It’ll be interesting to see if it takes some focus off of finance measures. I predict not, as that’s the aggregate lens that almost everyone in power looks through.
But the fundamental problem is that there is no actual measurement of human satisfaction, and financial productivity diverges hugely from anything we’d rationally want to optimize. GDP is paperclips.
To take a dirt-simple example, person A and person B are neighbors. Person A sells bread to person B for $10/week, and pays person B $10/week to mow their lawn. Gross Neighboorhood Product is $1040/year. Now something comes along to disrupt this, and each one has to mow their own lawn and bake their own bread. It takes longer, doing things they are less skilled at, but still gets done. But it’s an enormous financial loss—measured productivity goes to $0!
You miss (amongst others) division of labour and specialisation / non-uniform skills. In your example the GDP might not be a good measure because every participant can stand on either side of each transaction, which makes it kind of a zero sum game. It is well known that economic interchange is not a zero sum game (citation needed, could not come up with a precise one). Extrapolating this, you would need to be able to stand on each side of all interactions that lead to the global GDP.
Your example even breaks down when you assume that the bread-baking neighbour is baking bread not only for you but for others, too. In that case economies of scale come into play which favour specialisation towards one baking all the bread and others (maybe investing into better lawnmowers and their handling skills) mowing the lawns.
Sure, I absolutely agree that that specialization and trade very often makes all participants better off. I only claim that not all financial transactions are this, and I claim that many beneficial behaviors are not tracked financially.
Financial aggregates are only a proxy for what we want, and our current common measures have been Goodhart-ed to the extent that they’re actively misleading on many topics. I hold little hope for adding other measurements, and I recognize that Goodhart will apply to them as well, but it would be nice if people were more cognizant that money != value.
It’ll be interesting to see if it takes some focus off of finance measures. I predict not, as that’s the aggregate lens that almost everyone in power looks through.
But the fundamental problem is that there is no actual measurement of human satisfaction, and financial productivity diverges hugely from anything we’d rationally want to optimize. GDP is paperclips.
To take a dirt-simple example, person A and person B are neighbors. Person A sells bread to person B for $10/week, and pays person B $10/week to mow their lawn. Gross Neighboorhood Product is $1040/year. Now something comes along to disrupt this, and each one has to mow their own lawn and bake their own bread. It takes longer, doing things they are less skilled at, but still gets done. But it’s an enormous financial loss—measured productivity goes to $0!
My intuition is that GDP is, on the margin, like 70% correlated with human flourishing.
Even in your example, it’s not clear that GDP is pointing in the wrong direction.
You miss (amongst others) division of labour and specialisation / non-uniform skills. In your example the GDP might not be a good measure because every participant can stand on either side of each transaction, which makes it kind of a zero sum game. It is well known that economic interchange is not a zero sum game (citation needed, could not come up with a precise one). Extrapolating this, you would need to be able to stand on each side of all interactions that lead to the global GDP.
Your example even breaks down when you assume that the bread-baking neighbour is baking bread not only for you but for others, too. In that case economies of scale come into play which favour specialisation towards one baking all the bread and others (maybe investing into better lawnmowers and their handling skills) mowing the lawns.
Sure, I absolutely agree that that specialization and trade very often makes all participants better off. I only claim that not all financial transactions are this, and I claim that many beneficial behaviors are not tracked financially.
Financial aggregates are only a proxy for what we want, and our current common measures have been Goodhart-ed to the extent that they’re actively misleading on many topics. I hold little hope for adding other measurements, and I recognize that Goodhart will apply to them as well, but it would be nice if people were more cognizant that money != value.