My email has been flooded with petitions asking me to oppose changes to the way the federal government calculates cost of living adjustments for seniors on Social Security. Frankly I’m torn. I don’t want to lose money, but I don’t want my country to go bankrupt either.
Fortunately, Zachary Karabell’s article, “(Mis)leading Indicators,” put my mind to rest. (Foreign Affairs, March/April, 2014 pgs. 91-101) According to him, all these economic indicators , the GDP, GNP, CPI, for example, don’t amount to a hill of beans. There is no national economy Karabell argues. What we have is a collection of little economies and measuring them would give us a truer picture of where we stand as a nation. Take unemployment numbers as an illustration. Job figures vary dramatically by race, geography, gender and education levels so a single unemployment rate doesn’t tell us much. We need to know what segments of the populations are reaching full employment and which remain hampered by the recession. If we don’t see the disparity, then we can’t fix it. (Ibid, pg. 100.)
The same problem exists when we talk about the Gross Domestic Product (GDP), especially when we talk about our growing deficit with China. Again, Karabell warns that a single number fails to take into account how products are produced. China may assemble Apple’s I Phone and I Pad, but the components — the chip, the physical hardware, not to mention the value of the invention — are largely American. Looked at in this way, our trade imbalance with China, “is as much as 25 percent smaller than current calculations.” (Ibid pg. 97)
Shoddy tools for measuring economic growth make for poor economic policies the author insists. We should throw the baby out with the bathwater and start our calculations again. Fortunately, we have the means to do just that. Big Data, that tool NSA uses to invade our privacy, is the very one to help us better understand the intricacies of our economy. (Ibid, pg. 99)
I know I’ve often objected to big data collection in my blogs, but Karabell’s article about our multifaceted economy opens a new line of thinking. Big data may have friendlier face than I first imagined — one that could allow us to examine our lives in new and better ways.
(Courtesy of flipspagnoli.wordpress.com)