Wednesday, December 9, 2015

Stein on economic metrics

From the economic section of this Zak Stein paper:

"One important thing missed by summary indices of economic systems (like GDP, or simple calculations of profit) is intra-systemic inequalities—the differences between the most well off and the least well off are disguised. Highly profitable companies and nations with rapidly rising GDP often house staggering inequalities of wealth. In fact, in many organizations the rate of profit and the rate of exploitation (and thus increasing inequality) are correlated (Bowles & Gintis, 1998; Harvey, 2006). The less you pay workers, the more you skim off the top, and the more profits go up. GDP is similar, in that it is the perpetual expansion of the economy that drives numbers up. GDP goes up as things that used to be free are brought into the market and given a price. This means that we would be lowering GDP, for example, by teaching people to grow their own food, or treat simple aliments with herbs they grow themselves, or start a free neighborhood parent group that shares childcare. On the other hand, opening a childcare center, herbal company, or commercial farm expands the economy and makes the GDP go up. Take something people can do or get for free and sell it back to them, that is what makes for economic value according to simplistic growth-oriented measures like the GDP (see Eisenstein, 2011)."


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.