# What are: Alternative economic indicators



## notimp (Aug 26, 2020)

This is based on my quickly sketched down notes on an interview with Enrico Giovannini given at this years Forum Alpbach (online conference, tickets still available). Which means, double check all of it, this is filtered through me, and then my lousy note taking. 

GDP was 'invented' as an economic indicator at Bretton Woods 1944 following a debate of mainly two economic schools, one of which represented by Simon Kuznets basically lost out. (Kuznets wasnt invited back, starting from day two).

What prevailed was the british solution of going with an indicator based on production. This was important to US interests at the time, because that would favor the capitalist economic model over the communist model moreso than Kuznets approach of having an indicator based on consumption and well being.

For this one source is cited, namely: https://www.amazon.com/Power-Single-Number-Political-History/dp/0231175108/ref=sr_1_1?dchild=1&keywords=The+Power+of+a+Single+Number:+A+Political+History&qid=1598415362&sr=8-1

Additional quick sources pulled up via google: https://foreignpolicy.com/2011/01/03/gdp-a-brief-history/
https://www.thesolutionsjournal.com...-towards-better-measures-of-human-well-being/

Why is GDP so important? Roughly: Because it is a number 'seen as important' that is tracked/stated quite frequently. So other indicators, that maybe are produced once a year get a backseat position to GDP at the policy making stage.

Why may GDP currently be 'unwanted' as a measure of development? Mainly: Because it doesnt include environmental action, and because it "registers it as something economically positive, if you buy a computer, but something negative (expense) if you hire a bunch of people" - this is roughly an analogy for, it doesnt represent a large part of economic activity that is projected to grow in the future - namely the service sector.

Why is GDP so hard to get rid of? Because it has a 'good' 'enough' correlation to job creation. So in times of economic crisis, everyone is prioritizing getting GDP up again so more jobs are created. There were efforts in the past, but they all kind of petered out as soon as the next economic crisis came along.


And now for the technocratic vision of future government (we are still talking about Enrico Giovannini mind you..  ). So here is what you do. 

You DONT create one replacement number like Gross National Happiness, because that one especially only reflects on 'current perceived state' and is useless when it comes down to policy planning or projecting.

You can invent a whole list of economic indicators, normalize them, make sure that they are connected in a "communicating vessels" fashion (where one of them can snuff out changes in another one, if its impact is bigger). Issue: That might snuff out certain indicators that might be important from a different vantage point. So you dont just create the one single number indicator model - you create several ones of those (several groups of indicators (still following the communicating vessels concept within a group).

Next, indicators alone are not enough. You need models that say what will happen, when you input indicator values. This is where you look at science to deliver, respectively - or to look at it the other way around, to get science integrated into the system as well - because don't forget, we are sketching out the creation of an alternative to the Bretton Woods system here.

And then you make sure you implement it in a way that dictates to future governments in a country - not necessarily 'what to do' but what indicator values to reach. You do that by drawing up policy that requires them to run their economic and social plans against your indicators and models - with a required outcome, before they are 'allowed' to govern.

So once scientists are happy and you created the new governance dogma, whats left?

At that point you come to the striking conclusion, that you cant model social systems. Or at least that social systems are very hard to model - which you still try (see: https://www.europarl.europa.eu/RegData/etudes/STUD/2020/648782/IPOL_STU(2020)648782_EN.pdf ) with the quote from the interview that summarizes all this being "we cant predict revolutions". But you can still try - which is basically where PR should come in. (Make sure people are engaged in NGO activities give them 'ownership' over issues, ...)

Part of this was already integrated in italy (government has to adhere to indicators of economical and ecological wellbeing) on a national level (technocratic experiment  ), part of it Giovannini sees coming into action with this EU government making it mandatory to report adherence to indicators found in the SDGs (sustainable development goals), so revising the strategy for mandatory non financial reporting. This follows less of a (strict) conceptual model, but should produce similar results. (Sorry for being so vague here, my notes got thin...  ).

Those ideas still dont have a political majority (not the dominating view) - so, is that a dealbreaker?

No, because large financial funds and private funds have decided to use indicators of sustainability to asses longterm viability of companies (their long term capacities) and this produces internal pressures within the capitalist system.

Blackrock for example (so Giovannini) has recently published a list of companies where they are on the board and where they voted against bonuses for managers who 'hadn't done enough for sustainability'.


