Monday, August 10, 2009

Sooner or Later, Things Start to Make Sense

Way back in grad school, I studied public sector cost/benefit analysis. The prof, an economist of reasonable standing, and a truly gifted classroom presence took us into the intricacies of understanding non-quantifiable costs and benefits. In short, he was addressing the difficulty of a "numbers only" methodology, and the "courage", as he defined it, of honestly addressing the non-quantifiable rather then hiding behind the numbers.

16 years later (1992), while traveling in Russia, we became friends with Vladimir, a faculty member at the Merchant Marine Academy in St Petersburg. In explaining to us the inevitable fall of the USSR, Vlad addressed the fallacy of the Soviet GDP, in that it was so heavily influenced by what he called unnecessary, dead end public works projects. One example he offered was the massive open air concert plazas along the Volga canal. As he described it, they created short term WPA style jobs while being built, and a couple of jobs keeping them clean over the years, but the only concerts most ever hosted were on the day the specific plaza was completed. His point was that no society can benefit from an endless string of low wage public works projects, especially when it is a closed economy, even though they were posting nice GDP numbers to compete with the West's numbers. He said, "GDP rose and we lived like livestock."

Just recently, I watched a WingNut spout packaged GDP ratios and the like to claim that life in America is fabulous, almost everyone is doing quite well, the current recession is just a minor inconvenience, unregulated capitalist creators of wealth will come to save the day and "no one will be turned away from the emergency room" - so no other country or "system" is worthy of comparison. Of course, it was clear that he had no idea about the numbers he was using other than they were right wing talking points. Oh, yes, the US also has the most obese poor in the world, which he said was a clear indicator of what a pack of whiners the poor are. As one fellow quipped off line, "He wouldn't know a GDP is it bit him on the ass."

Zoom to the present, and we find this quite interesting piece! My economics prof's viewpoint and Vlad's evaluation both eloquently stated, and my conclusion therefrom confirmed.

Numbers are not in any measure the end all/be all descriptors of the human condition.


  1. Which article, Al?
    The link takes me to the front page of the NYT...

  2. Sheerah: You have to go to the sidebar that links to the featured articles. I'm guessing that the one Al is referring to is the one titled "GDP RIP".

  3. Chief - correct

    Everyone else - link has been fixed in the original post. Here is is just in case:


  4. Off subject, so apologize but don't know how else to provide. Given your recent booszing at the FM site, further add:
    On the really good analysis/comment side, if you and your readers haven't discovered yet, there is a very dynamic dialogue on COIN and "why fight in Afghanistan?" on the CNAS/Abu Muqamama blog ( Overall context includes either direct quote or refs to former Ranger Andrew Exum, Army Col Gian Gentile, David Killcullen, Col John Nagl, and some others who appear very knowledgeable and/or involved, but are unknown to me.

    At a different but closely related level is the on-going dicussion at organizations like CNAS and Center for Complex Operations at National Defense University on the "what next mix" - COIN, conventional, unconventional, hybrid, fourth generation warfare, iregular warfare - roles and missions and capability needed as we move further from 9-11.

    In a different context, what and how those decisions might impact us on the homeland side is offered on my Project White Horse site - Thinking about War: Mitigating and Accepting Risk

  5. Bob Reich had an interesting post up at his blog the other day.

    He noted that some economists are "V" theorists, predicting that the current recession was so sudden and so steep that the recovery will be equally dramatic. He said he wasn't a "V" theorist.

    He observed that there is another school of thought he called the "U" theorists. These were the ones who felt that the economy was in for a long period of ugly doldrums, similar to Japan's "Lost Decade". But he noted that he wasn't a "U" theorist, either.

    He claimed that he was, instead, an "X" theorist. As in "X" standing for the unknown in a mathematical formula. He pointed out that the "growth" of the preceding 20-30 years was built on the back of consumer spending (unmatched with increasing median income) and financial speculation. The former, he said, was simply unsustainable and a return to the 60-70% of the economy being generated by spending on nondurable goods was just plain undesireable. The latter turned out to be a bubble, and while you could, if you wanted, reinflate the bubble, why would you want to?

    So he was confident that some sort of recovery would come along at some time, but admitted that he had no idea what it would look like, who would benefit and how it would work.

    I thought, y'know, that's not very reassuring, in a sort of reassuring way.

    No wonder its called the dismal science.