Economic growth: who loses?

Labour's promise to "secure the highest sustained growth in the G7" is so far a mere aspiration without a detailed plan to achieve it. It is like a man claiming to want to become a great guitarist without practising or studying - and just as impressive and as likely to succeed.

The party promises to correct this omission in coming months. I would hope that one question it answers is: who is it going to hurt?

I say this simply because even mainstream policies to increase economic growth would undermine many vested interests and ideas. For example:

 - Nimbys. Economic growth requires more liberal planning laws - be it to enable universities to build more laboratories, to get us more wind or solar farms, or of course to build more houses (which itself could raise productivity). That's going to hurt nimbys. Westlake and Bowman's idea for street votes on new developments might mitigate a lot of this hurt - by ensuring residents benefit from such developments - but it won't appease all the die-hard nimbys.

 - Land-owners. Most economists, I suspect, agree that we need to tax businesses less and land-owners more: Westlake and Bowman, for example, advocate replacing business rates with a land tax. Whilst this would encourage business formation and expansion and help solve the problem of high streets being blighted by closed shops, it would of course hit commercial property owners.

 - Financiers. Westlake and Bowman also advocate eliminating the tax deductibility of corporate interest payments to end the bias towards debt financing (and by implication the bias against equity finance). That'll hurt some lenders. So too would a state investment bank aimed at supporting start-ups, simply because it would create more competition. And of course, one effect of higher trend growth would be higher real interest rates - the two are correlated - which would raise the costs and dangers of all leveraged strategies.

 - Monopolists. The UK has some of the highest energy costs in Europe, thanks to lax regulation of our privatized industries. This squeezes economic growth in exactly the way David Ricardo described 200 years ago; if we are spending all our money on economic rents, there's less to spend on other things and hence less revenue for genuine entrepreneurs. Pro-growth policies would therefore either cap energy prices or tax away the profits of energy companies.

 - Incumbent companies. Economic growth requires fiercer competition, not least because productivity increases come not so much from existing firms upping their game but from new companies starting and efficient ones expanding. This in turn requires tougher competition law to help new start-ups or to break up large inefficent firms such as BT.

 - Some workers and employers. We might be close to de facto full employment: the sum of the unemployed and those outside the labour force wanting a job is close to its lowest since records began in 1992*. This means that if Labour really wants to create significant numbers of good jobs in the green economy, care sector, housebuilding or wherever it will have to destroy some others. This of course is what "fiscal responsibility" means: cutting some spending or raising taxes to pay for other spending priorities means cutting jobs and businesses. The question is: which jobs and businesses does Labour wish to destroy? It shows no interest in this question.

 - Brexiters. One of the few big, quick ways to raise growth would be to rejoin the single market. Which would of course outrage Brexiters and the right-wing media: liberalizing migration policy would have the same effect. The more intelligent of these might also oppose economic growth because they know that stagnation breeds reaction and illiberalism and so feeds their agenda.

Nothing I've said here is terribly left-wing. I'm not talking about radical pro-growth policies such as economic democracy, income redistribution or universal basic income but merely bog-standard orthodox economics. And yet even such mainstream policies would upset a lot of vested interests. Indeed, there's little evidence the voters want economic growth: they voted against it in 2010, 2015, 2016, 2017 and 2019.

Any serious economic policy must be aware of this opposition to growth, and be prepared for the fight.

The challenge here is not an intellectual one. Most economists roughly agree what type of policies we need to raise growth, even though we differ upon the relative importance we'd attach to them or to just how effective they'd be. But politics is not about intellect, and raising growth is not merely a technocratic exercise. Instead, it's about power. Would Labour have the power to face down anti-growth interests? Can it mobilize countervailing forces to them? If stronger growth is to be any more than an idle aspiration, it must be serious about these questions. A purely top-down managerialist ideology cannot be sufficient.

* That phrase de facto is important. Labour isn't wholly fungible, and there'll always be some unemployment simply because of mismatches between labour supply and demand. What matters is whether the unemployed have the skills or health to do the jobs Labour wants; it is improbable that people suffering from long covid will quickly be able to work on building sites, for example.

