{"id":27883,"date":"2017-11-11T18:53:53","date_gmt":"2017-11-11T23:53:53","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27883"},"modified":"2017-11-11T18:54:12","modified_gmt":"2017-11-11T23:54:12","slug":"how-economics-failed-the-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27883","title":{"rendered":"How Economics Failed the\u00a0Economy"},"content":{"rendered":"
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<\/span>How Economics Failed the\u00a0Economy<\/a><\/h3>\n<\/header>\n
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The Difficult Art of Reckoning With the Human\u00a0Good<\/strong><\/p>\n<\/div>\n

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When, in the 1930s, the great economist Simon Kuznets created GDP, he deliberately left two industries out of this then novel, revolutionary idea of a \u201cnational income\u201d: finance and advertising. Don\u2019t worry, this essay isn\u2019t going to be a jeremiad against them, that would be too easy, and too shallow, but that is where the story of how modern economics failed the economy\u200a\u2014\u200aand how to understand how to undo it\u200a\u2014\u200ashould begin. Kuznets\u2019 logic was simple, and it was not mere opinion, but analytical fact: finance and advertising don\u2019t create new value, they only allocate, or distribute existing value\u200a\u2014\u200ain the same way that a loan to buy a television isn\u2019t the television, or an ad for healthcare isn\u2019t healthcare. They are only means to<\/em> goods, not goods themselves.<\/p>\n

Now we come to two tragedies of history. What happened next is that Congress laughed, as Congresses do, ignored Kuznets, and included advertising and finance anyways for political reasons\u200a\u2014\u200aafter all, bigger, to the politicians\u2019 mind, has always been better, and therefore, a bigger national income must have been better. Right? Let\u2019s think about it.<\/p>\n

Today, something very curious has taken place. If we do what Kuznets originally suggested, and subtract<\/em> finance and advertising from GDP, what does that picture\u200a\u2014\u200aa picture of the economy as it actually is\u200a\u2014\u200areveal? Well, since the lion\u2019s share of growth, more than 50% every year, comes from finance and advertising\u200a\u2014\u200awhether via Facebook or Google or Wall St and hedge funds and so on\u200a\u2014\u200awe would immediately see that the economic \u201cgrowth\u201d that the US has chased so desperately, so furiously, never actually existed at all<\/em>.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

How Economics Failed the\u00a0Economy The Difficult Art of Reckoning With the Human\u00a0Good When, in the 1930s, the great economist Simon Kuznets created GDP, he deliberately left two industries out of this then novel, revolutionary idea of a \u201cnational income\u201d: finance and advertising. Don\u2019t worry, this essay isn\u2019t going to be a jeremiad against them, that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[244,246,14273,16981],"class_list":["post-27883","post","type-post","status-publish","format-standard","hentry","category-economics","tag-economics-2","tag-economy","tag-medium","tag-umair-haque"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27883"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27883\/revisions"}],"predecessor-version":[{"id":27885,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27883\/revisions\/27885"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}