Industries That Add Nothing To The Economy

[frozen_out]

That's where Injin's argument falls down. We have the society we have (NHS, taxes, banks, governments etc), because the majority of people want it.

This is where Injin's argument ALWAYS falls down, in every single thread he posts in.

The fact that we are where we are is an indication that we have what people want, or are inclined to believe is effective. This doesn't discount the fact that what we have and where we are may in fact be irrational but that's an entirely different discussion.

People have organised from the dawn of time, the state is the natural progression of that organisation. Personally I'm not over enamoured with the state. I think it should be much, much smaller and much more restricted in function but it is neccessary. If only because it makes it easy for me to steal other folks resources, which is the real reason most people tolerate the state, although very few will readily admit it.

Edited December 18, 2008 by frozen_out

[Guest pioneer31]

What about street lights?

****** em. No one wants them.

You obviously do little driving at night

[bimyo]

The fact that we are where we are is an indication that we have what people want, or are inclined to believe is effective.

Extraordinary that you can say this in a state which regularly elects governments with the consent of less than 40% of the people. And once you take away the people saying that they're only voting because they have no real choice... I'd say the proportion of people who really want this form of rule is not very far above zero.

[frozen_out]

Extraordinary that you can say this in a state which regularly elects governments with the consent of less than 40% of the people. And once you take away the people saying that they're only voting because they have no real choice... I'd say the proportion of people who really want this form of rule is not very far above zero.

You're mixing up what people find acceptable with what is rational.

We are where we are because people are more or less happy. This is an inescapable fact. When people are unhappy, things change.

The state incurs an overhead, essentially an admin charge for 'protecting' your property rights, keeping a standing army and taking things by force which it then allows to be passed on to you. In return you forgo some of your freedoms (take planning laws as a quick off the top of my head example).

However over time the state always aims to increase its power, for various reasons. As a result eventually the overhead becomes too large, a revolution occurs and a new system with a smaller overhead appears in its place.

[huw]

What does it mean to be engaged in "productive" economic activity?

First I would point out that the word "productive" in this debate sounds like a technical term, but if one reads the thread one notices that in fact it is being used with no specific meaning other than "desirable".

What we are really discussing is what economic activity is desirable.

I take a fairly radical ecological approach.

Desirable economic activity for me would have to mean tending to the long term welfare of the species. Almost anything that uses fossil fuels, for instance, will not mean that criterion, since the squandering of a one-off energy rich resource is a deeply bad idea. That immediately rules out virtually all our current economic activity. The one use to which I would happily see fossil fuels put is the development of alternative, sustainable energy sources.

That would be economically "productive".

My Utopia would have levels of material consumption (IE the misnamed "standard of living") WAY below what we have in the west today, along with lower technology, more labour-intensive small-scale industry, along with a monetary system which did not ensure that almost every citizen was inevitably in debt. Without debt, we could choose to work less in return for a lower material standard of living, rather than being forced to work to pay our debts.

In my own priveleged way - I'm a GP- I practice what I preach here, working as little as I can in order to be productively idle (as a playwright, composer etc) and accepting a lower "standard of living" than my medical peers in exchange for a way higher "quality of life"

[edit: I'm well aware everything is relative here and that my lower "standard of living" would be some people's luxury, but I don't know any other GPs who live as simply I do - rented 2-up 2-down terrace, no status car, no holidays...]

In my Utopia this would be an option for everyone.

All 6 billion (and rising)?

That's the elephant in the room in the sustainability/economic-growth debate.

To the extent that you divert your time toward writing and composing and away from increasing the numbers of humans through your work as a GP, you are indeed practising what you preach

[cells]

I've had a drink so I'm allowed. As an underwriter I'll add my own industry to this list, but wondered what other sectors of the market you feel add no 'real' value to the economy & are just really good at moving money &/or people around. Here we go.......

Insurance

Banks

EAs

Recruitment

IFAs

My drinking has kicked in early so please add to this list, even better if you can give a coherent reason why (or even why not)

Ignorance is bliss eh?

[A.steve]

Again, there seems to be no practical way of doing the accounting separately ... is that what you're objecting to?