Comments

[ltr]

Want higher growth, look to and work with China::

https://fred.stlouisfed.org/graph/?g=XM0W

August 4, 2014

Real per capita Gross Domestic Product for United States, United Kingdom, France and Germany, 2007-2021

(Percent change)

https://fred.stlouisfed.org/graph/?g=XM1a

August 4, 2014

Real per capita Gross Domestic Product for United States, United Kingdom, France and Germany, 2007-2021

(Indexed to 2007)

https://fred.stlouisfed.org/graph/?g=XMt4

August 4, 2014

Real per capita Gross Domestic Product for United States, United Kingdom, France, Germany and China, 2007-2021

(Percent change)

https://fred.stlouisfed.org/graph/?g=XMt9

August 4, 2014

Real per capita Gross Domestic Product for United States, United Kingdom, France, Germany and China, 2007-2021

(Indexed to 2007)

[Jan Wiklund]

There is however one way to build in a way that nimbies have to show their cards - making town plans in the way they made it in the 19th century. That is, mark out streets, blocks and parks where one expect to build, and write generalized building regulations covering all town.

In this way, one would deprive the nimbies of their strongest card: "don't build here, build some otherwhere". They would have to oppose all building everywhere, which would call forth a popular opposition against them.

And in case the general town plan is made in a reasonablu democratic manner, they should thus be powerless.

[ltr]

Jan Wikund:

There is however one way to build in a way that nimbies have to show their cards - making town plans in the way they made it in the 19th century. That is, mark out streets, blocks and parks where one expect to build, and write generalized building regulations covering all town.

[ Direct or people-centered democracy that Labour could adopt. Nice. ]

[rsm]

《 It is like a man claiming to want to become a great guitarist without practising or studying - and just as impressive and as likely to succeed.》

What if he succeeds but his sound is annoying, yet influences people merely due to the stories he tells about constantly practicing?

《Any serious economic policy must be aware of this opposition to growth, and be prepared for the fight.》

What if I oppose growth because it just means more of my natural freedoms are taken away as I am forced into suboptimal choices like sleeping indoors instead of outside, because you enclosed all the commons?

《Want higher growth, look to and work with China》

Why does Xi Jinping want slower growth in China? Why are growth targets decreasing?

[LJC]

'Labour's promise to "secure the highest sustained growth in the G7" is so far a mere aspiration without a detailed plan to achieve it.'

But equally, any Opposition Party that publishes a detailed plan before their Election Manifesto will either have it rubbished by the Government, or stolen by the Government. Only independent think-tanks can come out with detailed plans, because they are not standing for election and success for them is getting their plan taken up by a major Party.

[ltr]

But equally, any Opposition Party that publishes a detailed plan before their Election Manifesto will either have it rubbished by the Government, or stolen by the Government....

[ The whole point of an election is being able to choose between policies. Labour, with no detailed policy set down, would be ridiculous to vote for. ]

[Blissex]

«even mainstream policies to increase economic growth would undermine many vested interests and ideas. For example:»

So "growth" is actually not "growth", because some people fear it will be degrowth for them?

«little evidence the voters want economic growth: they voted against it in 2010, 2015, 2016, 2017 and 2019.»

That seems to me a risible claim: property and finance rentiers voted for growth in their asset profits and rents in 2010, 2015, 2017, 2019 and the Cameron/Clegg, May, Johnson delivered it in large amounts, entirely redistributed from losers.

«But politics is not about intellect, and raising growth is not merely a technocratic exercise. Instead, it's about power.»

So far so good, this looks like a turn away from wikehamism.

«Would Labour have the power to face down anti-growth interests?»

New New Labour has loudly described to which vested interest they would deliver growth if they get that power:

https://www.theguardian.com/politics/2022/dec/22/labour-targets-new-swing-voter-middle-aged-mortgage-man
“Party sees identifying 50-year-old male home-owners as key to electoral success”
«this archetypical voter as male, 50 years old, without a university degree but with a decent job in the private sector and, crucially, a homeowner with a mortgage. This person almost certainly voted leave, Ford added, explaining Labour’s insistence that it will not take the UK back into the single market.»

https://www.theguardian.com/commentisfree/2023/mar/05/house-prices-freefall-property-ownership-rent-britain
«The foreground of Labour policy, however, is all about home ownership. [...] There is talk of a new mortgage guarantee scheme; the party’s first actions in government will include “helping first-time buyers on to the housing ladder and building more affordable homes by reforming planning rules”. Labour, we are told, “is the party of home ownership in Britain today”.»

Is that clear enough? They want power to face down lazy, exploitative upgraders, renters, workers, the people who are against the growth of income and wealth of property and finance interests.

[Blissex]

«A purely top-down managerialist ideology cannot be sufficient.»

