The Zombie Numbers That Rule the U.S. Economy

[xchrom]

http://www.theatlantic.com/business/archive/2014/02/the-zombie-numbers-that-rule-the-us-economy/283949/

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This Thursday the Conference Board, a global business association, released its monthly index of “leading economic indicators.” Like the unemployment and inflation, housing starts, G.D.P. changes and other figures, these numbers arrive in metronomic waves. Financial services like Bloomberg, Dow Jones and Reuters blast them out the moment they’re released. Stock markets will often respond within seconds. Commentators and policy makers attribute to them a near-cosmic significance.

We act as if they are markers from time immemorial, but in fact they were invented for modern industrial nations after the Depression and World War II and are now seriously outdated.

Take gross domestic product. Derived from formulas set down by the economist Simon Kuznets and others in the 1930s, its limitations have long been recognized, none more eloquently than by Robert F. Kennedy in a famous speech in 1968 when he declared that it measured everything except that which is worth measuring.

GDP treats all output as a positive. When you buy LED lights that obviate the need to spend on incandescent bulbs and reduce energy consumption, GDP goes down and what should be an unmitigated good becomes a statistical negative. If a coal company pollutes a river, the cleanup costs are positive for GDP, as are any health care costs for those harmed.

[hunter]

1. There are so many, many numbers like that.

Generally as "Productivity" increases these days so does human misery and environmental destruction.

Productivity with inadequate wages, labor and environmental regulations, is NOT a good thing.

[xchrom]

2. as our mothers tried to teach us: figures don't lie, but liars figure. nt

[badtoworse]

3. Interesting piece. I would have liked to have seen some proposed alternatives.