A Poor Measure
To bring grist to the maill, to bring profitable business
into one's hands; to be a source of profit.
— John Ayliffe (1676–1732)
These are notes which will eventually become grist and ground into a letter in YBL. I doubt it will fit in any issues that are in the pipeline for 2022.
Randle Mayes has an excellent piece in Quilette called The Mismeasure and Misuse of GDP. I suggest reading his piece before reading the rest of these notes.
The kinds of production that are excluded from GDP figures is often seemingly arbitrary, and can border on the absurd. In a recent post on Marginal Revolution, Alex Tabarrok asks does pot contribute to GDP? If the question is purely economic, of course the answer is yes.
Any number of objections have been made to including various means of production which are not legal, on moral grounds. It's as if those forms of production will go away if you ignore them. But the real reason for excluding them is that production of things like illegal drugs, prostitution and gambling are nearly impossible to measure with any accuracy. James Scott calls this legibility. If something is legible to a state, it is measurable and therefor taxable and controllable. Making an activity illegal is an attempt at bringing it under control. When such things are discussed, economists will twist themselves into knots trying to rationalize their omission-by-unmeasurability. What they never question is if this is an indication that GDP as economic-god-number is fundamentally flawed. This is not just a problem for GDP but for Economics as a field of study as a whole. Economic theory is still tethered to double entry book keeping. What can't be quantified and put in the ledger is ignored or dismissed as being unimportant. I point this out because what we leave out will our undertstanding of the scope of human activity and it's impact on such things as the availability of resources, human well being, inequality and climate change.
GDP as calculated today is a measure of a specific scope of human activity; a measure of what is legible to a 20th century industrial nation-state. Since the later half of the 20th century and almost till today this more or less worked. Keynes redefined GDP as a wartime measure of production and this carried over through the decades after the war because, in terms of production, growth in an industrial economy didn't differ that much from a wartime economy. It's a good measure of flat-out mass production that is so vast in scope that all of the other means of production can be treated as rounding errors.
Until even a few decades ago, the industrial economy was still dwarfed by the larger planetary biome and ecosystems that comprise it. In otherwords our impact on the planet was small compared to Nature so we could ignore it. Yes this was hubris, but it cuts both ways. Nature was so much bigger than us that Nature could largely ignore us and absorb our impact.
What has changed is that the impact of all of that breakneck industrial production has hit a threshold where this relationship is starting to reverse. Our industrial output is now significantly impacting and competing with Nature. In the last hundred years the scale of human activity has ratcheted up by several orders of magnitude which can be seen as a positive feedback loop that fueled postwar global population growth. The more we produced the longer we lived and the more babies survived into adulthood which created a labor force which not only created demand for ever more production but also supplied the labor needed for production.
This growth is not linear, it compounds because we are not only scaling up production but replacing the technologies used to produce with ever more efficient tools and techniques. This has completely skewed our sense of the scale and scope of human activity.
Not too long ago the plots for big heist movies like The Italian Job and Ocean's Eleven were based on the premise that physical robbery was the fastest way of getting rich. But today the biggest haul from the biggest fictional heist now looks quaint compared to what what fairly average silicon valley tech startups are pulling in. Millions of dollars no longer impresses people, no one dreams of being a millionaire, the minimum level of real achievement is now measured in billions.
What should be alarming is the fact that geologists are increasingly accepting the term anthropocene as a valid epoch. Let that sink in for a moment and appreciate the magnitude of that statement. The scope of human activity is now so large that its impact will be measurable in geological time scales. This should scare the crap out of people.
As Bruce Sterling has pointed out on several occasions, the french historian Fernand Braudel didn't consider anything that happened over less than two to three centuries to be of any importance. He was focused on the longer trends that have shaped human history that play out over many generations. But, for geologists a few hundred years is not even enough time to properly produce a soft-boiled egg. Real change is measured in no less than hundreds of thousands of years before something is worth even noticing.
The main thing is, geologists think in terms of the context of deep time. We view everything from the perspective of millions of years, minimum. When a geologist looks at a stream they see the depositional zones, the erosional zones, the flood plane–and they are thinking both how the local geology affected it and how the stream will look in five million years. (As an aside, you get really strange looks when you discuss this with your eight-year-old son at a park.) And I do mean EVERYTHING. I remember drinking some loose-leaf tea once, adding the tea to the cup then the water, and realizing as the leaves settled that the high surface-area-to-volume ratio combined with cell damage from desiccation made them get water-logged very quickly, allowing for certain flood deposits to form. I’d always been curious about that.
— Tyler Cowen, How do geologists think?
Real change takes millions or even tens or hundreds of millions of year to make enough of a dent on the geological record to pay attention to. The only exceptions are cataclymic events such as the meteor that triggered the K-T event. Geologists are increasingly coming to the conclusion that our species is in the process of making a measurable impact on the very rock that makes up our planet.
GDP is a holdover from a time when becoming a millionaire was seen as the pinnacle of societal success. In the process of scaling from millions to billions the scope of human activity now encompasses a significant portion of what was considered to be part of Nature, and therefore something that was apart from human activity. We need to start measuring the total scope of human activity, not simply what can be entered into ledger books.