That reminds me of that I think is the impression of the "very public sociologist" that the defining characteristic of Starmer is “top-down managerialist ideology” especially in the service of strengthening the authoritarianism of the state.

That's would be silly: the defining characteristic of Starmer is that his politics are ultra-brexit hard thatcherism, because his core constituency of choice is affluent propertied kippers, and his main policy goal is growth of housing costs at the expense of the lower classes for the benefit of the constituency he has chosen.

The managerialism and the strengthening of state authoritarianism are just means to that end.

[Blissex]

«There is however one way to build in a way that nimbies have to show their cards - making town plans in the way they made it in the 19th century. That is, mark out streets, blocks and parks where one expect to build, and write generalized building regulations covering all town.»

That's the usual comical conceit that NIMBYsm and booming housing cost inflation are just accidents that need a simple technical fix as in the suggestion above, as if one clever idea is what nobody could figure out.

They are instead the very core of english politics, a quite deliberate policy of Conservatives, New New Labour, LibDems of enriching affluent incumbents at the expense of the lower classes. Two example:

Commenter on "The Guardian": «I will put it bluntly I don't want to see my home lose £100 000 in value just so someone else can afford to have a home and neither will most other people if they are honest with themselves»

a href="https://www.theguardian.com/society/2022/jun/29/how-right-to-buy-ruined-british-housing
A 79-year-old retired carpenter in Cornwall: «bought his council house in Devon in the early 80s for £17,000. When it was valued at £80,000 in 1989, he sold up and used the equity to put towards a £135,000 fisherman’s cottage in St Mawes. Now it’s valued at £1.1m. “I was very grateful to Margaret Thatcher,” he said.»

[Laban]

The entire discussion is moot, as my understanding is that while British GDP has increased substantially over the last 30-odd years, none of that increase has been reflected in median living standards. The benefits of increased GDP have all accrued to the oligarch class.

(Blissex, nice to see you at MoA, but I can only imagine that Guardian commenter is childless. I own my house outright and its worth 5x what I paid in 1997, but would be delighted if house prices halved or more - because I have children just starting their careers who are discovering house prices at 10x median earnings rather than 3-4x as was the case in the late 70s.

In places like London even renting is an issue - you practically have to be in a relationship to afford anywhere)

[ltr]

I own my house outright and its worth 5x what I paid in 1997, but would be delighted if house prices halved or more - because I have children just starting their careers who are discovering house prices at 10x median earnings rather than 3-4x as was the case in the late 70s....

[ Really important; the healthy need being to have housing for "living in," rather than as an endless speculation.

I would very much welcome ideas on this. ]

[ltr]

What makes the UK and France so different from
Germany?

https://fred.stlouisfed.org/graph/?g=piYU

January 30, 2018

Real Residential Property Prices for United Kingdom, Germany and France, 1992-2018

(Indexed to 1992)

[LJC]

Try re-reading what I wrote instead of misrepresenting it:

"[The whole point of an election is being able to choose between policies. Labour, with no detailed policy set down, would be ridiculous to vote for.]"

I wrote "before their Election Manifesto". You are expecting Labour to present their detailed plans now instead of in their Election Manifesto when the Tories have already called the election and published their own Election Manifesto.

[Blissex]

«that Guardian commenter is childless. I own my house outright and its worth 5x what I paid in 1997, but would be delighted if house prices halved or more - because I have children just starting their careers»

Plenty of childless women, or parents who can afford to give a "leg up" to their few children by doing reverse mortgage, and also many don't care.

But there is a big story about that topic, see below.

«who are discovering house prices at 10x median earnings rather than 3-4x as was the case in the late 70s.»

That is a deliberate policy by reaganistas/thatcherites:

* Up to some decades ago women had sons as pension assets, as there was no "pension system" (in older times "pension" meant "sinecure" by grace and favour). As a result armies were small and mercenary and often soldiers were orphans and similar.

* The necessity to fight mass industrial wars required a generalized draft, which was opposed by mothers as the risk of losing their pension assets was high.

* Bismarck therefore invented a mass pension system, initially only for mothers/women, and other countries followed.

* When the post-WW2 baby-boom happened various governments wondered how to fund a PAYG mass pension system for them, given that a decent pensions requires 25-35% of wages to be saved.

* Option 1: funded via contribution. Ultimately paid for by employers, so unacceptable to neoliberals.

