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November 08, 2021

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Paddy Carter

"Hagglund’s solution to this is ingenious. What we need, he says, is a “revaluation of value”. We must judge economic success not by how much we produce, but rather by how much free time we have"

This is not the same thing, but not unadjacent to:

Utility = f(Consumption, Leisure)

the standard formulation in economics that, one might argue, has not had as much influence as one might have imagined.

rsm

Is Benjamin Friedman blatantly cherry-picking his data, and assuming ergodicity?

Did the economic stagnation of the Great Depression lead to Roosevelt's relative tolerance?

Did 2008's economic stagnation lead to Obama's relative tolerance, despite what Friedman wrote in 2006?

Did 2020's economic stagnation lead to Biden's relative tolerance, once again going against Friedman's 2006 prediction?

Conversely, was economic growth in the 1980s accompanied by the rise of intolerance for drugs ("Just say no") and homosexuality?

Does the Easterlin paradox, when considered with Friedman's theory, mean that tolerance and openness don't make people happy?

Should we stop using GDP in public policy, because it is a political statistic that is half made-up and is never reported with the statistical error margins that intellectual honesty demands?

《we’ll need redistribution in another sense – from landlords to tenants.》

Why not simply buy back land from voluntary sellers, and make it commons again? Can landlords make far higher returns from financial derivatives which free them from having to own any of the underlying?

Blissex

Our blogger is a bit behind the times: thanks to Thatcher, Blair, and their successors, millions of UK people have chosen a "working less" policy, thanks to massive bonuses, profits, capital gains from working in finance or owning property and shares, Whether in Dubai, Rutland, Portugal, or on a cruise ship, they are working part time, or have retired, comfortably enjoying their free time.

Sure, someone have to "work until they drop" to pay for all that, but it is mostly mostly "losers" or immigrants, who cannot vote or don't vote, and they don't matter anyhow, as no major party represents them.

«the left and greens must campaign for the cultural change without which degrowth is impossible.»

The issue is obviously not "degrowth": thanks to the "cultural" change of thatcherism, the GDP of renters and workers has been degrowthed very successfully for 40 years, and the corresponding gains of owners of property and shares or executives and traders in finance has enabled them to work a lot less, either retiring early or working part time.

The change required is actually a distributional, not cultural, change and there are powerful interests that oppose that, and no major party represents those who would benefit from it.

Only an collapse of the rentierist model and a temporary alliance of productive capitalists and workers can then change the distributional model.

Blissex

«The precedent here is perhaps free market ideas in the 50s and 60s. These were marginalized, but years of often-neglected work by campaigners and thinktanks eventually led to them becoming accepted in the 80s.»

This is one of the most stunningly naive opinions by our blogger, who is presenting here the hacks working for property and finance interests as "marginalized" and "often-neglected" and yet still winning a wykehamist debate of ideas.

Happily disregarding how they were funded by wealthy rentier interests, and their often fantastic claims were repeated and amplified by media owned by wealthy rentier interests.

Blissex

Along with the usual uselessness like this: “Can landlords make far higher returns from financial derivatives which free them from having to own any of the underlying?”

There is this interesting point which hints at some useful topics:

«Should we stop using GDP in public policy, because it is a political statistic that is half made-up and is never reported with the statistical error margins»

Indeed the GDP index is largely made-up and it should be mentioned with error estimates (IIRC most national statistic agencies do report in footnotes some guesses of the possible counting errors).

There are two implicit important points in that rhetorical question:

* What is usually mentioned is not "GDP", which is a vector of physical quantities, but some (arbitrary) GDP *index*, constructed from GDP and some (arbitrary) vector of prices.
Sometimes it gets worse and GDI ("I" for "Income") is reported as if it were GDP ("P" for "Production"), as if all reported incomes resulted from production (following J.B. Clark).

