GDP is a mirror on the markets. It must not rule our lives

By fixating on a snapshot of statistics, we focus on short-termism and lose sight of what the Victorians prized most: value

• 
• • Diane Coyle
  • The Guardian, Thursday 20 November 2014 19.59 GMT

'What is the point of economic growth if it does not make most people better off?' Photograph: Colorblind/Getty Images

Next month the Office for National Statistics will issue data for the first time on the UK’s wellbeing. In the exercise, the ONS is recognising that GDP, which now includes estimates for the market value of illegal drugs and prostitution, is at best only a partial measure of our economic health. Not that one would draw this conclusion from the political tub-thumping that improved GDP figures bring.

GDP is a measure of economic activity in the market and in the moment. So its key shortcoming is that it collapses time and makes us short-term in focus. It counts investment and consumption in the same way – an extra £100 spent on education is equivalent to the same amount spent on fizzy drinks.

-----Also read

Economic Growth: the destructive god that can never be appeased

Economic Growth

Growth And Free Trade: Brain-Dead Dogmas Still Kicking Hard

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Studies have repeatedly shown that the time horizon of the financial markets in particular is ever more short-term. Shaving about 0.006 seconds off the time it takes computer orders to travel from Chicago to the New Jersey data centre which houses the Nasdaq servers made it worth investing several hundred million dollars in tunnelling through a mountain range to lay the fibre optic cable in a straighter line. More than two-thirds of trades in US equity markets are high-frequency automated orders. How has the search for profit so foreshortened our vision?

It wasn’t always so. The term “Victorian values” now speaks to us of characteristics such as narrow-mindedness, hypocrisy and conformity, but it could also speak of hard work, self-improvement and above all self-sacrifice for the future. The list of the Victorians’ investments in our future is staggering. It includes railways, canals, sewers and roads; town halls and libraries, schools and concert halls, monuments and museums, modern hospitals and the profession of nursing; learned societies, the police, trades unions, mutual insurers and building societies – organisations that have often survived more than a century.

Why the Victorians managed to be so visionary is not entirely clear, but it had something to do with the confidence of an age of discovery both in science and other areas of knowledge, and also in geographical exploration and empire building. They made such strides against ignorance and the unknown, firm in their sense of divine approbation, it seems a belief in progress came naturally to them.

Civic and business leaders in the late 19th century had extraordinary confidence and far-sightedness, even as they too stood at the centre of social and economic upheaval. This Victorian sense of stewardship is something we could usefully remind ourselves of when thinking about how we measure value today. In the late 19th century it was the innovators and the builders of institutions who had standing, and it was the men and women of vision who were understood to be the creators of value.

They still are, even if it is often hard to measure or quantify what they build. Anything of value has its roots in values and vision, as much today as at any time in the past.

Financial markets have their place as a powerful way of harnessing incentives to achieve desirable outcomes. For example, the market in the US for trading permissions to emit sulphur dioxide, which helps cause acid rain, has been a triumphant success in removing what was once a serious environmental harm.

However, there is no sign that the wider public has stopped challenging the ascendancy of markets and money. The bestseller status of Thomas Piketty’s Capital in the 21st Century bears witness to that. It has put the question of the great inequality of wealth in the market economies at the centre of public debate, and it underlines another question: what is the point of economic growth if it does not make most people better off? Or, worse, if growth is actually destroying things that many of us value.

A further problem with GDP is that it obviously includes many things that are value-destroying. Natural disasters are good for GDP growth because of the reconstruction boom afterwards; the destruction of assets and human life is not counted. The metric ignores the depletion of resources, the loss of biodiversity, the impact of congestion, and the loss of social connection in the modern market economy.

People have long proposed alternative measures of progress – recently, environment-adjusted measures, or simply measuring happiness, directly by survey. What could be more straightforward than asking such a direct question? But reported happiness changes very little over time because, whether it’s the joy of a lottery win or the catastrophe of being disabled in an accident, it only takes about two years for people experiencing even a dramatic change in their life to revert to previous levels of happiness.

This takes us back to monetary measures, back to GDP and its inclusion of things that clearly have negative value. It also excludes “informal” activities such as housework and caring, many volunteer activities, and always excludes the full value of innovations. Nathan Mayer Rothschild was the richest man in the world at the time of his death from an infected tooth abscess in 1836. An antibiotic that hadn’t then been invented but now costs just $10 would have saved him. How much would he have paid for that medicine?