On implementation the major problems the initiatives are facing are political - so what does Giovannini propose? First, produce political movements with the aim to drive notions of 'sustainability' into countries constitutions. (So whenever you hear this, this is more than naive babble. This is seen as an avenue to stop the profit maximization mantra in small and medium enterprises.) Second, force more discussions about several of those indicators (economic inequality, health, crime, inequality between genders, ...) at the public level. Then follow up with an implementation like with mandatory reporting on SDGs on the EU level.

First you can do this on the national level, but all future frameworks are aiming for a shared view internationally. (In my notes I've noted down OECD 2011 better life index, life initiative, next to it but I havent looked that up yet). Anecdotally Giovannini states, that there are encouraging results on meta studies on several of those indicators, that they arent 'culturally driven' - so that you could basically make that work for a large group of people, following the same model.

To make that work you need to invest in the development of 'statistical means' in a large number of countries, but apparently this is already part of the 2030 SDGs agenda.

Also, so Giovannini, it is very encouraging, that you can gather much of the data needed for indicators through 'crowd sourcing models', which are cheap, and hey - you have a form of public participation attached to it as well.


This should be it, sidenotes I have left are:
To look up: Alan Kruger, Obamas GDP speech, the 2009 Stigliz report (to what institution if havent noted down).
That a live model of several complex indicators in action can be found somewhere on a ASVIS/Gruppo API website.
Istanbul world forum (individual visions) [whatever that means..  ]
The report on sustainable equality for the social democrate fraction/group in the EP (european parliament)
And to look up the Sustainable Solution(s) network

End of info dump.


----------



## Taleweaver (Aug 26, 2020)

Hmm...tough subject.

Here's the thing: I'm well aware of the shortcomings of the GDP. I've seen an image showing that "economy" (meaning: GDP) can be soaring at the same time as unemployment. The GDP doesn't sufficiently take important factors into account or downright ignores them. Things like environmental cost, general public health and (indeed) general happiness are important factors, but are much harder to measure.

The problem - for me, that is - is that I'm simply not smart enough to truly talk about this stuff. I've actually read quite a few books by Joseph Stiglitz, as well as a few by Krugman and Paul De Grauwe. Interesting ones (especially Stiglitz)...but I've got to admit I'm being tutored rather than informed. That is, I can only sit there and nod, getting what they're trying to say. I can _understand_ them, but I can't argue with them, for what they say is on a much higher level.

For example: I've also read a book that was somewhat called "economy: an introduction" (or "a definition" or something). But I can't find it by googling it, because there are MANY books 'explaining' what economy really is (meaning: the more I look into it, the more I know that I don't know sh** about it  ).
EDIT: found it: the book is called (in English) _Economics: The User's Guide, _by Ha-Joon Chang

So...am I in favor of an alternative? Yes. Absolutely.
But once you get to "so...which one?", I can't but fold. You can put me in a room with economists making a case for their study and I'll agree with all of them...EVEN THOUGH THEIR IDEAS MIGHT NOT COMPLEMENT!

*sigh* I know: I feel like a fucking Trump voter ("I want it different! Whataya mean, "how" different? _Different _different,  smartass!"). But really: I've gotta take the easy way and say "I'm with Stiglitz", in the hope that I don't have to grab his books from the library again to look up the 'why'.


----------



## notimp (Aug 26, 2020)

I personally get the impression, that not even the people proposing alternatives know why one is 'better over the other' based on likely outcomes.

If you look at the reasoning given above, why GDP was implemented, it was a decision that had more to do with political power spheres than other influences - at least in the partial assessment of Giovannini.

The concepts that spring into my head immediately are: "The map is not the territory (metaphor) - https://wiki.lesswrong.com/wiki/The_map_is_not_the_territory ) and holy markrole, how are you going to try to sell this to citizens. Even within the EU the status quo is, that you have two member states that pronounce themselves to be "LGBT free", while you are proposing a meta framework to have future governments, for a long while adhere to equality indicators?

At the same time this scenario (minority rights influencing the creation of economic indicators) highlights the subjective, maybe even trend based creation of some of those indicators (if you really go with many of them).

