Tuesday, December 08, 2009
YOU CAN'T RECOGNIZE A RECOVERY IF YOU USE THE WRONG INDICATORS
Jonathan Rowe, Yes Magazine - One reason that the nation has not made more progress toward an economic "recovery" is that the people in charge really don't know what one would look like. The top economists in Washington don't appear to have asked the obvious question, "Recovery of what-and for what?" Instead they have followed the old drill, tried to rekindle the old flame, and remained wedded to the old guideposts that leave them looking at yesterday and trying to see tomorrow.
Just recently, the president of France realized the stupidity. He has decided that his nation's measures of economic health need to change to account for today's challenges instead of yesterday's. As Washington gears up to spend billions in more "stimulus," it would help to ask exactly what it is trying to stimulate-and most importantly, exactly what would constitute success.
Economic indicators are our national psyche's main gauges, the mirror into which we look to see how things are going. In a market culture-which is to say, a money culture-the prospects for money become the prospects for ourselves. Such metrics as the Gross Domestic Product have an oracular status; reporters watch them obsessively, policy experts steer by them, and politicians march to their command.
Yet for the most part the indicators are a crock and testimony to the grip of yesterday upon the expert economic mind. The prime example is the GDP, the anachronism of which is a secret, it seems, only within the media and policy establishments that invoke it constantly. Any measure that portrays an increase in car crashes, cancer, marital breakdown, kinky mortgages, oil use, and gambling as evidence of advance-as the GDP does-simply because they occasion the expenditure of money has a tenuous claim to being reality-based discourse. Metrics are silent rulers, in both senses of the word. In defining the task, they also define the steps we must take to carry it out. . .
Another example is "productivity," which, if anything, is even more totemic. An increase in output per hour worked-which is the reigning definition-is deemed the stairway to economic heaven, and the goal most devoutly to be sought, no further questions asked. Thus the excitement recently when the Commerce Department reported that productivity had increased at an annual rate of 9.5 percent during the third quarter of 2009.
But exactly why is this such good news? "Generally, when U.S. workers are more productive that's a really good thing for the economy," observed a writer on the Atlantic's website. "It means a higher GDP will result." The statement is standard issue, and remarkable only in its circularity (and that the ratio of fallacy to sentence is one to one. . .
Labels: ECONOMICS, GDP, PRODUCTIVITY
12/05/2009 | Comments