December 28, 2001
From the desk of Mindles H. Dreck:Nominee for the "Parallel Universe" award
What more could you ask for than free people with the resources to do as they please?
Very little, I would think. Yet along comes David Boyle, armed with his new book The Sum of Our Discontent and a $50,000 PR budget, suggesting additional conditions. It starts out in a promising way, pointing out all sorts of problems and inconsistencies in how everything from national accounts to meaningless news statistics are produced (these are subjects I enjoy). As I plowed into it, however, I began to founder in its finger-wagging criticism of numerical measurement.
Chapter 9 is called "The New Indicators," and it suggests that economists and post-war politicians have focused exclusively on GDP as the aim of government policy. He suggests this is not a good measurement of economic progress. Boyle goes on to plug (and do a disservice to) a variety of alternate indicators, such as the GPI ,described in this Atlantic article, or the related Index of Sustainable Economic Welfare. Here's Boyle's verdict on post-war (British) growth:
The mantra of growth has been repeated with growing conviction ever since World War II, and with a kind of manic frustration as real life failed to comply with the figures.......In the 45 years since Butler painted his hopeful future of growth (1954), there are (sic) more ill health and less creativity, fewer people on sports teams, less amateur dramatics, fewer learning musical instruments or painting. There are more people with asthma, depression, and cancer. There is more crime, more people in prisons. But the key measurement of success used by politicians and economists recognized none of these things as important. By narrowing the definition of what constituted "wealth" we ended up narrowing all our lives.
This breathtaking statement earns Boyle a nomination for the MTZ "parallel universe award." Boyle needs to read up a bit on what happened in the latter half of the 20th century. Doubled lifespans and quadrupled real incomes apparently count for little in Boyle-land, where we are all sick in body and spirit.
One wonders where he gets the figures (there is no footnote) to back this nonsense up. Fewer people on sports teams? fewer learning musical instruments? I'm sure the coal miners in Britain in Doyle-land's 1950s were pleased with the musical literacy of their children. The statements about health are just laughably absurd. One suddenly understands why Boyle is engaging in the counter-tribal (he claims to be a mathematician of sorts) act of attacking numeracy - he doesn't want to be bound by figures.
Also, while GDP is generally the focus of economic policy, it has never been the exclusive focus of economists, let alone politicians. His characterization of GDP growth as the sole political lodestar is therefore a straw man.
To be fair, Boyle is reasonably hard on alternative measures, suggesting that what we choose to measure is a reflection of our aspirations, and our aspirations change. But this is all the more reason to use the elastic abstraction of money. Ignoring the cries of those who somehow think it is crass to measure things in monetary terms, let's consider why we do so. Money is a medium of exhange. We don't all want the same things, as Boyle's ridiculous assortment of alternative measures so aptly suggest. Money can be exchanged for the things we want. Money can be used to pursue diverse aspirations.
Boyle points out that money itself is useless, but that is precisely its virtue in this context. For instance, critics of economic growth worry about inequality. But imagine for a second that somehow one person accrues all of a country's monetary wealth. What is he to do with it? If he cannot trade it for the things he wants he has nothing, so individual and economic freedom are also necessary. If the citizens of that country are allowed to trade with him (there's that freedom thing again), he will quickly part with significant sums, and many will be richer for his wealth. It is true that when freedom is missing, inequality persists - think of Zaire, where President Mobutu traded his ill-gotten gains primarily with the outside world and enslaved his citizens with the blunt stick of his corrupt government. You can hoard all the power in a country, or have a monopoly on the means of production or critical services . But if you have all the money and no ability to use it, you have nothing.
GDP is an attempt, however flawed in calculation, to measure the amount of wealth created by summing all the monetary transactions in a country or zone. Money is meaningless until it is transacted, and that is why, paradoxically, measuring total monetary transactions in GDP is precisely the right way to measure economic progress.
One wonders if Boyle has noticed that terrorists come from countries that cannot manage consistent GDP growth over any stretch of time and are slaves to authoritarian regimes riding the inelastic demand curve for oil. Has he noticed that countries that have both grown their GDPs and respected individual freedom have been particularly peaceful and do not attack each other?
Boyle's diatribe has scary social-engineering overtones. Are we really to measure progress by people learning musical instruments? I am as ardent a booster of musical literacy as there is, but I wouldn't dream of using musical training to measure "wealth" in any way that might be important to government. Boyle goes on in his non-attributing way:
'A country that cut down all its trees, sold them as wood chips, and gambled the money away playing tiddly-winks, would appear form its national accounts to have got richer in terms of GNP per person,' wrote one economist in 1989. Some of them almost did.Well, that's right. We can do things you don't approve of with money (the above example would bring growth to a screeching halt in the next period). We can also do things you do approve of. That's the point. If we could only do things you approve of, it would be called "Boyle's Authoritarian Economy." Now why isn't there a stampede to renounce the citizenship of our GCP-obsessed countries and move there?
I am highly suspicious of economists that attempt to measure economic growth in non-monetary terms, because the terms they invent reflect their own aspirations for society. The suggestion that one person's particular definition of progress should be shared by all of us is social engineering in disguise, an attempt to shape society to one constituency's interests. In the extreme, eugenics comes to mind as one way people have pursued alternative measures of national wealth in the past.
If your country's citizens have money, they require only individual and economic freedom to enjoy increased wealth, as they define it. That they should choose to exchange that monetary wealth for something other than musical instrument lessons is their own choice, much as the David Boyles of the world may lament it.
Posted by Mindles H. Dreck at December 28, 2001 09:50 PM | Technorati inbound links