Realism must precede optimism or the optimism will collapse as the tsunami of reality comes ashore.
It’s time to prepare materially and psychologically for a winter unlike any other in our lifetimes.
Here’s the view from 30,000 feet:
1. The stock market and the general zeitgeist of optimism have soared based on expectations that the real-world economy and efforts to suppress Covid would also track a V-shaped recovery.
While GDP did make a V-shaped recovery, GDP (gross domestic product) is a measure of flows and consumption, not a measure of the socio-economic “balance sheet.” GDP measures the money flowing through accounts but not the “assets” of a functioning society: functional institutions and infrastructure and the well-being and security of the citizenry.
Thus GDP soars while the real-world economy and society are hollowed out by economic inequality, declining health, financial insecurity, rising prices for essentials, dysfunctional institutions and decaying infrastructure.
Simply put, GDP doesn’t measure what’s important; it creates destructive incentives to squander resources and borrow staggering sums to support more consumption. This systemic flaw in what we measure has long been recognized by mainstream economists such as Joseph Stiglitz. Measuring What Counts: The Global Movement for Well-Being (Joseph E. Stiglitz et al.)
So the recovery of GDP doesn’t mean the real-world economy has been restored to pre-Covid settings. GDP is a deceptive metric that’s masking a free-fall in our well-being, security and social cohesion.
2. Just as GDP is a deceptive measure of the economy, counting Covid fatalities is equally deceptive: a declining death count is good news, of course, but that ignores the other effects of Covid, particularly organ damage and “Long-Covid” debilitation, not just in people with pre-existing conditions and the elderly but in healthy middle-aged and even some young people.
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