As far as I can tell, there is no way to do the accounting responsibly, accurately and meaningfully. Sure, we can make some arbitrary decisions - or we can chose to measure those things that are easy to measure and ignore the rest.

My objection is that the calculation of GDP is incomprehensible from a technical and operational perspective, while being incoherent and self referential from an ethical perspective. In the context of our national accounts and national debt, GDP/GNP acts as something akin to a global religion... the constraint that prevents elected politicians borrowing arbitrarily large sums to fund their pet projects (enriching their friends) at the country's future expense.

Another example of the absurdity is PFI. National debt levels are constrained by international treaty at a set proportion of GDP... and, because there is always incentive for an elected government to borrow and spend... there is also an incentive to increase GDP. When a new hospital is required by the state, there are two options:

a ) The state borrows the money at the cheapest rate - so finances construction of a publicly owned asset that is then used at zero additional cost for 100 years.

b ) The state commissions a private company to build a hospital that will never be publicly owned - but, instead will be built with money borrowed at a higher rate than that available to the government, before being let at a profit to the same government... where, of course, the private company demands long-term binding government contracts before engaging with the project - hence eliminating any cost benefit should the hospital prove surplus in future.

The obvious answer is that option a would be the best: the minimum bureaucracy; the cheapest finance; an opportunity to create real long term value by avoiding short term constraints.

The real answer is that option b is best: the private project contributes to GDP - and the contribution is even greater as a result of the systemic inefficiencies forcing up the costs. This allows the government to borrow more in the short term than the project will cost - hence hiding the true price of the project from the electorate - who might, otherwise, consider the waste to be profligate. For as long as new projects can be started of this kind, the debts can be kited... rather like the credit-card junkie who takes all his friends out for a wildly expensive meal each month... shares the bill; pays it all by credit card - and keeps their cash to make his minimum payment. It is great as long as it lasts - then, likely, catastrophe.

As another gedenkenexperiment, consider the possibility that cars could be made safer (to prevent collisions) at no additional costs or impositions. This would be economically counter productive - since, with fewer accidents, insurance premiums would be lower and this industry would not contribute as much to GDP; similarly - the repair shops industry would also suffer - as would the lucrative trade in dealing with emergencies arising from collisions. So, while it might be in some people's interests to have cars that don't crash, cars that crash contribute more to economic growth... and there's a perverse incentive for governments to such 'production'. Similar arguments apply to low quality consumer goods and systems that meet the letter but not the spirit of a design brief. Where GDP growth is pursued, it requires a perverse perspective to think this is beneficial to the electorate.

The P in GDP stands for Product, remember. Edit: if we want to capture the value of our cathedrals, cars and biros we'd be better off using a term such as 'Nett Asset Value'.

I suppose the problem is that we need to account the value of things which do not generate a profit. We might think about replacement cost; production cost - or market value when sold.

I find the idea absurd that we can estimate our credit as a nation by guessing the value of an owner occupier's home is to them as if they were paying rent... but we do not bother to record the price they actually paid. I think it bonkers that a state with fewer assets is able to borrow more than one with more assets. As a metric for productivity, I see the approach as being a little less relevant than Numberwang.

Edited December 18, 2008 by A.steve

[brumroccoco]

Welcome to Blisstonia Cells

[huw]

As another gedenkenexperiment, consider the possibility that cars could be made safer (to prevent collisions) at no additional costs or impositions. This would be economically counter productive - since, with fewer accidents, insurance premiums would be lower and this industry would not contribute as much to GDP; similarly - the repair shops industry would also suffer - as would the lucrative trade in dealing with emergencies arising from collisions. So, while it might be in some people's interests to have cars that don't crash, cars that crash contribute more to economic growth... and there's a perverse incentive for governments to such 'production'. Similar arguments apply to low quality consumer goods and systems that meet the letter but not the spirit of a design brief. Where GDP growth is pursued, it requires a perverse perspective to think this is beneficial to the electorate.

Quite so -- I have no been trying to defend the measure of GDP as currently constituted (I believe I prefaced my initial comment with the phrase supposed to). There are certainly flaws, such as the famous one that a catastrophe such as an oil spill increases GDP because of the activity involved in cleaning it up, this is similar to your safer-car example.

