Monday, August 10, 2009

Social Health and the False Readings of Economics

James Howard Kunstler, called a 'collapsist' by someone recently, writes in his weekly essay today about the mistake of judging the value of our economic activity by numbers:

One of main reasons behind the vast confusion now reigning in the USA, our
failure to construct a coherent consensus about what is happening to us (or what
to do about it), is our foolish obsession with econometrics -- viewing the world
solely through the "lens" of mathematical models. We think that just
because we can measure things in numbers, we can make sense of

For decades we measured the health of our economy (and therefore of our
society) by the number of "housing starts" recorded month-to-month. For
decades, this translated into the number of suburban tract houses being built in
the asteroid belts of our towns and cities. When housing starts were up,
the simple-minded declared that things were good; when down, bad. What this view
failed to consider was that all these suburban houses added up to a living
arrangement with no future. That's what we were so busy actually doing.
Which is why I refer to this monumentally unwise investment as the greatest
misallocation of resources in the history of the world.

Even this interpretation -- severe as it is -- does not encompass the sheer
damage done by the act itself, on-the-ground and to our social and cultural
relations. Suburbia destroyed the magnificent American landscape as
effectively as it destroyed the social development of children, the worth of
public space, the quality of civic life, and each person's ability to really
care about the place they called home.

Whenever I hear an economist making claims that the recession the ending and the recovery is beginning, based on a temporary stock-market ralley or some temporary lowering of the unemployment rate, I am skeptical. These are just numbers that don't speak to the true realities of the economy.

Kunstler is right. The right interpretation of the numbers, taking into account far greater factors than just a few economic numbers being proffered by a governmental agency, is what's needed, and not just some false and sunny optimism.

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