Retire GDP Metrics That Don't Factor Social Progress, The Environment, Natural Resources; Stiglitz
- It's time to retire metrics like GDP. They don't measure everything that matters.- Joseph Stiglitz. The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore. The Guardian, Nov. 24, 2019.
- "It is clear that something is fundamentally wrong with the way we assess economic performance & social progress."
- "The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy."
The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Will we be able to prosper within our planetary boundaries? Can a modern economy deliver shared prosperity? And can democracies thrive if our economies fail to deliver shared prosperity? These are critical questions, yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.
The standard measure of economic performance is gross domestic product (GDP), which is the sum of the value of goods and services produced within a country over a given period. GDP was humming along nicely, rising year after year, until the 2008 global financial crisis hit. The global financial crisis was the ultimate illustration of the deficiencies in commonly used metrics. None of those metrics gave policymakers or markets adequate warning that something was amiss. Though a few astute economists had sounded the alarm, the standard measures seemed to suggest everything was fine.
Since then, according to the GDP metric, the US has been growing slightly more slowly than in earlier years, but it’s nothing to worry about. Politicians, looking at these metrics, suggest slight reforms to the economic system and, they promise, all will be well. In Europe, the impact of 2008 was more severe, especially in countries most affected by the euro crisis. But even there, apart from high unemployment numbers, standard metrics do not fully reflect the adverse impacts of the austerity measures, either the magnitude of people’s suffering or the impacts on long-term standards of living.
Nor do our standard GDP measures provide us with the guidance we need to address the inequality crisis. So what if GDP goes up, if most citizens are worse off? In the first three years of the so-called recovery from the financial crisis, about 91% of the gains went to the top 1%. No wonder that many people doubted the claims of politicians who were then saying the economy was well on the way to a robust recovery..During the Clinton administration, when I served as a member and then chairman of the Council of Economic Advisers, I grew increasingly worried about how our main economic measures failed to take into account environmental degradation and resource depletion.
If our economy seems to be growing but that growth is not sustainable because we are destroying the environment and using up scarce natural resources, our statistics should warn us. But because GDP didn’t include resource depletion and environmental degradation, we typically get an excessively rosy picture. These concerns have now been brought to the fore with the climate crisis...
More, https://www.theguardian.com/commentisfree/2019/nov/24/metrics-gdp-economic-performance-social-progress
Also, Climate Change In The Next Decade, What Climate Change Will Look Like, Nov. 2019 Business Insider
https://www.businessinsider.com/climate-change-in-the-next-decade-2019-11#last-year-the-ipcc-warned-that-we-only-have-until-2030-to-act-in-order-to-avoid-the-worst-consequences-of-severe-climate-change-2
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The usual way of managing those when politicians and the public notice them is to restrict borrowing. (Yes, these metrics are calculated, the complaint should be "listen up, heathen, this is what you should be heeding--listen to me!"
Then people don't like effect that this change has on the system that's being regulated. Who knew cause and affect was a thing?
We know about second-job holders, too. Sometimes you have to watch for the agitprop to get to complete data, though. But the BLS also has this data.
Both are measured. Not everything that's measured gets managed.
Take https://www.census.gov/library/stories/2019/06/about-thirteen-million-united-states-workers-have-more-than-one-job.html as an example. It has a lot of numbers and charts, and I'm betting most people will take away all the wrong information. It's hard to sift through the implied claims--women are much more likely to hold a second job (it's a very small percentage difference) or the assumption that we're talking about full-time + part-time work when at least some of the skew is because women have two part-time jobs. And yet, it's a small percentage.
It's hard to reconcile that article's numbers with https://www.bls.gov/opub/ted/2018/4-point-9-percent-of-workers-held-more-than-one-job-at-the-same-time-in-2017.htm?view_full even though they claim to use the exact same data source. Of course, I'm not comparing 2017 with 2013, the "4.9%" source also includes 2013 data in the graph, at odds with the "13 million" article. I could say that there's a 25% difference between the two articles for multiple-job holders in 2013, but it amounts to maybe 2.5% of the workforce. What's most dissatisfying about the "13 million" article is the trend shown in the second article: That this group has been on a steady decline since the mid '90s. It's only a huge political issue now because it's a political issue; it's less of an economic issue now.
It's also worth noting that second jobs have many reasons. I've worked two part-time jobs to get experience in one job and transition to full-time work (turning down full time work at one job), or because I could only find two part-time jobs and needed money for food and rent. I've freelanced on the side because it was fun or because there was a specific need--a specific bill or a specific want. For a while my wife and I both had part-time jobs so we could send money to help her mother out of an IRS problem. My father worked two jobs for a year because he believed his industry was heading for a really nasty strike and I was in gestation, so when the strike came and 30k men went looking for jobs, he already had one to tide him and his family over.
I lean towards the second article's statements. Why? Because it has the balls to refer directly back to the actual data from BLS, and to the extent I checked, the data cited in the "4.9%" article are the BLS data.