Numbers Count
by Paul Hazelden


Introduction

In a world ruled by accountants, if we want to change things, we have to change what they count.

•   GDP
•   Employment

What else do we need to change the way we count?

GDP

If we measure the health of the economy by the growth of GDP, we will never have a healthy economy.

I am ignoring the obvious point that on a finite world, we cannot have growth as the measure of success. The only sane measure of success is sustainability. But that is not the point I am making here.

GDP counts good activity and bad activity as being equal. In a sane world, we would want to encourage good activity and discourage bad activity - we want to distinguish between them.

I know 'good activity' and 'bad activity' sounds a bit simplistic. But is it really so hard to distinguish between the things we want more of, and the things we want less of? Even if we end up with a division that people disagree about, it would be better than no distinction between the two, as at present. Some disagreement might even encourage people to think and talk about these things.

In a world ruled by GDP, I don't want you to drive carefully and safely: I want you to have a car accident. I don't want you to die - that would limit your future economic activity somewhat - but I want you to write off your car.

Let us compare two weeks: one in which you don't have an car accident, and one in which you do.

In the week with no accident, let's say you use £10 worth of petrol, and another £10 or so can be written off as wear and tear on the vehicle. So let's say your driving generates £20 worth of economic activity in the week.

But if you have a crash, things get much more interesting. You generate employment for the vehicle recovery people, and for the garage which assesses your car, then for the people who tow it away and those involved in scrapping it, and of course for many people who work for the insurance company. Say £2,000 for all this? Then the old car gets sold for scrap (£500?) and you need to buy a new one (£12,000?), but before you manage this, friends and family will be driving you round, and making extra journeys to help you out. Let us guess a total amount of economic activity around £15,000 - rather better than the pathetic £20 when you don't crash.

Except that it is not better. We don't really want people to crash their cars. But when we use GDP as a measure of value, we have to pretend that we do.

A car crash generates cost, not value. Before the crash, you have a car. Then you have the crash, a lot of time and energy spent as a result, a lot of money spent, and you end up with a car again. You are no better off. No value has been generated, despite all the economic activity.

Is it possible to provide a measure of economic activity which adds the good activities (purchasing new items for the home, or food, or an evening's entertainment) and subtracts the bad activities (car crashes, fires, medical treatment)? Why not?

Employment

We also measure the unemployment rate, as if the only thing which mattered is whether or not people are in employment.

Again, I want to ignore the obvious problems with measuring employment: full-time and part-time jobs count the same, as do permanent and temporary jobs. We know they are not the same, but we ignore the vital differnces when counting employment.

(Contradicting myself just a bit... it would be very simple to measure part-time jobs as part-time. If you work half time, it would be easy to record this as 50% employment, rather than the 100% employment we pretend it to be at present. Rather than count the percentage of the workforce who have no job at all, we could count the percentage of the available workforce hours which are actually spent in employment. This would give a much better idea of the spare work capacity in the country. After all if everyone has a job for one day a week, is it more helpful to say we that have 100% employment, or that 20% of our employment capacity is being used?)

Instead, I would like to concentrate on the distinction between good jobs and bad jobs. I think this is trickier than the distinction between good economic activity and bad, but it is still possible.

The basic question here is: what sort of country do we want to live in?

We can argue about the details, but here is my personal suggestion for a starting point.

I want to live in a country with a free press and an independent judiciary, so I want to pay people to do these jobs. I want food grown and homes built, roads mended and gardens maintained. We like to be entertained by artists and singers and sportspeople, and there is nothing wrong with this. People also like to gamble at times, and there is nothing inherently wrong with this - it can become an addiction, but so too can eating.

We want to be safe, so a police force and an army are also good things to have. On the other hand, we don't actually want the army to go out and fight anyone, so we don't want arms traders.

Financial services are a bit complicated. We want insurance, and we want banks to look after our money safely and lend money to us when we need it. There is really nothing else I can think of which we need from the financial sector. We certainly don't want anyone who is paid to 'make money' - after all, none of them actually do it. All they can do is take money away from other people who need it more - not a useful job, however you look at it.

Possibly the basic banking service should be zero-rated in employment terms - not counting as a good job, but not counting as a bad one, either. Like all infrastructure (we need somewhere to put our money, just like we need somewhere to put our sewerage, but we don't actually want either) they are necessary evils which we have to put up with but don't have to like. However, investment consultants and futures brokers are a pure drain on the economy, and we are clearly better off without them or any of their brethren. ing the Arms dealers and bankers.

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