* Option 2: funded by social security. Ultimately paid for with taxes, which are come mostly (in absolute terms, not percentwise) from older and richer people, so unacceptable to neoliberals.

* Option 3: funded by huge property profits. Excellent for neoliberals as it means that (usually younger) lower income "parasites" and up paying for the retirement of (usually older) richer property owners, especially female one.

In effect property based pensions are way to make lower income sons pay for the retirement of richer women (whether mothers or not), with most of the redistribution from lower income mothers to higher income childless women. Choosing motherhood and raising a son is particularly hard for a lower income woman, and most of the economic benefits go to childless higher income women via higher property prices and rents.

(note: there are secondary effects involving daughters and men too, but the bigger story is about young sons and older women).

[Blissex]

«while British GDP has increased substantially over the last 30-odd years, none of that increase has been reflected in median living standards. The benefits of increased GDP have all accrued to the oligarch class.»

That seems to me the usual gross misconception tha only a tiny sliver of uber-rich have benefits, while instead most of the benefits have gone to the top 20-40% of voters, who have been voting for "growth" of their booming living standards for 40 years.

Unless retired carpenters with million pound properties are to be considered part of the "oligarch class".
There is a case for that: most of that 20-40% of voters vote for the parties "sponsored" by that "oligarch class" also because many of them consider themselves part of the "oligarch class".

The problem of the past 40 years is not that a tiny minority of capitalists in top hats and morning coats have screwed everybody else, that's so 19th century.

The problem of the past 40 years is *mass* rentierism, something that many on "the left" steadfastly pretend to ignore, perhaps because many belong to the mass rentier class.

[ltr]

Try re-reading what I wrote instead of misrepresenting it:

You are expecting Labour to present their detailed plans now instead of in their Election Manifesto when the Tories have already called the election and published their own Election Manifesto.

[ Please try being polite, as Labour advocates newly need to learn to be:

I have not the slightest interest in supporting a Keir Starmer led Labour that so far has only chosen to personally criticize Labour representatives who have had specific policy proposals.

Starmer finds it necessary to personally attack a Jeremy Corbyn rather than to distinguish policies. So, I assume Starmer can only be destructive as a Labour leader.

I want detailed Labour policies set down now; right now. Policies can be revised and added to, but I want specific policies set down by Labour now. ]

[ltr]

Blissex:

The problem of the past 40 years is not that a tiny minority of capitalists in top hats and morning coats have screwed everybody else, that's so 19th century.

The problem of the past 40 years is *mass* rentierism, something that many on "the left" steadfastly pretend to ignore, perhaps because many belong to the mass rentier class.

[ Perfectly expressed, and just what is needed for Labour leaders to think clearly through the matter of general national development.

Really clearly summarized. ]

[ltr]

Why does Xi Jinping want slower growth in China? Why are growth targets decreasing?

[ China is planning for growth that is increasingly high level or technologically advanced and ecologically sound and encompassing more of the population. Growth will still be relatively fast, but less so than in past decades.

This is being discussed in national planning sessions right now. ]

[rsm]

《entirely redistributed from losers.》

When your house goes up, whose account is debited? (If someone buys it, does the bank create the money that you get paid?)

And isn't the following Blissex quote an appropriate response to Xi Jinping's new declining GDP targets?

《So "growth" is actually not "growth", because some people fear it will be degrowth for them?》

[Blissex]

"with most of the redistribution from lower income mothers to higher income childless women"

In case it is not clear: lower income mothers spend a lot of effort and money to raise tenants and upgraders/buyers and affluent propertied childless women reap the profits. That is "green" growth especially welcome when the sons of the lower income mothrs are immigrants from abroad or "the north".

[ltr]

«even mainstream policies to increase economic growth would undermine many vested interests and ideas. For example:»

So "growth" is actually not "growth", because some people fear it will be degrowth for them?

[ Surely not; GDP and GDP per capita growth is precisely that even if there are interest groups, such as Greens, that oppose GDP growth. The need then is to have growth that is green as possible.

Growth in the UK has seriously faltered since 2008 and this is a general problem and must be corrected for the sake of the UK as a nation. ]

[ltr]

"Xi Jinping's new declining GDP targets"

The Chinese growth target for 2023 is over 5%, which is what is attainable given potential GDP estimates. This means rapid and ecologically sound growth for China, up to potential.

As for potential, look to investment levels in China which are designed to steadily increase potential GDP.

