Sunday, August 04, 2019

Sunday Morning Links

This and that for your Sunday reading.

- Noah Smith comments that while we shouldn't necessarily try to adjust GDP for other necessary elements of individual and social well-being, we should avoid treating it as a catch-all measure in assessing policy choices:
GDP does have plenty of flaws, even as an economic indicator. First of all, it leaves out a lot of things that represent real value. When your dad washes the dishes, that represents value creation -- if the dishwashing took place in a restaurant, it would be compensated monetarily, but since it happens for free at home, it gets ignored. GDP also ignores the value of leisure -- if you pay $10 to see a movie in a theater, it gets counted in GDP, but if you have an equal amount of fun hanging out with your friends, that value isn't counted.

Beyond these deficiencies, there’s the broader fact that economic value isn’t the only kind of value. Japanese people, for instance, are on average poorer than Americans in purely material terms, but the very low crime, efficient urban design, and clean streets and buildings has real value that isn't counted in economic statistics. The U.S. and Canada, meanwhile, have an abundance of natural beauty and open space that adds little to GDP, while many European and Asian countries enjoy advantages in health and life expectancy that are also uncounted. These are the kind of things that Bhutan and New Zealand are trying to account for, some of which are also included in the United Nations’ Human Development Index. GDP also doesn’t account for inequality or other issues of distribution.

A third problem with GDP is that it’s not much more than a snapshot of the present. It represents the amount of economic value that’s produced this year, rather than the amount that can be produced sustainably during the coming decades or centuries. Chopping down rainforests, draining aquifers, exhausting topsoil and burning fossil-fuel that contributes to climate change all raise GDP, but don’t necessarily make humanity better off in the long run.
Instead of trying to update GDP to include sustainability, health, education, happiness, equality, leisure, and safety, leaders should monitor these things independently. Fortunately, there is every indication that most of them do this already.
So instead of trying to fix GDP, it's better to simply remember its limitations. It is not the one economic number to rule them all, but simply one of a broad set of indicators of a society’s success.
- Meanwhile, Andrew Simms highlights the damage done by neoclassicals economics built around unduly narrow standards for success together with grossly implausible assumptions about the relationship between people and corporate actors.

- Jeffrey Sachs writes that first-past-the-post voting systems represent one of the most important common denominators in the rise to power of Donald Trump and Boris Johnson. And James Butler examines how Johnson looks to be handing unprecedented amounts of power to lobbyists looking to enrich their clients at the expense of the public.

- Dale Marshall rightly argues that Canada can't pass the buck when it comes to reining in greenhouse gas emissions. And Michael Segalov points out the need for governments to make public transit a more practical option if we want people to shift away from higher-emitting forms of transportation.

- Finally, Chuka Ejeckam argues that after decades of draconian drug policy which has placed disproportionate burdens on racial minorities, Canada's decriminalization process has been designed to ensure that the gains from a newly legal market are concentrated in already-privileged groups.