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Archive for August 10th, 2009

Running the Numbers

Photographer Chris Jordan presents a shocking perspective of consumerism in “Running the Numbers, An American Self-Portrait.” You need to scroll down a bit for the gallery.

Here are some examples:

Depicts two million plastic beverage bottles, the number used in the US every five minutes.

Depicts two million plastic beverage bottles, the number used in the US every five minutes.

Depicts 426,000 cell phones, equal to the number of cell phones retired in the US every day.

Zoomed section of photo that depicts 426,000 cell phones, equal to the number of cell phones retired in the US every day.

Zoomed segment of photo that depicts 166,000 packing peanuts, equal to the number of overnight packages shipped by air in the U.S. every hour.

Zoomed section of photo that depicts 166,000 packing peanuts, equal to the number of overnight packages shipped by air in the U.S. every hour.

Also check out Running the Numbers II.

http://chrisjordan.com/

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In an NYT Op-Ed today, Eric Zencey argues that GDP should be subjected to “creative destruction.” He writes,

Creative destruction can apply to economic concepts as well. And this downturn offers an excellent opportunity to get rid of one that has long outlived its usefulness: gross domestic product. G.D.P. is one measure of national income, of how much wealth Americans make, and it’s a deeply foolish indicator of how the economy is doing…

To begin with, gross domestic product excludes a great deal of production that has economic value. Neither volunteer work nor unpaid domestic services (housework, child rearing, do-it-yourself home improvement) make it into the accounts, and our standard of living, our general level of economic well-being, benefits mightily from both. Nor does it include the huge economic benefit that we get directly, outside of any market, from nature…

In general, the replacement of natural-capital services (like sun-drying clothes, or the propagation of fish, or flood control and water purification) with built-capital services (like those from a clothes dryer, or an industrial fish farm, or from levees, dams and treatment plants) is a bad trade — built capital is costly, doesn’t maintain itself, and in many cases provides an inferior, less-certain service. But in gross domestic product, every instance of replacement of a natural-capital service with a built-capital service shows up as a good thing, an increase in national economic activity. Is it any wonder that we now face a global crisis in the form of a pressing scarcity of natural-capital services of all kinds?

This points to the larger, deeper flaw in using a measurement of national income as an indicator of economic well-being. In summing all economic activity in the economy, gross domestic product makes no distinction between items that are costs and items that are benefits. If you get into a fender-bender and have your car fixed, G.D.P. goes up…

The basic problem is that gross domestic product measures activity, not benefit…

BECAUSE we use such a flawed measure of economic well-being, it’s foolish to pursue policies whose primary purpose is to raise it. Doing so is an instance of the fallacy of misplaced concreteness — mistaking the map for the terrain, or treating an instrument reading as though it were the reality rather than a representation…

Several alternatives to gross domestic product have been proposed, and each tackles the central problem of placing a value on goods and services that never had a dollar price. The alternatives are controversial, because that kind of valuation creates room for subjectivity — for the expression of personal values, of ideology and political belief…

Common sense tells us that if we want an accurate accounting of change in our level of economic well-being we need to subtract costs from benefits and count all costs, including those of ecosystem services when they are lost to development…

Given the fundamental problems with G.D.P. as a leading economic indicator, and our habit of taking it as a measurement of economic welfare, we should drop it altogether. We could keep the actual number, but rename it to make clearer what it represents; let’s call it gross domestic transactions. Few people would mistake a measurement of gross transactions for a measurement of general welfare…

We’re in an economic hole, and as we climb out, what we need is not simply a measurement of how much money passes through our hands each quarter, but an indicator that will tell us if we are really and truly gaining ground in the perennial struggle to improve the material conditions of our lives.

The “recession” will officially end sometime around Q3 2009, primarily because GDP is the arbiter of recessions. Meanwhile, headline unemployment will continue rising until December, and U6 could well past that. Metrics are not neutral; they have consequences. When I posted about the Happy Planet Index a month back, I soon realized that it had been much ballyhooed in the blogosphere. But, at least they are thinking of alternatives. GDP, on the other hand, is taken as a given.

For some previous discussion here of the inadequacy of GDP, read these posts.

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