Tuesday, January 7, 2014


One of the byproducts of reading, thinking, and writing—which is how I spend most of my waking hours—is that the more you learn, the less you realize you know. 

It is just as well death comes along or you’d blow a gasket.

That convenient ‘certainty of youth’ thing vanishes although you become amazingly good at hiding your inner doubts.

Typically, you adopt a look—what I always think of as a carapace—which makes you appear knowledgeable even if you are a blithering idiot.

However, looking as if you are master of your area of expertise doesn’t mean you are. But that doesn’t seem to matter in a disconcerting number of areas. Politics, medicine and economics come instantly to mind. Economists, for example, have a truly awful track record of forecasting economic growth, but the media go back to the same experts time after time—because who else should they talk to?

Actually, I think they should talk to people who have a proven track record of getting it right regardless of whether they are credentialed economists or nor. But that’s not the way we work. We value credentialing over competence any day of the week—and a credentialed expert, who looks and sounds the part, scarcely has to be competent at all..

Aspects of our culture are decidedly peculiar.

I’m on this track because I’ve been thinking about economic growth. Our society focuses on it to the exclusion of almost every other metric when it comes to assessing the wellbeing of the Nation even though we know perfectly well (or should know perfectly well) that GDP is an impressively poor indicator of how well we are actually doing—and that’s assuming we are measuring it accurately (which we should positively not assume).

Folks, this is nuts. We are making major policy decisions (arguably most of our decisions given the importance of the economy) on the basis of data which we know to be grossly inadequate—and where superior alternatives exist.

Why do we do that year in, year out?

This brings me to the question of growth itself. There is currently a consensus that we have to have good economic growth if we are to balance our budget and solve our various problems—but is this true?

I’m far from convinced it is. Growth has all sorts of negative side-effects (giants being just one of them) in addition to its positive aspects. This doesn’t mean I’m against growth. I would just prefer if we adopted a more useful metric in relation to society’s progress, and really thought the implications through.

A further twist in relation to growth is that we act as if we have little or no control over it—as if it was a random bean whose growing rate was decidedly uncertain.

This begs the question of how so many other economies have grown so much faster than the U.S. over the last 40 years—and are continuing to do so. Were Singapore, Taiwan, South Korea and so on just accidents—or does this planning thing actually work? And how about Scandinavia, Germany, Austria, Holland and even much criticized France? And, for the hell of it, I’ll throw in Vietnam, Indonesia and China. I’ll even add Poland and a good chunk of South America. I’ll top up the whole thing with much of Africa and Australia.

I’m borderline on India for reasons you will, of course, be aware.

The thrust of my argument? Treating the U.S. economy as if it was a random bean isn’t working. However, we can’t plan until we have some broad consensus as a nation.

And given that we can’t plan, arguably it doesn’t matter if use a mediocre benchmark such as GDP.

Needless to say, it defies credulity to believe that perhaps our legislators, economists and media—all well educated, intelligent, honorable people—just aren’t aware of GDP’s flaws and limitations.


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