George Monbiot Should Hope He Doesn't Get What He's Asking For

GDP ain't a great measure - but it is objective for what it is

Gross Domestic Product should in fact, be Net National Income - or even Net National Consumption. As far as economics goes that’s a joke - and while economics will strike many as a joke in itself that’s about as good as economic jokes get too.

The point is that we can measure the economy gross or net, national or domestic and by production, income or consumption. Those last three will all be the same once we adjust for savings and the fact that people lie about taxes. Domestic means done in the place, national means accruing to the place. So, what is produced (summatDP) in a place or what goes to the people in the place (summatNP). This difference between N and D usually doesn’t matter much except in the case of Ireland. By D it’s hugely richer than England, by N it’s about the same, the reason being those vast floods of US tech company profits that surge through the place but don’t stick to the sides.

The really big one, G and N, is the one where we really should change. Gross means that it’s value added (whether we’re measuring income, production or consumption it’s really value add, that is what is produced, what is income or consumption) and Net means that it’s value added minus value subtracted.

Yes, there are other problems, it doesn’t measure non-monetised transactions and so on, caring work in the home etc. But that’s a problem for another day.

But gross and net. On this Monbiot is right:

Unlike GDP, which bundles up good things and bad (if you have to refurbish your home because of flooding, this contributes to GDP)

Well, no, he’s not actually. Because this is Monbiot and economics so of course he’s not right. But he’s edging toward the right idea. The flood is damage, it’s damage to the capital stock of the place. That’s not part of GDP. As also an increase in the capital stock of the place isn’t part of GDP of course. Capital changes aren’t. So, the damage to the capital stock ain’t in GDP. But cleaning up after the flood (or pollution etc) is. Because that’s adding value, therefore it’s in our measure of value added.

So, yes, we should move to a measure which includes the balance sheet as well as the profit and loss - we should be measuring changes in the capital stock as well as the flow of value add. Therefore we should be measuring net, not gross.

This is all well agreed within economics. Or at very worst there’ll be some pipe sucking and a “Yes, interesting point”.

However - there’s always a however, no? - net is difficult to calculate. We all agree that we’d like to include the reduction in capital assets in the calculation - because it’s the net addition to human prosperity that we’d like to measure, after all. But, umm, capital numbers, they come in late. For example - and only an example - corporate depreciation is in the annual accounts of companies. Which only have to be filed up to 18 months after the year in question. Aggregate those and, well, our number turns up 2 years after the events. Sure, great target, not that much good as a management tool.

There are also more conceptual problems. Say that we move between whole word and phonetics as teaching reading methods (one of the wildnesses I think I’ve seen has been that the left was on opposite sides of that on different sides of the Atlantic but maybe that’s my observation at error). OK, so how many decades is that before we know about the addition, or subtractions, from the economic performance of the nation?

That is, the real value of the G is that it’s something we can calculate in something close to real time.

Oh, and, by the way, if we do work net then Norway is one of the poorer countries of Europe. That icy social democracy is built upon the extraction and sale of that capital asset, all that oil and gas, right?

OK, so so far so good, George is right in ideals, not so much in technical detail. But now:

At the moment, every attempt to create a greener and fairer country is hampered by the way we measure progress. So my third big policy is to dethrone our use of GDP as a general indicator of how well we are doing, and replace it with more appropriate measures. There’s a vast range of ideas about what a genuine progress index would look like, so Labour would launch a consultation and citizens’ assemblies to decide how best to do it.

Unlike GDP, which bundles up good things and bad (if you have to refurbish your home because of flooding, this contributes to GDP), our index would incorporate measures of health, education, housing, environmental quality, employment and leisure time, ability to meet the cost of living, equality, inclusivity and democratic engagement. All these things are measured today, but they currently take second place to a perverse metric that was never designed to track our wellbeing.

It’s that “vast range” which is really the problem. So, for example, equality. Well, what measure of equality? What’s the target? And then, well, equality is a measure desired by a specific side of the political debate. Absolute, total, equality is desired by no one other than those licking their lips at the ability to impose it - other than for themselves of course. True, there’d be fun in being able to force people into defining their target. What? Gini? Palma? Wealth or income (note Sweden has higher wealth inequality than Britain)? Before or after tax and benefits? No, all benefits, including government services?

But leave aside that fun of forcing a definition and a target upon them. Greater equality is not a universally shared objective. So, why should it be incorporated into this new target?

Education. So, more grievance studies PhDs is an advance in civilisation is it? Well, it would be if an expansion of tertiary education were part of that measure. Which means we might think the proposition is, as they say, arguable. Even problematic.

But my headline is that George should hope he doesn’t get what he’s arguing for. And the pip of that argument is in this:

employment and leisure time

OK, let us try to prioritise that, leisure over employment. We have to make the one insistence here, work within the household is still work. Nothing about working hours makes sense unless we include unpaid work in the household as well as that work out there for The Man. So, we should do so.

As it happens my income is about that of George’s Guardian contract. About twice UK household income, that sort of level. Of course I - and he - are worth it even as I’m much more likely to agree that it’s because I’m a member of the Lucky Sperm Club. Born in this time and place, where humans are so damn fucking rich. Well, OK.

So, now consider what this actually means. Well, it’s about £35 an hour over a normal working year actually. Last time I bought a cauliflower it was £2 I think. A cabbage maybe €1. That I don’t really know these prices in detail shows that they’re the sort of sums not really thought about. I do pay more attention to meat prices, they’re higher. Loin of pork where I live runs around €7 a kg at present. Can’t say I’ve really worried about any of those prices - I’m lucky, pig in shit compared to near all humans across all of human history.

Well, yes, but. If I’ve got my numbers right then a cauliflower costs me 4 minutes of work for The Capitalist Bastards. Yes, that is about right - and a cabbage 2 minutes. There is absolutely no way, no way at all, that any small scale grow my own food at home, on an allotment, working the back garden, is going to produce a cabbage for 2 minutes of my time. Economies of scale in farming mean that just ain’t gonna happen. Nor is the pig going to give up a kg of loin in under 10 minutes either.

This then flows on to all those other things. The best bet on recycling is that it takes 30 to 45 minutes per household per week. Pfft, call that 3 hours a month. The value, per month, to me of recycling getting done is £105 is it? £1,200 a year? Is it fuck. So too repairing clothing and on and on and on through all the things that George Monbiot insists we should all be doing to make ourselves richer in that real and true sense.

The moment we include “leisure” as one of our measures then all green - and Green - insistences flee out the door.

Sure, I think we should prioritise leisure. That’s why I’m the capitalist free market bastard that I am. Because it is exactly the economic flowering delivered by Ol Adam Smith’s division and specialisation of labour which delivers ever increasing amounts of that leisure time to us capitalist wage slaves. So, you know, more of this please.

And the reason George Monbiot should hope he doesn’t get what he’s wishing for is, obviously enough, that the conclusion is entirely, wholly and absolutely, at odds with everything about life that he’s been arguing for for the past 40 years.

Which, you know, would be a bit of a shit. Imagine finding you’ve been wrong all your life?