Economic Growth: the destructive god that can never be appeased

The blind pursuit of economic exapansion stokes a cycle of financial crisis, and is wrecking our world. Time for an alternative

• 
• • George Monbiot
  • The Guardian, Tuesday 18 November 2014 19.41 GMT

'Perhaps it’s inaccurate to describe this as another crash. Perhaps it’s a continuation of the last one, the latest phase in a permanent cycle of crisis.' Photograph: Tyrone Siu/Reuters

Another crash is coming. We all know it, now even David Cameron acknowledges it. The only questions are what the immediate catalyst will be, and when it begins.

You can take your pick. The Financial Times reported yesterday that China now resembles the US in 2007. Domestic bank loans have risen 40% since 2008, while “the ability to repay that debt has deteriorated dramatically”. Property prices are falling and the companies that run China’s shadow banking system provide “virtually no disclosure” of their liabilities. Just two days ago the G20 leaders announced that growth in China “is robust and is becoming more sustainable”. You can judge the value of their assurances for yourself.

Housing bubbles in several countries, including Britain, could pop any time. A report in September revealed that total world debt (public and private) is 212% of GDP. In 2008, when it helped cause the last crash, it stood at 174%. The Telegraph notes that this threatens to cause “renewed financial crisis … and eventual mass default”. Shadow banking has gone beserk, stocks appear to be wildly overvalued, the eurozone is bust again. Which will blow first?

Or perhaps it’s inaccurate to describe this as another crash. Perhaps it’s a continuation of the last one, the latest phase in a permanent cycle of crisis exacerbated by the measures (credit bubbles, deregulation, the curtailment of state spending) that were supposed to deliver uninterrupted growth. The system the world’s governments have sought to stabilise is inherently unstable; built on debt, fuelled by speculation, run by sharks.

If it goes down soon, as Cameron fears, in a world of empty coffers and hobbled public services it will precipitate an ideological crisis graver than the blow to Keynesianism in the 1970s. The problem that then arises – and which explains the longevity of the discredited ideology that caused the last crash – is that there is no alternative policy, accepted by mainstream political parties, with which to replace it. They will keep making the same mistakes, while expecting a different outcome.

To try to stabilise this system, governments behave like soldiers billeted in an ancient manor, burning the furniture, the paintings and the stairs to keep themselves warm for a night. They are breaking up the postwar settlement, our public health services and social safety nets, above all the living world, to produce ephemeral spurts of growth. Magnificent habitats, the benign and fragile climate in which we have prospered, species that have lived on earth for millions of years – all are being stacked on to the fire, their protection characterised as an impediment to growth.

Cameron boasted on Monday that he will revive the economy by “scrapping red tape”. This “red tape” consists in many cases of the safeguards defending both people and places from predatory corporations. The small business, enterprise and employment bill is now passing through the House of Commons – spinelessly supported, as ever, by Labour. The bill seeks to pull down our protective rules to “reduce costs for business”, even if that means increasing costs for everyone else, while threatening our health and happiness. But why? As the government boasted last week, the UK already has “the least restrictive product market regulation and the most supportive regulatory and institutional environment for business across the G20.” And it still doesn’t work. So let’s burn what remains.

This bonfire of regulation is accompanied by a reckless abandonment of democratic principles. In the Commons on Monday, Cameron spoke for the first time about the Transatlantic Trade and Investment Partnership (TTIP). If this treaty between the EU and the US goes ahead, it will grant corporations a separate legal system to which no one else has access, through which they can sue governments passing laws that might affect their profits. Cameron insisted that “it does not in any way have to affect our national health service”. (Note those words “have to”.) Pressed to explain this, he cited the former EU trade commissioner, who claimed that “public services are always exempted”.

But I have read the EU’s negotiating mandate, and it contains no such exemption, just plenty of waffle and ambiguity on this issue. When the Scottish government asked Cameron’s officials for an “unequivocal assurance” that the NHS would not be exposed to such litigation, they refused to provide it. This treaty could rip our public services to shreds for the sake of a short and (studies suggest) insignificant fizzle of economic growth.

Is it not time to think again? To stop sacrificing our working lives, our prospects, our surroundings to an insatiable God? To consider a different economic model, which does not demand endless pain while generating repeated crises?

Amazingly, this consideration begins on Thursday. For the first time in 170 years, parliament will debate one aspect of the problem: the creation of money. Few people know that 97% of our money supply is created not by the government (or the central bank), but by commercial banks in the form of loans. At no point was a democratic decision made to allow them to do this. So why do we let it happen? This, as Martin Wolf has explained in the Financial Times, “is the source of much of the instability of our economies”. The debate won’t stop the practice, but it represents the raising of a long-neglected question.

