Posts Tagged ‘Gross national product’

Labor Day Message 2014

August 31, 2014

 

Regular readers of the healthymemory blog might receognize some striking similarities between this message and the 2013 message. Unfortunately, not much has changed. When I was in elementary school the predictions were that due to technology we would have much more leisure time (http://en.wikipedia.org/wiki/Leisure) in the future. I’ll remind you that at this time it was highly unusual for married mothers to be working. In my view, some of the technological achievements, particularly in computing and in broadband, have vastly exceeded these predictions. So I ask you, why are we working so hard? We’re working much harder than when I was in elementary school. And it’s getting worse. Americans now work for eight and a half hours more a week than they did in 1979.

I would further ask, exactly what are we producing? Suppose only those who provided the essentials for living and for safety went to work. What percentage of the working population would that be? Make your own guess, but mine would be less than 10%, so what is going on here?. Currently we are working hard to achieve an unemployment rate at or below 5%. But is this a realistically achievable unemployment rate? Remember that the previous two occasions when the employment rate was at or below 5%, the economic prosperity was bogus. There was the dot com bogus, when people expected to become rich via the internet. Then there was the bogus finance/real estate boom where riches were created via bogus and unsubstantiated financial instruments. So why, absent some other fictitious basis for a boom, do we expect to get back to 5% unemployment

To examine the question of why we are working so hard, I present the following study tht can be found in Kahneman’s Thinking Fast and Slow.It found that being poor is bad. Of course, this finding is not surprising. The surprising finding is that a household income of $75,000 represented a satiation level beyond which experienced well being no longer increased. And this was in high cost living areas. In other areas the number would be lower. So, it is clear that we are working more for no real benefit. Why?

The world’s environmental and resource issues also need to be considered here. As the undeveloped world develops, the demands on resources, the pollution of the environment, and the rate of global warming will increase as the developing world hops on the same exhausting treadmill that the developed world has been on.

I think the problem is that classical economics has outlived its usefulness and has become destructive. Economics needs to undergo a paradigm shift. Classical economics is based on the rationale theory of man. Socials scientists have debunked this theory quite well as have behavioral economists. Computing the Gross National Product (GNP) in terms of hard dollars might seem to b objective, but reminds one of the drunk who is looking for his car keys under the streetlamp rather than in the dimly illuminated part of the parking where he dropped them. Economists need to consider subjective, relevant measures as happiness and life satisfaction, but these measures are given only glancing consideration. Perhaps this is due to the extreme economics supermeme that plagues us and has been discussed in previous healthymemory blog posts.

Once appropriate measures and appropriate philosophies regarding self fulfillment and self actualization are adopted we can get off the treadmill and enjoy the fruits of technology and our lives.

You also might visit or revisit the Healthymemory Blog Post “Gross National Happiness.” There is also an entry on this topic on wikipedia.org.

Advertisements

Extreme Economics

February 24, 2013

In The Watchman’s Rattle: A Radical New Theory of Collapse by Rebecca D. Costa, she outlines five supermemes that lead to the stagnation and collapse of civilizations: Irrational Opposition, The Personalization of Blame, Counterfeit Correlation, Silo Thinking, and Extreme Economics. This healthymemory blog post will address the supermeme Extreme Economics. According to Costa (p. 138) “The economics supermeme occurs when simple principles in business, such as risk/reward and profit/loss, become the litmus test for determining the value of people and priorities, initiatives and institutions.

The reason that extreme economics is so dangerous is that profit can prevent or retard technological solutions. (p.140) That’s because broad systemic solutions that benefit humankind don’t always fit accepted economic models. And when they don’t, progress is inhibited.

The emphasis on short-term returns can preclude a technological solution that in the long term would be both more profitable and beneficial. Extreme economics has increased educational costs and resulted in an inefficient delivering of medical and pharmaceutical services. Wherever one looks, college athletics, for example, one finds the adverse effects of extreme economics. I have read that Alan Greenspan, a former Chairman of the Federal Reserve had the phrase, “Greed is good,” posted in his office. I shall remind the reader that greed is one of the seven deadly sins. Moreover, Greenspan’s policies and lack of action helped lay the groundwork for the economic crisis. Sometimes I think the world has become one enormous whorehouse.

It is actually somewhat worse than Costa portrays. Research has indicated that the predominant model in economics is obsolete. Humans cannot be entirely rational because our information processing limitations allow us only to process only a minute amount of data bearing on a decision. Behavioral economics has indicted that the decisions humans make are not always in accordance with the rational paradigm. Yet the majority of economists, and unfortunately those in key positions, still cling to an obsolete model.