So in my naive perception, this is a technocratic, structural model to lead countries into a more sustainable future, but it is not 'politically impartial' (which, hey - we asked for years for politics to actually come up with political visions..), and has blind spots. (Such as the majority of service sector jobs being created, being what they are.)

To a large extent most of those actions (environmental investments, higher importance of equality indicators in societal discussion) simply mirror (or put into a framework) what already will be happening within the EU in about the next 10 years, will allow us to look at service sector jobs more favorably (those UBER drivers really are so much more happy, because they increased individual freedom!). And not look at the impacts of a falling per capita GDP.

But then I'm a cynic.


----------



## FAST6191 (Aug 26, 2020)

Even random business wonks that speak in silly code have key performance indicator*s*.

No indicator is perfect so best to have many of them and have a rough idea what they might tell you

Stock markets are one, indeed I wondered if this thread would be about it, however anybody that plays such things will tell you they only have a vague correlation with reality, and like many types of average they can be offset by a few big players. Can also be wildly inaccurate in the case of things like Iran's efforts there.
Also prone somewhat to bubbles wherein values get inflated massively proportional to incomes and profits. A deflation bubble is theoretically possible but never seen in a widespread event so far as I am aware.

Employment can be a fun one. Though that gets tricky as you get to figure out what is underemployment, what you are using to assess it (some will go with people actively claiming unemployment, others will seek further as many do live on savings).
It is also used in assessing the value of schools, though some do job in field (tricky for some -- physics, computers, maths all being pulled into random things, and finance a lot) and lose track after 12 months or so.
Similar things for average wage growth and net income per household, some choose to break it down further by education, sex, age and whatever else.

Land prices are also a thing, as is housing supply and type of house (rental vs leased vs owned vs various flavours of homeless, number of rooms and size of accommodation usually proportional to a national average, age of homeowners can also be a thing to look at).
Vehicle ownership can also be something to look at, though that is sharply regional in nature and may fall off with public transport.

Tax income for a country. Can be hard if a country includes assets it owns in income (or maybe a sovereign wealth fund) and either offsets tax or has to be filtered out.
Central/reserve bank interest rates also factor into this.
Import vs export rates is a thing to look at as well, though you may have to determine the nature of the economy (typically agrarian, industrial and service, service tending to be what most of the richest countries go in for presently and others that have gone through industrial look to transition into)

Average debt in households or individuals can be a good one, however it tends to regional and national level rather than international. Types of debt might also be one to look at as such things are different, and may or may not be able to be discharged in bankruptcy, and some may be manageable where others are not.
Saving rates can also be a thing.

Cost of living indexes. Usually keep track of a few hundred common consumer goods, though indexes are available for other things. A reasonable track of inflation assuming no good on there gets radical shift.
Some will use food as one here as well, indeed traditionally food supply pretty much determined your country but the mechanisation of such things kind of put an end to that. Food is also prone to being both price fixed (milk is a popular one here) and subsidised (see US corn production).

Related to that is bankruptcy rates both individually and as a business.

Retirement age and methods employed to achieve retirement. Similarly poverty rates and income distributions, as well as economic mobility. Average lifespan can also be something to consider in this but that is more of a related stat that some might be interested in.

Economic freedom indexes can be useful but are usually more reserved for analysing countries that are less free in other ways.

Wild spikes (positive or negative) in any of those and comparisons to previous decades, or indeed centuries, can also tell you much. What you get concerned by is up to you.


----------



## UltraDolphinRevolution (Aug 26, 2020)

Debt levels (and whether they are national or international) are also not considered.


----------



## notimp (Aug 26, 2020)

@FAST6191 as far as I have understood it, the indicators in the model described in the first posting would be posed to be 'equivalent to GDP' in importance, and also would be probably measured/assessed in real time.

As such they'd have a more direct impact on policy making, which would operate with those as complexity shortcuts.

The more granular ones would be integrated into one or several 'connected vessel' type indicators (ecological performance, wellbeing, ...) but those themselves would not be as granular.

--------------------- MERGED ---------------------------



UltraDolphinRevolution said:


> Debt levels (and whether they are national or international) are also not considered.


Again, thats something thats always considered. 

See f.e.: h**ps://www.youtube.com/watch?v=7fJQL7FJ9y8

The reason why currently (coming out of the corona crisis) its considered a bit less is, that every economic competitor among nation states is investing as well, and that it is currently comparatively cheap for countries (that are seen as stable) to get long term private financing. You are only starting to get into issues, when private financing dries up (because creditors want to drive conditions, or stopped believing that you would be able to 'pay back' in full).