This, though, is just the beginning. Is it not also time for a government commission on post-growth economics? Drawing on the work of thinkers such as Herman Daly, Tim Jackson, Peter Victor, Kate Raworth, Rob Dietz and Dan O’Neill, it would look at the possibility of moving towards a steady state economy: one that seeks distribution rather than blind expansion; that does not demand infinite growth on a finite planet.

It would ask the question that never gets asked: why? Why are we wrecking the natural world and public services to generate growth, when that growth is not delivering contentment, security or even, for most of us, greater prosperity? Why have we enthroned growth, regardless of its utility, above all other outcomes? Why, despite failures so great and so frequent, have we not changed the model? When the next crash comes, these questions will be inescapable.

On batting - The perils of premeditation

Due to the demand for sixes in T20, more and more batsmen are resorting to predetermined slogging, which leads to their downfall in the other formats

Martin Crowe in Cricinfo

November 19, 2014

If you clear your mind before a shot, you actually find you have more time to play it © Getty Images

For someone who believes in meditation, it's only right to question premeditation. In my humble opinion, to clear the mind is far more beneficial than filling it. When it comes to batting, also from experience, nothing is more accurate.

To clear the mind is to allow an instinctive charge to ignite. To clear the mind allows potential to rush forth. On the other hand, to fill the mind is to force the issue, to demand a specific action, resulting normally in hitting too early after moving too little. The mind has jumped the gun, resulting in an early swing of the bat with decelerated power.

----Also by Martin Crowe

The space between two balls is where cricket is really played

On Playing Spin - Watch, move, and play late

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Far better to see it early, allow for the information of the ball to manifest, a decision found, the movement fluent and full, the hitting late and powerful. When you take that extra split-second, you ensure all is ready and working, the late timing and gap found, confirming there is always time for anything.

Yet the line between success and failure is so fine. As the bowler runs in, there is often a brief moment of wavering between predetermined thinking and a clear, instinctive mind. The mind can switch, and it often does completely out of the blue. One of the best ways to shut out a random interrupting thought is to repeat a slow positive affirmation: "This ball, this ball, watch the ball, watch the ball."

When a random predetermined thought rushes in, there is no stopping the outcome. The message goes straight to the hands, the hitting. Yes, the ball is sighted clearly, but it's the predetermined shot that is prominent in the mind, so the swing is made urgently, prematurely, the body doing very little while the hands and bat rush in to send the ball to where it was commanded prior to being bowled.

At this point the odds are with the bowler, the batsman having given away all his power, mentally and physically.

	One of the best ways to shut out a random interrupting thought is to repeat a slow positive affirmation: "This ball, this ball, watch the ball, watch the ball"

The clearing of mental stimulation prior to the ball means trusting the instinctive software waiting to send accurate information to the nervous system and body. It results in a full appreciation of the ball's behaviour through the air and off the pitch, and what the appropriate reaction should be.

This choice is the one that supreme batting champions for over hundred years have used. However, recently, with the addition of T20, the desire to decide first, before the ball is seen, has changed the nature of the batting mindset for good.

Prior to T20, the only time batsmen were lured into such prolific premeditation at the crease was in the first and last ten overs of a limited-overs match. In T20, with only 120 balls an innings to play with, suddenly the decision that a boundary is needed instantly becomes a no-brainer. The need to hit sixes becomes the focus from ball one. To prepare for this, the batsman feels a need for a headstart, literally. He thinks that to clear the fence he needs to muster his strength and methodology early. Hence the early swing of the bat.

It's a huge tease. Yet time and again we see that clear-headed batting is the ultimate way to operate in normal, more timeless cricket. It will always produce a better long-term result.

Sadly, in the frenzy that can descend quickly in T20, short-term gain is sought. When it comes off on odd occasion, it becomes a drug. It's so cool to predict a shot and then pull it off. It's like you have this special gift and you want to show it off often. Yet it all goes against the art of batting as demonstrated by Don Bradman, the greatest ever.

In the good old days, if you tried this with an old-fashioned bat you would get out. Nowadays, with the latest innovations in bat-making advancing as quickly as they are, the premeditated slog has become successful. The six is now easily achieved with a turbo weapon and a tiny ground to clear.

This six-hitting phenomenon is a massive boost to the brand value of a player. He is prime real estate in a T20 market if his slugging profile is lifted. This kind of freelance slugger has become the rage in the IPL.

And so this is the tease for generations to come: do you set the brain to "pre" or to "clear"? It depends on what uniform you are wearing, what format you are playing, even what country you are in. "Clear" for Tests, "pre" for T20, and "good luck" in one-dayers.

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