Notes on GDP Measure and Time Aggregate Considerations

A number of factors appear problematic in today's GDP measures - although some suggestions represent more "practical" concerns than others, of course. Happiness...do we really need to be able to measure that? Even though doing so appears impractical, this seemingly elusive factor would not actually be that difficult, were time aggregates a part of traditional measures. After all, the ability to optimize time use potential could bring happiness factors within reach of one's economic outlook. Even though much about happiness involves personal decisions, it certainly helps to have more economic choices with others in our midst, to make that process easier.

Local coordination patterns would mean gaining better control of our time, through direct negotiations with others. One good argument for the utilization of time aggregates (services time use potential among local groups) is that immigration would ultimately come to be perceived as a positive - rather than a negative - by many. How can citizens have positive perceptions regarding "excess" immigration, when nations impose severe limits on their members who are allowed to heal? Should the capacity for healing be opened to all members of society, few would still be perceived as outsiders who supposedly only want to "take" needed services from others.

One common argument as to the "inadequacy" of GDP, is that technological advancement is not easy to factor into societal gain through economic measurement. However: this argument often has an underlying implication, which questions the need of citizen involvement as vital for future growth. Who needs the economic time representation of people (on a wide scale) if automation can do the bulk of the work?

For me, this line of reasoning is a fallacy, because economic activity is part and parcel of human life. No one can afford to be fooled into thinking that wide swathes of society can somehow go without meaningful work and still be able to retain integrity and identity. A primary reason we realized such gains from technology in the past, is that it freed us for more challenging intellectual work. No one can afford to stop this process now, just because of the institutional hurdles in the way of direct use of our digital realm for the benefit of all.

What's more, going too far with the idea of robots as the only workers necessary, could present problems for time use as a sufficient monetary anchor. That would be the case not just for market monetarists and economic activity in general, but for everyone at a personal level. This is the time to be moving ahead and making decisions how to spend time among one another - not insisting there are no ways to reasonably do so. Lest anyone forget, humans are central to economic activity. The work that people seek is every bit as much desired consumption, as any vacation. One only need look at forfeited vacation time statistics in the U.S., to get a feel for the forms of consumption which people actually desire.

However there is a more immediate issue, which presents further difficulties for GDP measures. Production measures for services had already skewed GDP results in recent decades, but calculation and measure of present day healthcare is becoming even more murky. Unfortunately, healthcare uncertainties are making it difficult to accurately pin down quarterly components, which impact ongoing economic flows at multiple levels. As Kevin Erdmann recently noted about the ACA:

Frankly, in an industry so screwed up, I don't understand how they can begin to account for economic activity. What is the market price for a medical procedure that is "billed" at $2,500, but settled with your insurance company for $200, with a $20 co-pay?

In a recent post I looked at historical timing in the U.S. as a possible factor for healthcare monetary confusion, in that its current structures were formed when government taxation was also increasing. Almost from the outset, there were hidden costs and redistributive structures which were all but impossible to disentangle. In the above linked post, Kevin Erdmann also noted problems which healthcare presents for inflation, which - while present in education - do not show up in statistics to the same degree.

All anyone can really presume is that education is at least obvious in terms of what is expected of those who participate. That in turn makes the monetary flows easier to understand. Whereas nothing about healthcare is obvious: whether it be one's personal health outcomes, how much money might remain for administrative costs and expenses at the end of the quarter, or even what insurance can be expected to cover. While aggregate skills capacity is needed in all areas of our lives, skills and time optimization are desperately needed in healthcare to assist in some of these uncertainties.

Otherwise, not being able to measure monetary flow and adjust accordingly, is like going down the road in one's vehicle, and not even knowing what gear one should be using. In all of this, it is important to remember that GDP is not a static concept. The essential nature of GDP is that it represents economic flow. There are aspects of income which shape shift within the flow for past and future concerns. But healthcare has become one giant shape shifting monster, which is dependent on factors which go well beyond the economic flows of the present. This situation only becomes more untenable as time goes on, hence it needs to be addressed.

To be sure, time arbitrage is the high hanging fruit in the tree. Just the same, it is still well worth the harvest efforts that would be necessary. If services are to remain a vital part of tomorrow's economy, everyone's time is needed, in order to make it happen.

Update: I neglected to link to an article from FT Magazine earlier this summer which questioned whether GDP had outgrown its usefulness, hence this post serves as an apt "parking spot".