----------



## notimp (Dec 16, 2020)

notimp said:


> First, produce political movements with the aim to drive notions of 'sustainability' into countries constitutions. (So whenever you hear this, this is more than naive babble. This is seen as an avenue to stop the profit maximization mantra in small and medium enterprises.)


Here we go:



> Emmanuel Macron wants climate goals in French constitution
> 
> A referendum could force a change in the French constitution to add pledges to combat climate change. President Macron has come under fire for a perceived lack of effort to protect the environment.


https://www.dw.com/en/emmanuel-macron-wants-climate-goals-in-french-constitution/a-55942305

Like a brainwashed single organism.


----------



## Nightwish (Dec 17, 2020)

Kind of irrelevant in the land of scharze null uber alles so that people don't want things out of the infinite money that needs to be injected so neoliberalism continues (as economists including those Taleweaver mentioned say). It's even less likely that the single market changes than the tame carbon limits agreed to.
But also... that's the cart before the horse. Figure out what you want, then figure out to measure progress towards it; there's no universal goals that every country wants or needs. Certainly not ones made up by a hedge fund manager whose primary concern is that there's no non-bubble worth investing in and wants to replace governments in what gets to be funded.


----------



## notimp (Dec 17, 2020)

Land of schwarze null is no more - at least for exactly as long as the german economy needs to get back its footing.



> Kind of irrelevant


Yeah, wats a constitution here or there. Pieces of paper, really. *sarcasm*


----------



## Nightwish (Jan 6, 2021)

I think you need to check your math, as well as the conditions attached to the measures.
https://www.sinistrainrete.info/eur...mes-riformato-e-peggio-di-quello-vecchio.html

And, sorry to say, constitutions have been ignored or temporarily suspended in the face of the GFC, at least. I should know, it happened here.


----------



## notimp (Jan 7, 2021)

Nightwish said:


> I think you need to check your math, as well as the conditions attached to the measures.
> https://www.sinistrainrete.info/eur...mes-riformato-e-peggio-di-quello-vecchio.html
> 
> And, sorry to say, constitutions have been ignored or temporarily suspended in the face of the GFC, at least. I should know, it happened here.


You see me rolling my eyes.

When Greece went into the Eurozone, it accepted that it shed its sovereignty in terms of national currency. It was clear from the very first moment, that currency devaluation is out of the question, when it comes to restructuring national finances.

Greece tried to get out of the monetary union during the Syriza government and ultimately backed down on that attempt as well.

That doesnt mean, that every other european countries constitution is a piece of paper now, that they would surrender to anyone that wants to force lets call it 'future driven' legislation and do so by constitutional law. I've seen the infighting about this in my own country - and national legislative bodies arent exactly willing to just roll over and make it an actionable constitutional law, every citizen would have the right to sue under.

At this stage its 'symbol politics' yes, actionable constitutional rights - no.

Also - I'm very much sorry what happened to Greece, not everything was 'self inflicted' by a long shot, Greece was made a pawn during the migration crisis, that was needed to serve a 'function' in my opinion.

On "die schwarze Null" is out: See first item:
https://ec.europa.eu/info/sites/info/files/2020-european-stability-programme-germany_en.pdf

Might be hard to parse - couldt find news articles on it (only tried for two minutes) - but they are out there.


----------



## notimp (Jan 8, 2021)

Nightwish said:


> I think you need to check your math, as well as the conditions attached to the measures.
> https://www.sinistrainrete.info/eur...mes-riformato-e-peggio-di-quello-vecchio.html
> 
> And, sorry to say, constitutions have been ignored or temporarily suspended in the face of the GFC, at least. I should know, it happened here.


I might have been too quick in judging your position. So the old ESM regulation (or primary aces to funds was made even harder) still stands despite of increasing criticism. Maybe due to structural political meddling - is what you posted. And I'm not fit to judge that, on that structural level. Not by a longshot. But if thats your argument, I can see where you are coming from.


edit: Easy to understand overview of current proceedings, you could use to get search terms to do snowballing research:


----------



## Deleted User (Jan 12, 2021)

General health/wealth/contentment of the population is a good one.