[ltr]

https://www.imf.org/en/Publications/WEO/weo-database/2022/October/weo-report?c=223,924,132,134,534,536,158,922,112,111,&s=NID_NGDP,NGSD_NGDP,&sy=2007&ey=2022&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1

October 15, 2022

Total Investment & Gross National Savings as a Percent of GDP:

2022

China

Total Investment ( 44.8)
Gross National Savings ( 46.4)

France

Total Investment ( 24.9)
Gross National Savings ( 23.6)

United Kingdom

Total Investment ( 17.4)
Gross National Savings ( 12.6)

[rsm]

《lower income mothers spend a lot of effort and money to raise tenants and upgraders/buyers and affluent propertied childless women reap the profits.》

What would happen if lower income mothers asked politicians for a strong basic income to match the money created out of thin air to shore up investment assets (housing, stocks) when markets arbitrarily devalue them?

As for China, why don't individuals get to have a say in GDP targets? Why does Xi Jinping speak for all Chinese?

[ltr]

As for China, why don't individuals get to have a say in GDP targets? Why does Xi Jinping speak for all Chinese?

[ Enough; this is false and absurd, and only reflects a disdain for truth and a disdain for 1.4 billion people of China.

Blissez already dismissed this writer as only intent on prejudiced trolling. I now am also forever done with this prejudiced troll. ]

[ltr]

"ECONOMIC GROWTH: WHO LOSES?"

With the lack of growth since 2008, the British as a united nation have lost. The loss has been the result of policy, has been needless and saddening for those who care for the British as a whole.

This superb post explains the British loss.

[Blissex]

«Growth in the UK has seriously faltered since 2008»

There is a clear inflection point around 2003-2005 (a few years after the PRC entering the WTO) as reflected in electricity consumption statistics, plus there was a definite collapse in oil exports and the UK became again a net oil importer in 2007:

blissex.files.wordpress.com/2018/02/dataelectrukfallbyregion2005to2015.png
blissex.files.wordpress.com/2018/02/dataelectreuothersconsperhead1960to2015.png

blissex.files.wordpress.com/2018/04/dataukoilextrconsexpmazama1965to2015.png

Also:

blissex.files.wordpress.com/2021/02/dataukprodbysector1970to2013.png
http://www.coppolacomment.com/2016/07/the-untold-story-of-uks-productivity.html

[Blissex]

«GDP and GDP per capita growth is precisely that even if there are interest groups, such as Greens, that oppose GDP growth.»

I am sorry that both our blogger and myself have not been clear and created this misunderstanding: I think we have both referred to groups who are strongly pro-growth, but only of growth of their own income and wealth, and are also strongly opposed to any growth that reduces their income or wealth or often even just their *relative* power.

For example if "growth" benefited only workers without making employers either better off or worse off in the first instance, employers might oppose it because it would increase the negotiating leverage of workers and allow them to win increased wages.

As to GDP growth in the aggregate in first approximation it benefits asset owners at the expense of workers (by making assets relatively scarcer), and even GDP per capita growth can mask large distributional effects. Apparently S. W-L was astonished by this obvious point:

“I’ve been told of one meeting where the response to the argument that EU membership had increased GDP was ‘maybe your GDP but not my GDP’”

[rsm]

"electricity consumption statistics"

Was the inflection because poor people's lights were being turned off, or because industry outsourced manufacturing and no longer needed the abundant supply?

"‘maybe your GDP but not my GDP’"

Why do economists typically assume ergodicity, ignoring error bars? Can physicists (bridge-builders?) get away with ignoring error bars?

[Blissex]

"electricity consumption statistics"
«Was the inflection because poor people's lights were being turned off, or because industry outsourced manufacturing and no longer needed the abundant supply?»

My current guess is both: outsourced manufacturing led to people in those areas having less money to pay the bills.

There are some significant details:

* In two countries that I have checked (and this is clear from the dataelectrukfallbyregion2005to2015.png graph above) the biggest per-person electricity consumption falls (apocalyptically huge: 20-30% down in a decade) happened in the poorer and more industrial areas, in the richer areas electricity consumption just stopped growing.

* In developing countries like Malaysia consumption per capita continued to surge.

* For the previous 100+ years electricity consumption had grown in strict similarity with GDP growth, both aggregate and per-person, to the point that it was used as a proxy for GDP.

[Blissex]

"‘maybe your GDP but not my GDP’"
«Why do economists typically assume ergodicity, ignoring error bars?»