There have been a number of healthymemory blog posts bearing on this issue. See the following healthymemory blog posts: “Thinking Fast and Slow,” “Happy Labor Day: Why Are We Working so Hard?” “Why With All This Technology, Are We Working so Hard?” and “Gross National Happiness.” This last post discussed a substitute metric to the Gross National Product (GNP), one that is much more directly related to human needs and human happiness. Another metric that has been proposed as a replacement to the GNP and is discussed in the same healthymemory blog post is the Inclusive Wealth Index (IWI). Relevant and effective metrics would be valuable in addressing the world’s economic problems.

© Douglas Griffith and healthymemory.wordpress.com, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.

Happy Labor Day: Why Are We Working So Hard?

September 2, 2012

For Labor Day I think it is appropriate to repost “Why, With All This Technology Are We Working So Hard?”

When I was in elementary school the predictions were that due to technology we would have much more leisure time in the future. I’ll remind you that at this time it was highly unusual for married mothers to be working. In my view some of the technological achievements, particularly in computing and in broadband, have vastly exceeded these predictions. So I ask you, why are we working so hard? We’re working much harder than when I was in elementary school.

I would ask further what, exactly, are we producing? Suppose only those who provided the essentials for living and for safety went to work? What percentage of the working population would that be? Make your own guess, but mine would be less than 10%. So what is going on here?

Currently we are working hard to achieve an unemployment rate at or below 5%. We are finding that exceedingly hard to achieve. But should we be? Remember that the previous two occasions when the employment rate was at or below 5%, the economic prosperity was bogus. There was the dot com bogus, when people expected to become rich via the internet, only the path to these riches remained unspecified. Then there was the bogus finance/real estate boom where riches were created via bogus and unsubstantiated financial instruments. So why, absent some other fictitious basis for a boom, do we expect to get back to 5% unemployment?

To examine the question of why we are working so hard, I present the results of the following study.1 It found that being poor, is bad. Of course, this finding is not surprising. The surprising finding is that a household income of $75,000.00 represented a satiation level beyond which experienced well being no longer increased. And this was in high cost living areas. In other areas the number would be lower. And this was for experienced well being. Emotional well being might have carried additional therapeutic costs. So it is clear that we are working more for no real benefit. Why?

One reason might be the that the economic theorists who currently formulate policy are classical economists using the rational theory of man. Behavioral economists have debunked this theory. Moreover, computing GNP in terms of hard dollars might smack of objectivity, but reminds one of the drunk who is looking for his car keys under the streetlamp rather than in the dimly illuminated part of the parking lot where he dropped his keys. Economic measures should include such subjective, but relevant, measures as happiness and life satisfaction.

Perhaps with the appropriate measures and appropriate philosophies regarding self fulfillment and self actualization we can get off the treadmill and enjoy the fruits of technology and our lives.

You also might visit or revisit the Healthymemory Blog post “Gross National Happiness (GNU).

1Kahneman, D., & Angus, D. (2010). High Income Improves the Evaluation of Life but Not Emotional Well Being. Proceedings of the National Academy of Sciences 107, 16489-93

© Douglas Griffith and healthymemory.wordpress.com, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.

Gross National Happiness (GNH)

July 7, 2012

The preceding Healthymemory Blog Post criticized the Gross National Product as a measure of well-being. There are alternatives, for example Gross National Happiness (GNH)1. The term “gross national happiness” was coined in 1972 by the Kind of Bhutan, Jigme Singye Wangchuck. And he did more that coin a term; he opened a center and formulated a program for developing the concept and measuring it. He engaged scholars throughout the world and began having international conferences. He was committed to build an economy that would serve Bhutana’s culture based on Buddhist spiritual values. Readers of the Healthymemory Blog should be familiar with how Buddhist meditation techniques have found to be important for emotional and memory health (try entering “Buddhism” in the search box. Also try entering “Meditation”).

The proposal is to treat happiness as a socioeconomic development metric. A GNH value would be an index function of the total average per capita of the following measures:

  1. Economic Wellness: This would involve direct surveys of people and statistical measurement of economic metrics such as consumer debt, average income to consumer price index ratio and income distribution.

  2. Environmental Wellness: This would involve direct surveys of people and statistical measurement of environmental metrics such as pollution, noise, and traffic.

  3. Physical Wellness: The proposal would employ statistical measurement of physical health metrics such as severe illness. I think this index should also include direct surveys of people.

  4. Mental Wellness: This would involve direct surveys of people and statistical measurements of mental health metrics such as the usage of antidepressants and the rise of decline of psychotherapy patients.

  5. Workplace Wellness: This involves direct surveys of individuals and the statistical measurement of labor services such as jobless claims, job change, workplace complaints, and lawsuits.