If the population is at or above replacement rate is another.

The rate of various crimes that indicate alienation, atomization, and anti/a-social derangement.


----------



## FAST6191 (Jan 12, 2021)

MysticLord said:


> General health/wealth/contentment of the population is a good one.
> 
> If the population is at or above replacement rate is another.
> 
> The rate of various crimes that indicate alienation, atomization, and anti/a-social derangement.



I don't know.

I do find those places going for happiness index interesting case studies. Can also be a good thing if you are considering moving somewhere. As an economic indicator? Different matter.

Population replacement rates is a fun topic but generally the richer countries tend to see declining birth rates. Some might see this as a factor or time working - salary - housing - living expenses - leftover monies but I am not sure I would look at such a thing and think "what a healthy economy".
Now playing a ponzi scheme with your kids as collateral for retirement and healthcare (granted that is also what goes in poor countries...) might make for an unhealthy pension pot but that is a different matter.

Among what age brackets?
The youth roaming around as nobody will employ them is one thing, and maybe you have a nice lost generation.


----------



## Deleted User (Jan 12, 2021)

FAST6191 said:


> I don't know.
> 
> I do find those places going for happiness index interesting case studies. Can also be a good thing if you are considering moving somewhere. As an economic indicator? Different matter.
> 
> ...


The real question you're asking is "What do you consider a worthy goal for a nation, and how best do you measure that goal?"

I can't speak for you - because I'm not you - but I don't give a shit about "ARE EKAWNUHMEE". I don't care about corporations, multi-national, national, regional, or local. Don't care about highways, rails, canals, being able to spend your 20s collecting dragon dildos and masturbating to Japanese cartoons, having anonymous sex with strangers.

Almost every economic indicator we use measures how hard our ruling class is screwing us, and how much of the wealth our ancestors suffered for they are stealing. With that in mind, the economic indicators our ruling class and their proxies use are at best worthless. Most often they are a justification for our enslavement and impoverishment, and division into warring factions of losers fighting over crumbs.

My idea of a worthy goal is having a place that you can always call home no matter who or what you are, and being able to sustain yourself without working for someone else if you don't want to. I want a nation where:
1. no one is a billionaire, 
2. everyone has a home, 
3. everyone runs a small business to feed themselves, 
4. corporations don't exist,
5. a semi-literate 14 year old can understand all of the laws, 
6. the people who rule you live close enough to you that you and everyone in your neighborhood can with a bit of effort hang them from the nearest lamppost after beating them with shovels and setting them on fire when they piss everyone off.

The indicators for this would be:
1. Wealth inequality measures - min, max, mean, median, and mode.
2A. Home ownership rates.
2B. Rental rates.
2C. The number and complexity of home zoning laws and building codes.
3. Home and Business Zoning/Regulation Freedom - everything related to whether or not you can turn the first floor of your house into a noodle shop so you can quit your job, and whether or not you can live in the space above the nail salon you run, basically.
4A. Measures of legal and regulatory barriers to - and tax burdens of - starting, owning, and running a small business.
4B. Presence or absence of a shitcoin casino stock market.
4C. Legality of collective organizations owning property, issuing stock, and doing business.
4D. What sort of collective organizations you allow - private or public or mixed, commercial or military or religious or ethnic or familial, and other stuff I can't think of at the moment.
5A. The length of words and number of every different punctuation symbol used in laws.
5B. Whether or not there are spoken word and visual symbolic representations of the laws available for younger and less able people to use.
5C. Whether or not the laws and everything related to their interpretation and enforcement are known, how often they change, who/whom they apply to, and their exceptions.
5D. Who makes the laws, interprets them, and enforces them.
5E. Everything for points 5A to 5D, but for social mores and other things less explicit than laws.
6A. Commonality of weapon ownership.
6B. Types of weapons one is allowed to own, use, train with, and accrue/buy/sell ammunition for.
6C. Legality and regulations concerning collective weapons training and organization.
6D. Legal exceptions for the occasional chimpout, public holidays where rules are relaxed, social mores for interactions between members of different groups.


----------



## notimp (Jan 13, 2021)

MysticLord said:


> Almost every economic indicator we use measures how hard our ruling class is screwing us, and how much of the wealth our ancestors suffered for they are stealing. With that in mind, the economic indicators our ruling class and their proxies use are at best worthless. Most often they are a justification for our enslavement and impoverishment, and division into warring factions of losers fighting over crumbs.


