largely in the form of sales and income taxes, which largely go to the state and the fed. So if a city is tracking GDP as a key metric they're in for a rough time. It means they're getting saddled with 100% of the maintenance liability of projects, and (usually) 0% of the revenue.
Unless a project is bringing in more citizens and growing the tax base, it's going to operate in the red no matter what. Most commonly, the project will be a road or highway that ends up displacing people, spreading them out, and diluting the tax base.
So at least at the local level, focusing on growth, specifically as measured by GDP, is a recipe for disaster (e.g. Detroit). I'd much rather my city focus on some other metric that's tied to sustainability.
Given the established link between energy consumption and human welfare and happiness...why not use BTU consumed per capita? Or even Barrels of oil equivalent.
The graphs are very interesting, especially the divergence of GDP from GPI in China. While the theory that GDP is a poor measure of delivering real improvement to human lives is believable, the numbers for China may also indicate they may have been cooking the GDP books since about the early 2000s.
Unfortunately there is a lot of anti-China disinfo going around. But untrustworthy data from China is a thing. I wonder if this research will reveal that not only has quality of life stagnated in China, but also the GDP numbers are not as good as has been claimed for over a decade, which affects assessments of sovereign and private debt, etc.
The Gini coefficient is a pure measure of inequality, you can "improve" it while making literally everyone worse off (e.g. destroy all things of value in your country, now everyone has nothing and you have perfect equality).
I mean if you "destroy all things of value in your country" I don't think you're going to be concerned about economic measures whether GDP or Gini, so isn't that kind of a red herring?
You wouldn't do something so extreme, but if you were trying to improve the Gini you might adopt measures that seemed to "succeed" but were actually reducing everyone's wealth.
I was surprised to learn that, in the US, health care is part of GDP. How messed up is that? Health care costs are not a productive output of an economy and to include them in GDP is ludicrous.
Entertainment is positive value ("I want to watch/play/whatever this because I enjoy it"), healthcare is compensation for negative value ("I got injured and want to feel a little less shit"). Nobody goes to the doctor just because they felt like doing it that day.
Counting the positive contribution of healthcare without counting the negative contributions of the injuries that lead people to seek healthcare is going to lead to a metric that looks better the more injuries there are!
Exactly. Putting health care in GDP also puts a positive light on rising health care costs -- and in the US there is nominally zero consumer power against rising health care costs. Most of the time it's impossible to know how much something will cost prior to the appointment, procedure, etc -- so people cannot "vote with their wallet" like they can with other spending.
It doesn’t put healthcare costs in a positive light, it puts the economic surplus to support healthcare spending in a positive light.
There’s a subtle but critical difference between them. Namely you can simply increase healthcare spending by 100x in the US without dramatic improvements in other parts of the economy.
This would be true if health care costs were discretionary, but they are not.
Your bank account going to zero due to breaking a leg, or medication needs, or X is not a sign of a a healthy economy. If that health care demand hadn't occurred, you could have spent your "economic surplus" in a way of your choosing -- perhaps frivolously or perhaps on something that provides longer term financial upside to you, your family, your community, whatever.
The problem with counting health care costs as part of GDP in the US is that it is a cost which is not distributed in any rational way -- local markets have vastly different service costs, employers have vastly different bargaining power with insurance companies, and individuals have vastly different health care needs with vastly different costs associated.
If health care were normalized and distributed across a population (instead of cost burden ultimately falling to individuals) then I can see the reason to count it as part of GDP. Then it's somewhat analogous to physical infrastructure -- a healthy economy can support spending money on infrastructure.
But, no one goes bankrupt because the town voted to increase taxes slightly to pay for a new road or renovating the local library. Health care cost is the number one cause of bankruptcy in the US -- health care cost increasing does not necessarily mean there is "economic surplus" to support it, instead more people could be driven to bankruptcy.
Those regional differences are hardly limited to healthcare just look at a 1,500 SF apartment in Memphis TN, vs NYC. The important bit isn’t a question of bargaining power it’s choice. Someone with a broken leg would very much like medical treatment, and had a surplus or leverage with an insurance contract to pay for it. The fact they got ripped off is no more relevant than someone paying full price for a designer handbag or whatever.