  6. Social Wellness: This involves direct surveys of individuals and statistical of social metrics such as discrimination, safety, divorce rates, complaints of domestic conflicts and family lawsuits, public lawsuits, and crime rates.

  7. Political Wellness: This involves the direct survey of individuals and the statistical measurement of political metrics such as the quality of local democracy, individual freedom, and foreign conflicts.

    Understand that this would be a measure of the GNH of a country. How the metric is defined might well vary from country to country as different factors might be included or weighted differently. One’s country GNH might not reflect a single individual’s happiness very well. You might live on a block with very wealthy home. You might live, zoning restriction permitting, in a mobile home on the same block. Your respective incomes might vary by more than an order of magnitude, yet your family might be much happier than the residents in the wealthy home. That home might be experiencing conflicts and be on the verge of a divorce.

    It should be generally understood, but apparently it isn’t, that the value of money is not linear. In other words, the value of a dollar to someone earning $10,000 is much more than to a person earning $100,000. So a graduated income tax makes sense psychologically as well as economically. There is only so much that an individual, or that individual’s family (even an extended one) can enjoy or use. Unfortunately, there are many who view success by the money and physical goods they possess. So they will fight to avoid taxes and to keep their taxes low even though it is not feasible that this additional income will benefit them. I applaud the two leading capitalists in the United States, Warren Buffet and Bill Gates, who realize this and are behaving accordingly. I’m reminded of the saying by a Texan that money is like manure; it’s no good unless it’s spread around.

    Another measure for either replacing or accommodating the shortcomings of the GDP is the Inclusive Wealth Index (IWI)2. The IWI includes three kinds of assets: manufactured or physical capital (machinery, buildings, infrastructure, and so forth; human capital (the populations’ education and skills): and natural capital (including land, fossils, fossil fuels, and minerals). The IWI contains important information not in the GDP. A county can appear to be doing quite well in terms of its GDP, but exhausting its natural resources at an alarming rate. A country like South Korea with its impressive human capital can do quite well without physical resources.

    So the shortcomings of the GDP are realized. Unfortunately it is still relied upon too heavily. We must move, and move quickly, to more relevant measures.

1Go to the Wikipedia for an informative alternative and many useful links.

2The Economist, June 30th 2012, p.78. And the “Inclusive Wealth Report 2012”, www.ihdp.unu.edu/article/iwr

© Douglas Griffith and healthymemory.wordpress.com, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.

Why, With All This Technology, Are We Working So Hard?

July 1, 2012

When I was in elementary school the predictions were that due to technology we would have much more leisure time in the future. I’ll remind you that at this time it was highly unusual for married mothers to be working. In my view some of the technological achievements, particularly in computing and in broadband, have vastly exceeded these predictions. So I ask you, why are we working so hard? We’re working much harder than when I was in elementary school.

I would ask further what, exactly, are we producing? Suppose only those who provided the essentials for living and for safety went to work? What percentage of the working population would that be? Make your own guess, but mine would be less than 10%. So what is going on here?

Currently we are working hard to achieve an unemployment rate at or below 5%. We are finding that exceedingly hard to achieve. But should we be? Remember that the previous two occasions when the employment rate was at or below 5%, the economic prosperity was bogus. There was the dot com bogus, when people expected to become rich via the internet, only the path to these riches remained unspecified. Then there was the bogus finance/real estate boom where riches were created via bogus and unsubstantiated financial instruments. So why, absent some other fictitious basis for a boom, do we expect to get back to 5% unemployment/

To examine the question of why we are working so hard, I present the results of the following study.1 It found that being poor, is bad. Of course, this finding is not surprising. The surprising finding is that a household income of $75,000.00 represented a satiation level beyond which experienced well being no longer increased. And this was in high cost living areas. In other areas the number would be lower. And this was for experienced well being. Emotional well being might have carried additional therapeutic costs. So it is clear that we are working more for no real benefit. Why?

One reason might be the that the economic theorists who currently formulate policy are classical economists using the rational theory of man. Behavioral economists have debunked this theory. Moreover, computing GNP in terms of hard dollars might smack of objectivity, but reminds one of the drunk who is looking for his car keys under the streetlamp rather than in the dimly illuminated part of the parking lot where he dropped his keys. Economic measures should include such subjective, but relevant, measures as happiness and life satisfaction.

Perhaps with the appropriate measures and appropriate philosophies regarding self fulfillment and self actualization we can get off the treadmill and enjoy the fruits of technology and our lives.

1Kahneman, D., & Angus, D. (2010). High Income Improves the Evaluation of Life but Not Emotional Well Being. Proceedings of the National Academy of Sciences 107, 16489-93

© Douglas Griffith and healthymemory.wordpress.com, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.