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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’.
by John Brian Shannon | Apr 3, 2016
I’m glad we live in a world where more than one country has a Minister of State for Happiness.
In contrast, the absence of a reasonable level of happiness means that all of our striving would ultimately prove to be in vain. It would be an unsustainable world where people spend their entire lives ‘fighting the good fight’ only to receive little or no reward at retirement and at points along the way towards retirement.
Why Hope for happiness? = Why Try? + Why Work?
Workers in the former Soviet Union used a phrase to illustrate this point; “As long as they pretend to pay us, we will pretend to work.”
And so, due to a lack of national happiness (caused by economic hardship) eventually the whole corporation formerly known as the USSR, collapsed.
The example of the former Soviet Union should serve as a warning to leaders of every country that the final and most profound metric for human beings is happiness — everything from worker productivity, to corporate profit, to the ambient level of law and order throughout a given society, to the success of our entire civilization — all of this hinges on the happiness metric.
So far, only Bhutan with their decades-old Gross National Happiness (GNH) index, the UAE, Venezuela, and the United Nations have given this profound societal element any serious consideration.
Very recently, the state of Madhya Pradesh announced that it will be the first state in India to create a Department of Happiness.
We employ ‘reverse engineering’ to our study of (all states of) matter in the universe, to the study of time, and to the study of the various lifeforms on this planet — shouldn’t it follow that we use reverse engineering to study and measure the societies and cultures within our civilization?
By ‘working it back’ regardless of the (pro tempore) results, Bhutan, the UAE, Venezuela, and the Indian state of Madhya Pradesh gain a huge and ongoing advantage by exploiting the data from the most profound human metric of all — Happiness!
Isn’t it interesting that the ‘Happiest Nations’ also lead the world in so many categories, including productivity, per capita income, the arts and sciences, and quality of life.
- A Quantum of Happiness (Project Syndicate)
- Jim Krane discusses UAE’s new Ministry of Happiness (Al-Jazeera America)
by John Brian Shannon | September 10, 2015
I compare the entire economics profession (and each individual economist in it) to a star quarterback — like the great Joe Montana who is probably the best quarterback who ever lived, or who will ever live.
But what would the great Joe Montana have been *without a healthy dose of self-confidence* and who instead lived his life on-and-off the field in a world of self-imposed self-doubt about his overall importance to his team — in short, a world-class athlete with vastly superior skills who didn’t know, or didn’t believe, how capable and how important he was to his team, to his sport, and to the fans?
That is similar to how economists and the profession in its totality appear to me in the year 2015 — world-class, with vastly superior skills, who don’t know, or who don’t fully believe how capable and how important they are to our society, to our nation, and to our civilization.
Where we are – and where we need to go
It is a profession that is better than it has ever been, certainly no cohort of economists have ever had the knowledge, sophisticated theory, and datasets of today’s economists, nor have such intractable problems ever required solving.
For example, the economic puzzles extant in ancient Rome or of the Victorian Era were Lilliputian by comparison.
Three problems confront the economics profession today
1. Unlike Joe Montana who received huge accolades for his massively successful plays on the field — economists sometimes prevent economic catastrophe but nobody notices and the world moves blithely on.
Economists prevent economic catastrophes and nobody notices. Need I say more? It’s a problem related to mindfulness, to the recognition of competence, and of reward.
It’s a problem intrinsic to human psychology that we reward some, but not others.
It might be more accurate to say that today’s economists ‘make plays’ that are of the utmost importance to ‘the team’ but are more analogous to the defensive linemen on a football team ‘who prevent the other team from scoring’.
Notice that for those players the cheering isn’t as loud?
It’s a problem in sports, and in economics too, and (unbelievably) many economists don’t give their own colleagues due respect.
It isn’t always about creating ‘touchdowns’ sometimes it’s about preventing ‘touchdowns’ by the other team — each is just as important as the other.
Psychology is a major factor in economics, in trade and in the markets, yet the application of human psychology in economic theory has been largely overlooked.
2. The profession lacks self-confidence. Imagine superstar pro athlete Joe Montana — but *without* confidence. (!)
Did Joe Montana, great as he is, ever seriously think that every time he threw the ball that it would result in a 50-yard touchdown?
No. Joe Montana showed up on gameday and played his best game. Because that’s what Joe Montana did.
