Arrogant And Out Of Touch

It has been a constant mystery for Flanders and Co as to why employment is going up in a ‘recession’.

The most reasonable thought might be that maybe the ‘recession’ is not as bad as painted and that it is the measurement of the GDP figures that is wrong giving us a too low estimation of the economy’s output.

Flanders sniffily dismisses this and attaches herself limpetlike to the ‘it’s all such a big mystery’ theory as well as deriding those who are self employed as people who don’t really count as employed…they’re not in real jobs.

Not saying she has an agenda in trying to question employment figures and tell us something dodgy is going on in the economy…but she has.

However if she had read the BBC news site she might have gained some insight into a small but growing part of the economy based on innovation and the entrepreneurship of the ‘self employed’…and further reading might have enlightened her about the failures of methods used to measure GDP and the effect such failure has on the economy and government policy.

Here the BBC illustrates a ground swell of industrial innovation  and manufacturing that employs new technology and the internet to lower the cost of production, speed it up and to share ideas and information around the world:

‘When Karl Marx predicted a revolution putting the means of production in the hands of the workers, he probably didn’t imagine it to be fought by an army of DIYers.

But increasingly tinkerers and hobbyists are proving they are more than equal to the corporate world, and their efforts are challenging the traditional methods of manufacturing.’

And here one of the BBC’s favourite Lefty economists, Stiglitz, reveals that measuring GDP is not quite so simple and methods used are lagging behind the reality leading to governments making policy decisions on the economy based on false information…having obvious harmful effects.

‘This report, building on extensive earlier work, describes the additions and subtractions that can and should be made to provide a better measure of welfare.

Policies should be aimed at increasing societal welfare, not GDP.

There are long recognized problems in GDP as a measure of economic performance, but many of the changes in the structure of our society have made these deficiencies of greater consequence.

International comparisons of levels and more importantly of rates of growth play a very important role in the design of policy. Comparisons are indeed possible if the procedures and definitions used to compute the accounts are comparable. Yet there are still “large differences in the ways National Accounts calculations are carried out even among European countries, let alone between Europe and the U.S1”. This may have far reaching consequences. It makes no sense, for instance, to structural reforms intended to import the “best practice” of the country performing the best in terms of growth rate, if the growth rates of the two countries differ mainly because of differences in the ways National Accounts are computed.’

Not saying Flanders is arrogant and out of touch but a BBC economics reporter might perhaps have a more rounded approach to the world and not just peddle a certain viewpoint that seems rather too politically partisan.