Maybe The Biggest Problem In America: Bad Economic Measurements

(NOTE: Based on time elapsed since the posting of this entry, the BS-o-meter calculates this is 10.854% likely to be something that Ferrett now regrets.)

Here’s one of the huge problems I see driving the rise of Trump and Bernie Sanders: our economic measurements have almost nothing to do with how my checkout clerk at Target is doing.
Like, it’s great to have the S&P 500 to tell me how corporations are doing, but Google can be making a fortune and that only really affects people who own stocks.  Which, with 401ks and such, is more people than you’d think – but even then, what happens to people’s 401ks, which sane people don’t touch except in times of emergency or great opportunity, has little to do with their bills this month.
The GDP, likewise, tracks large-scale levels of motion – which has an ill-defined affect on how many people are employed, but it doesn’t say what kinds of jobs they have or their potential for forward motion or their monthly expenses.  The job creation indexes would be just as happy if I got fired from my skilled programming job and had to take the minimum-wage pay of a checkout clerk.  The unemployment index doesn’t count people who’ve given up looking for work because there’s no jobs to be found, though admittedly tracking the inactive is a hell of a task.
The statistics the government uses to set policy, in short, have zero to do with how well Mabel the Target checkout clerk is doing.  That’s why Bernie and Trump have gotten so much traction – what’s good for corporations is often not good for blue-collar Americans, yet everything we have is aimed at corporations.
In a sane world, we’d have some sort of “quality of life” factor for people who don’t have college degrees, or who work nonsalaried jobs – a very finely detailed combination of reports on average debt, average rent/housing expenses, average medical care, average income, so we could have one number that says, “If you’re forced to work down in the trenches, here’s how fucked you are.”
Assuming that quality-of-life measurement was widely touted enough, politicians would be incentivized to use that number as part of the calculations they do to set policy.  And things would get better for Mabel.
But we won’t do that, because then we’d have to admit how crappy things have gotten for Middle America.  Hell, we voters can’t even bring ourselves to acknowledge that Middle America has shrunk to the point of emaciation, and the politicians on either side don’t want to create an index that makes it starkly apparent how much of America they’ve just given up on.  And even if we got it, chances are good that every department that fed numbers into that ultimate report would skew them as pleasantly as they could.
I understand why we won’t get it.
That doesn’t stop me from dreaming of wanting it.

1 Comment

  1. Mark
    Aug 8, 2016

    Interesting read. There is some suggestion in the economics community about this as well, but this argument could also go the other way: traditional measures might underestimate progress because it’s hard to measure output in the tech sector (how to measure the life improvement of Google maps for example). Short comments by John Cochrane are here:

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