* "statistical error" can relate to one of two things (descriptive and inferential statistics) that are often confused: the most common one is estimation error, if the "measure" is on a *sample* and it is used to estimate the same "measure" on the population, and counting or arithmetic error if the statistic is on the population itself.
Since GDP is supposed to be a descriptive statistic of a population (gross domestic production), not of a sample, the error estimated for it would be a counting or arithmetic one (by and large, even if some components of production are estimated from samples), not something like a confidence interval like for inferential statistics.

Tim Worstall

I adamantly refuse to believe any data at all on working hours that doesn't include household production hours.

So much so that I'd argue - not prove, just argue - that total working hours went down at the IR. That abolition of spinning as a major female household task makes up for an awful lot of factory going.

Jim

Mmmm, I would like to be a comfortably off landowner like the family Austen. With a good living off the CoE chucked in. But those Georgian silver teapots did not make themselves and the tea did not come to Hampshire by magic and someone had to dig up the clay and coal to make the bone china as well as grow the corn and raise the beef.

Fundamentally they were spongers. Ms Austen wrote nice stories built around the antics of spongers. We would all like to live on free handouts.

Work less? Have you seen the 'second jobs' our MPs have? A spot of advising here, a spot of lawyering there. The propensity of humans to cheat and lie and grab property and stuff seems unbounded. I suppose we might get to robots toiling in the fields and driving JCBs on building sites but I think that idea has more than a few snags.

I also doubt that increased leisure will bring peace. One has only to look at segments of academe where there is very little to do or study. Lo and behold, they find all sorts of crazy things to squabble about. Humans seem more and more like up-market monkeys, grabbing all the best bananas and fighting off competition. I am sure we will do nothing to save ourselves.

rsm

Blissex, what kind of doublespeak is this?

《Since GDP is supposed to be a descriptive statistic of a population (gross domestic production), not of a sample》

How is GDP different, in theory, from a poll? Don't both use samples to produce a "descriptive" statistic of a population? And doesn't the standard error reflect the statistical uncertainty of so doing?

《the error estimated for it would be a counting or arithmetic one (by and large, even if some components of production are estimated from samples),》

Aren't all production totals estimated from samples? Even government expenditures are extrapolated, because final figures don't come in till long after the GDP for the relevant period has been fixed?

Quoting our blogger's penultimate entry:

《recall basic national accounts identities. These tell us that GDP is the sum of consumer spending (C), government spending (G), investment (I) and net exports (NX). It’s also the sum of incomes: profits (P), wages (W), other incomes such as those of the self-employed (O), and taxes on production (T). 》

How are any of those totals not extrapolated from samples? Does anyone (except an economist, of course) think "Investment" can simply be summed up by taking reported totals from every company in the country? In practice, aren't they doing "inferential" statistics, and thus should calculate and report standard errors associated with each inference from sample to population?

And, when you combine the "Investment" estimate with the "Net Exports" estimate, don't you have to combine standard errors, which means you effectively multiply them (the reader is invited to do internet searches on techniques of combining standard errors)?

In the end, if they reported the actual standard error on their inferences, would it be so wide as to make GDP useless for policy making?

Which is why they don't report standard error?


GREGORY BOTT

Degrowth will come because credit events will force liquidation no matter what you think you want. Nations will bankrupt, social structures will liquidate and history will reset. All property and money will be useless. Best not have a large population overgrowth, a Asiatics?????

ltr

Terrific essay as usual, but I would lean strongly to the argument that meaningful progress on climate change will necessarily mean emphasis on growth. Indonesians or Indians are not going to support climate change programs that are not producing developing, but such programs can and should support growth as China clearly shows.

reason

This statement "... Which runs into the objection that working significantly less would be bad for the economy ..." is meaningless. The economy is a tool - it doesn't have it's own purposes.

ltr

Hagglund’s solution to this is ingenious. What we need, he says, is a “revaluation of value”. We must judge economic success not by how much we produce, but rather by how much free time we have:

"To be wealthy is to be able to engage the question of what to do on Monday morning, rather than being forced to go to work in order to survive."

[ The problem is that this may be true through western Europe, but is not true through the global south. What then? ]

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