As to bankruptcy, unpaid medical bills aren’t part of the GDP. It’s a measure of output so they also exclude things like buying a house for 1 million and then selling it for 1 million.
First do you really think people will get more injured to game GDP?
Anyway the metric is capacity to fulfill peoples wants. If the population has injuries then it will be less productive and therefore have a lower GDP. See the broken window fallacy.
> First do you really think people will get more injured to game GDP?
I think politicians will be incentivized to adopt systems that underfund preventative care in favour of more expensive emergency care, and this has already happened.
> Anyway the metric is capacity to fulfill peoples wants. If the population has injuries then it will be less productive and therefore have a lower GDP.
Only to the extent that those injuries affect economic productivity. Someone at the bottom will "earn" more in one medical bankruptcy than in an entire lifetime of minimum-wage work.
> First do you really think people will get more injured to game GDP?
Death squads going out and punching people to get them into hospitals? Probably not.
Lowering safety/emissions/etc standards in ways that both lead to increased immediate profit and (hopefully unintentionally) causes an increase in injuries over time? Absolutely.
There is a balance between worker safety and productivity. Even the CCP who cares about human rights about as much as a shark is still trying to reduce pollution to some degree because the current level is a net negative on GDP.
As such even your example is really about productivity not simply using healthcare to boost GDP.
I hope it is or that would mean our doctors and nurses aren’t paid!
GDP is literally just goods and services provided. So any compensated activity or good is included, so things like doctor's salaries, teachers, social workers are all included.
It's hilarious how people have such an aversion to GDP when it literally represents stuff they want.
The primary measure should be the physical health of the humanstock. If your "line goes up" but you have obese, mentally fragile, neurotic people on your hands, you're doing something wrong. Many things will follow naturally once you make peak physical health the top goal.
Not complaining but I have to say, being downvoted because I value actual health over some synthetic econometric measure that our managerial overlords tell us is "what akshually matters" is indefensible, y'all!
If I were an ultra-rich who owns 10% of the entire nation's wealth, it would be rational to promote GDP as the main indicator of success, because 10% of that GDP belongs to me. On the other hand, if I were the collective consciousness of the people, I'd define success in the percentile terms, like you said.
It is interesting how western countries want to change the metric for economic progress when they are lagging on it. They wouldn't leave GDP as metric if all was well.
You're saying western countries want metrics which show that they're doing well and GDP no longer fits the bill? My intuition is that the opposite is the case; people in countries which have high GDP per capita who still _feel_ that they're suffering want numbers that validate their problems as real and serious.
Americans are on top from the GDP perspective, in the top 10 for GDP per capita, but it doesn't make them live longer or healthier, doesn't make them happy or less stressed, doesn't give them good schools or stability or fulfilling work or optimism about the future or confidence in institutions. I want the leading metric to show that things are _bad_ so politicians stop pretending that they're good at governing just because of the success of an economy they have little to do with.
Whatever attitudes there are in regards to GDP across a diverse set of societies is essentially a deliberate and sinister choice by someone. That much is obvious. However, the thrust of the article is actually pretty much the opposite, that Western/developed countries stubbornly want to keep the metric of GDP due to "vested interests".
In truth, pretty much nobody really knows for sure what policies actually will increase GDP, or what causes the short term fluctuations (business cycle / recession) or variation in long term divergense between different countries in the first place. The more honest academic economists will freely admit this. (I was explicitly thaught so in my graduate macro-economics courses). So I think it's a strawman to think that countries/governments are engating in some kind of myopic GDP maximization plan.
I think the appropriate analogy is household or personal income. (GDP is just all incomes in a country summed up and corrected for inflation.) It's probably not the most important thing in the world, and probably not the most important determinant of personal happyness or life satisfaction. But a severe lack of it (especially compared to the people around you) or an unexpected large drop will probably be considered problematic by most people.