by John Brian Shannon | June 17, 2016
An economy that constantly grows and improves because it has enough virtuous circles (and cycles) is by design, a ‘good economy’.
It’s what every economy wants to be when it grows-up.
However, there are no generally accepted metrics to measure what constitutes a ‘good economy’ — but a definition by Edmund S. Phelps in his recent Project Syndicate essay is a definition that one can appreciate.
It is worth noting that the UN Happiness Index could be a way to grade the successful march towards a ‘good’ or ‘virtuous’ economy, as nations that rank highly on the UN Index also tend to have high productivity, high per capita income, low unemployment, a high degree of personal rights and freedoms, low crime rates (and related to that stat) generally high levels of education, and in other ways their citizens live fulfilling lives in a stable environment.
It’s easy to ‘work it back’ from the end-user point-of-view.
Another way to grade the march toward a ‘virtuous’ economy would be the Social Progress Imperative’s SPI Index.
If nations are ranking highly on SPI heuristics, it’s obvious that everything needed to support those high grades are *already in place* and working. Ergo, a high-scoring SPI nation is one with a ‘good’ or ‘virtuous’ economy.
Perhaps nations (and economists!) should put more emphasis on UN Happiness Index and SPI heuristics and less emphasis on GDP growth.
After all, You Can’t Feed a Family with GDP
The 1%’ers will always rate their country highly on the UN Happiness Index and on the SPI Index, as their incomes and security are guaranteed and their income growth meets or exceeds GDP growth. What matters in this case, is what 99% of the population thinks.
In developed countries, GDP growth has largely plateaued, and even in the United States of America the largest economy on the planet and the country with the strongest military, GDP growth is anemic at 2% annually.
There just isn’t room to grow the U.S. (and other) developed economies more than 2% per year under the existing paradigm.
“If you keep on doing what you’ve been doing, you’re going to keep on getting what you’ve been getting.” — Jackie B. Cooper
Einstein said something similar — “The definition of insanity is doing the same thing over and over again, but expecting different results.”
Therefore, to try to get more growth out of the U.S. economy by ‘doubling-down’ on everything that we’re already doing, does nothing except prove the truth of such quotes.
But what the U.S. hasn’t tried (enough) is to use heuristical analyses to plot a policy path towards high UN Happiness Index and high SPI scores. By doing so, I posit that the U.S. could unlock another 2% of GDP growth annually.
If that’s true for the U.S. economy, it works double for China’s economy.
Did anyone else notice the productivity increases in China during, and for a short time after, the Beijing Olympics?
Yes, a mini economic boom occurred as a result of hosting the Olympics — just as it does in any country that hosts the Olympics. But productivity isn’t known to spike upwards when a country hosts the Olympics.
I guess after not seeing the sky for decades due to a permanent and thick blanket of industrial smog, Beijing residents finally got to see the sky — due to some very foresighted Chinese air pollution abatement policies that were implemented for the duration of the Olympics.
“Look everyone, The Sky!”
An improved quality of life picture for Beijing residents worked to improve overall productivity, improving the bottom line for Chinese companies.
Certain other perks were added — including never-before-seen-in-China freedoms to travel and to miss time from work in order to travel to the Olympics.
That’s what I call a virtuous circle!
Imagine if that could be made permanent. It’s an example of how improved lives for workers can positively affect productivity and the bottom line.
By employing end-user heuristical data, developing nations could double their GDP growth annually.
For the rest of us; Now that the standard economic tools to increase growth have largely ‘topped-out’ in developed nations, it’s now time to look at improving the lives of citizens by using heuristical analyses — to increase the happiness of citizens, which will increase productivity, improving the bottom line, leading to higher GDP growth.
The proof that this works well is easily found by investigating the Norwegian, Danish, Swiss, Swedish, Liechtenstein, and UAE economies.
Ultimately, the question is a regional one; How can we improve the lives of workers and their families so that productivity can be enhanced, and thereby improve annual GDP growth?
Some nations have asked, and the results have been astonishing.
Soon, people will be saying things like; “The synergy of the ‘Good Economy’ is that the pursuit of happiness by individuals is directly related to the pursuit of worker productivity by corporations, which is directly related to the bottom line and GDP growth.”
And when those words are commonly spoken by both the masses and the elites, for the first time in history, our civilization will be firing on all cylinders — courtesy of the ‘Good Economy’.