Although I do not agree with the intensity of the characterizations -

If in the past the indicators for a system working were:

- percentage of people in full time jobs
and
- GDP

While inflation was seen as being connected to more people in work -

And now we've ended up at people hanging cellphones from trees, so their automated job agents from gigworking factories where nearer to the sending station as measured by miliseconds, than the ones of their colleagues -

- and we eagerly try to get away from people thinking that a full time job is something they should strife for - if simply not 'that motivated' that they still aim for the top, despite of a trend in wealth distribution that moves against vast sections of society

and inflation cant be adjusted anymore, because any amount of money you print is not ending up with workers, and therefore not interpreted as their ability to pay more for goods.

I think we can all agree, that society has a problem.

One that at least from my point of view you should not try to glance over by inventing alternative indicators of 'how good of a life people are living these days' - which is arguably the intention of many of those efforts.

Because that something isnt working - should be transparent to people right about now.

The 'corpoarate social responsibility' efforts also have been kicked up a nudge, while social minorities are now promoted into manegerial class jobs more often - from a companies perspective, also in parts to repeat - how wonderful the status quo is, and not necessarily to help their communities.

So imho - we are not dealing with a transparency problem.

At the same time, it is entirely unclear how companies should tackle it (economics), and demanding solutions for social problems from a scientific proxy - also mostly aims at reframing the situation.

Which - to be fair, is seen from large parts of society simply is a PR problem, because - goods have become cheaper, and at least in germany, the middle classes 'only' shrank by about 6% before the onset of the current crises.

edit: Oh, and climate change. Of course. 

Further interpretation: "Degrowth" as a proposed solution by the left, did not work at getting popularized in the political sphere either. So now we wait eagerly on what new indicators science can come up with.

Also - inflation not rising, is seen as 'just a temporary glitch', by many economists still. No need to change much, really.

But we do need new economic indicators?

Oh, because of climate change.


----------



## Deleted User (Jan 14, 2021)

notimp said:


> Although I do not agree with the intensity of the characterizations -
> 
> If in the past the indicators for a system working were:
> 
> ...


I think de-scaling - moving things from corporate-scale to human-scale - is the simplest solution that requires the least social capital overhead (social capital being rare these days), and is honestly the only realistic solution.

As for expecting our corporate/government managerial overlords to do what's in the nation's best interest than our own, we must first gain power over them if we want this to happen. The events of 2020 and 2021 showed us that it wasn't incompetence, but malice that makes our lives miserable.

As long as our elites defect from the social contract, we should too.


----------



## notimp (Jan 14, 2021)

If you interpret de-scaling as any efforts that are outlined in the joke of a PR attempt shown here:
https://www.youtube.com/channel/UC1lN9jw3BaAFaiDv0fWD-VA/videos

- you can pretty much forget it.

Also - dont forget, that corporations in many growing sectors are perfectly well positioned to only need 15-20% of the actual workforce employed (nationwide, because nobody really needs a service sector -) today to still operate at their current scale.

So when you promote "de-scale to human scale" you are doing them a favor. They dont need you anyhow. Most of their current efforts are centered around PR initiatives that make you love them, need their brand for self actualization (look it up), and employ enough people in unneeded jobs, that society doesnt topple over.

Investment initiatives will be started in 'carbon reduction' related fields (I exclusively heard the term moonshot thrown around in that context), and those will be disruptive to the point, where you can expect lower GDP growth than before the crisis.

Even in fields like eldercare (again, boomers have all the money), in my country behavioral economics are now employed - so the sector cost will not rise.


----------



## notimp (Jan 16, 2021)

Please dont ban for double posting -

The other reason you'd want new economic indicators, according to an economist on a WEF panel I watched yesterday is because of occupational slack, btw - so GDP decoupled from working income, so you could have gone with unemployment numbers, but those dont reflect how the mood within your population is either - because work isnt what work once was 20 years ago (see US, unsteady, not fulltime, not always providing living wages, ...) - so understandably some economists want to 'optimize' for 'other satisfaction indices' like 'living quality'. This of course means that a large part of population will stay decoupled from GDP growth. ('Because' climate targets, yay.)


----------