There is an "error bars" issue in studies of the political economy, but this is not what makes them disregard “your GDP but not my GDP” issues:

* The Second Theorem of Welfare Theory says that under certain certain laughable conditions aggregate growth and income distribution are independent matters.

* Thanks to that excuse and because of powerful economic and political incentives most Economists refuse to consider distributional matters because it's "politics".

Out blogger in this post makes it clear that "growth" and "distribution" are not independent matters.

[Zoltan Jorovic]

I do wonder how many people who pontificate about planning laws actually have any knowledge of them. If you think that the reason the country doesn't have a surplus of affordable housing is because of those laws, you are misinformed. There isn't the time and space here to explain how the system operates, and why it continues to fail to meet real needs, but start by reading this report:
https://positivemoney.org/publications/banking-on-property/

[Zoltan Jorovic]

I have to say I am disappointed with the suggestion that more "liberal" planning laws would be any sort of an answer to the housing crisis. It's as if you believe the fairy tale that developers simply wish to make homes for everyone and are being frustrated by red tape so that they can only build "executive" detached homes on greenfield sites, or lucrative off-plan investment apartments in up-and-coming areas of London. If only we loosened the restrictions there would be affordable housing for all, wherever they were needed. Have you heard the one about viability, Chris? How often that a plan gets agreed only to return with a request to reduce the affordable element? Or that the official "affordable" house is unaffordable for many in any case? The issue isn't planning, its the whole financial/economic/political system. So long as housing is primarily viewed as an investment asset that must grow in value, changes to planning will have marginal impact.

I dislike the way people legitimately objecting to having their lives negatively affected by a development are referred to pejoratively as "nimbys". Objections only carry weight if they have planning reasons behind them, in which case they are valid, and should be considered, and people are entirely right to express them. If the objection has no merit, it will be dismissed. Its not as if loads of applications get rejected because of "nimys" - they don't. Only if the objections have a legal basis and outweigh the benefits are they likelt yo have any impact. This is not a common occurrence.

[rsm]

When over half of GDP is imputed and the rest is based on surveys with over 50% non-response rates, shouldn't the error bars on the GDP statistic be around plus-or-minus 100%?

《My current guess is both: outsourced manufacturing led to people in those areas having less money to pay the bills.》

Was supply still abundant, and energy made scarce only by imposing a proxy scarcity of money?

《Out [sic] blogger in this post makes it clear that "growth" and "distribution" are not independent matters.》

Would a strong basic income put a floor on distribution, regardless of growth?

[ltr]

Blissex:

There was an increase in UK energy prices from 2000 to 2007, however UK manufacturing production and GDP do not falter until 2008. The faltering of growth in the UK was from 2008 and reflects the Conservative turn to austerity budgets.

Zoltan:

I am disappointed with the suggestion that more "liberal" planning laws would be any sort of an answer to the housing crisis....

[ My sense is that liberal planning laws and investment in transportation infrastructure would indeed slow housing price increases and begin to address the housing crisis. ]

[Blissex]

«There was an increase in UK energy prices from 2000 to 2007, however UK manufacturing production and GDP do not falter until 2008.»

Then the 2003-2006 period is the only period in history in which GDP and manufacturing grew while per-person electricity consumption collapsed :-).
Curiously the graphs show that electricity per person consumption in various other developed countries happened while there were severe economic issues in those countries, and vice-versa in developing countries electricity per-person consumption rose with GDP and manufacturing. :-).

https://www.economist.com/finance-and-economics/2023/03/09/how-to-measure-chinas-true-economic-growth
«But a successor has yet to be found for the “Li Keqiang index”. This unofficial proxy for China’s economic growth was inspired by a leaked conversation between Mr Li, when he was party secretary for the province of Liaoning, and an American diplomat. Mr Li confessed that the province’s gdp figures were “unreliable”. Instead, he focused on electricity consumption, rail cargo and bank lending.»

For another proxy:

http://www.nytimes.com/2009/09/27/weekinreview/27healy.html
«In the 1970s, when Alan Greenspan, the former chairman of the Federal Reserve was still running his own economic consulting firm, he said that he looked at sales of men’s underwear as an economic indicator. Sales rose steadily in normal times, the theory went, but tended to dip when men had less money, or were trying to cut back on their spending. The research firm Mintel projects that men’s underwear sales will fall 2.3 percent this year as men stretch out the lifespan of their boxers or briefs.»