But did the fact that he didn’t throw a 50-yard touchdown every single time he threw the ball, cause him to lose confidence? No.
If you’re playing *your best game* then you should have all the confidence in the world. But there’s no harm in trying to improve your game, over time, that’s a given. But to lose confidence every time you don’t score a touchdown? That should never enter the equation.
3. “Start with the end in mind.”
In order for economists to do their jobs properly, we need to have measurable goals and metrics to steer by.
Nobody enters a serious car or yacht race where there isn’t a definite start line and a definite finish line.
Economists are stuck in a race with no start line and no finish line. Why are we even racing?
We know who we’re racing, we know when we’re racing, but what goal are we trying to achieve? Would somebody tell me?
They can’t. There is no goal. Economics is a free-for-all-race against other economies with no end goal.
And yet, every economy (country) is in that race and each one started at a different position, are driving different kinds of vehicles, at different speeds, and taking different routes.
We need to stop that.
You can’t *win* a race when there’s no finish line (a goal) unless you kill all the other competitors. Then, you *win* by default. Not very sporting, old chap.
We tried that before. Mutually Assured Destruction (M.A.D.) — anyone remember that?
We arrived at M.A.D. in the 20th century because politics ruled the world and not always with good results. Thus far, the 21st century doesn’t look much better.
I could write a thesis on this — and volumes, or even tomes would still need to be written on the clear and verifiable path that took us from the (economic) competition between nation-states, to the (political) M.A.D. doctrine.
National Economic Goal-Setting
We need to start with the end in mind, a goal.
I posit that the finish line *the goal* (limited to the U.S.A. to keep this example simple) should be that every citizen should have a reasonable expectation to attain a net worth of 1 million dollars by age 25, near-perfect health with universal healthcare systems, and a tuition-free university education.
Further, regulators should require that a minimum of 25% of every American’s investment portfolio should be invested in U.S. corporations, or single entity businesses (artisans, for example) and another minimum 25% of their portfolio be invested in foreign companies that are located in countries that enjoy ‘Most Favored Nation’ trading status with the United States.
And finally, for the United States to always earn a Top 5 ranking in such indices as the UN Happiness Index and the Social Progress Imperative if we expect every citizen to fully buy-into our national success.
Economists could ‘work to’ and ‘measure against’ and ‘devise new theories’ in order to meet those goals
Who but America could attain such a goal?
Germany, Japan, The UK, France, Canada, Australia, a few more Western nations maybe — with America leading the way.
Beginning with the end result in mind would give the economics profession unprecedented focus and allow it to become all that it can and should be, instead of it continuing on without clear and measurable goals to steer by — and because of that it is a profession laden with self-doubt and presently living under the thumb of politicians.
A Tipping Point for Economics
The economics profession is nearing a tipping point in the early 21st century.
It will either rise to unprecedented greatness by asserting its independence from politics by setting its own goals with the ‘end-user’ of economics in mind (which are citizens, not corporations) thereby becoming super-efficient, super-effective, and consequently, economists would become more confident — or the profession will forever remain the scapegoat of politicians.
In the 20th century we faced Mutually Assured Destruction due to the competition between political models.
If economics remains subservient to politicians the 21st century will devolve to M.A.D. of a different kind, this time it will be the Mutually Assured Destruction of the global economy due to the competition between political models.
Because in a no-goal model, the only way to *win* is to eliminate competitors
Economics by its very definition is amenable to and works better with metrics, and an end goal. In politics, there is no end goal.
If we are to survive as a species, eventually, the importance we place on economics must supercede (Canadian spelling) that of the importance we place on politics, because, as I said before, in a no-goal race the only way to win is to kill all the other competitors. Then you *win* by default.
Which is what we’ve been doing in slow-motion since 1914 and one could argue, since the time of Cain and Abel.
Our species must evolve past the ‘law of the jungle’ model to a point where it isn’t all about the politics of ‘country A’ vs. ‘country B’ — but where it’s all about how well citizens score their nation on the UN Happiness Index and Social Progress Imperative index
Only when we devote our industrial, academic, and social effort towards the well-being of the ‘end-user’ (citizens) with verifiable end-user metrics, will we stop working at cross-purposes. Then watch our species succeed!
- Economists vs. Economics (Project Syndicate)