I suppose the problem is that we need to account the value of things which do not generate a profit. We might think about replacement cost; production cost - or market value when sold.

I am still not comfortable with mixing up assets and income; this is the same category-error that led people to believe that the value of their major asset enabled them to afford more holidays. Far better to try to value the service provided by non-economic assets.

I find the idea absurd that we can estimate our credit as a nation by guessing the value of an owner occupier's home is to them as if they were paying rent... but we do not bother to record the price they actually paid. I think it bonkers that a state with fewer assets is able to borrow more than one with more assets. As a metric for productivity, I see the approach as being a little less relevant than Numberwang.

Well the credit-worthiness of a state is strongly dependent on how much it can squeeze out of its citizens. The (local) assets of a state are irrelevant; it's not as if creditors can send bailiffs onto sovereign territory to seize things ... it's how effectively the assets (and people) can be sweated, and how much production can be made to exceed consumption, that is the most significant factor in state credit-worthiness. All IMO.

Edited December 18, 2008 by huw

[kokyu]

I suppose the problem is that we need to account the value of things which do not generate a profit. We might think about replacement cost; production cost - or market value when sold.

Why not drop the monetary value idea altogether and do something like ask people how happy/satisfied they are or try to assess this in some way?

Surely all these things which don't generate a profit must either increase quality of life or they are completely worthless?

Difficult to do maybe but no more difficult than trying to value everything in terms of money.

[tricksters]

You obviously do little driving at night

=========================================================================

If you can't negotiate your way round a village using your headlights, perhaps you should reconsider whether you should be driving?

(I'm not sure what lights Injin was referring to but I was specifically referring to village lights in rural areas).

[frozen_out]

Why not drop the monetary value idea altogether and do something like ask people how happy/satisfied they are or try to assess this in some way?

Surely all these things which don't generate a profit must either increase quality of life or they are completely worthless?

Difficult to do maybe but no more difficult than trying to value everything in terms of money.

The real measure of productivity is energy. All profit is a profit in energy, for something to be productive it must provide a profit in energy. For something like a nail bar the profit comes when it is costs less in terms of energy to give some that you have earned to someone to do them for you than it would cost for you to do it yourself.

Keeping accounts in terms of energy is incredibly difficult though.

Edited December 19, 2008 by frozen_out

[Wayo]

Law - it is nothing but inefficiency. In a perfect world the law would would be clear, understood, accessible and properly applied.

Because it isn't we have advice, advocacy, debate, deliberations, appeals and miscarriages.

Insurance - paying for peace of mind, only to discover on making a claim that is all you have paid for!

Forecasting, modelling, statistics and analysis based on non absolutes. It really is pointless putting together multiple unknows and incompletes and trying to make a conclusion out of it. If facts don't go in, they don't come out. Worse still publishing ludicrous casual not causal relationships between variables like life expectancy and drinking tea.

At least the CML has just seen sense on this one - you can't predict house prices to any degree of certainty so why bother trying?

[frozen_out]

Law - it is nothing but inefficiency. In a perfect world the law would would be clear, understood, accessible and properly applied.

Because it isn't we have advice, advocacy, debate, deliberations, appeals and miscarriages.

The law is a necessary overhead unfortunately. The fact that you can fill your car up with petrol relies on laws being in place. Again, most people won't acknowledge this fact but that is what it comes down to. It's an ass, and a big overhead but without it it's difficult for me to steal other peoples productivity legitimately.

[50%deposit]

escorts are a waste of space. You see them everywhere. And really, who actually wants an escort? Oh - im going to the cinema, but i dont want to go alone - I know, i'll get an escort to go with me.

Dating services - aaarrrgghhh - do people use those... NNNOOOOOOOOOOOOOOOOO really, there are thousands of them with millions of 'members'!!! really. If you add them all up they probably have 5 times the population of the planet as members for UK dating agencies........ And why.... who is going to expect anything other than the ugliest of the ugliest? AND when we have MySpace - The free online brothel.

online business directories - there must be millions of them, and no one ever uses them. Im not talking about Yell or such im talking about bizarre directories that are full of SEO services and debt advise etc.

Edited December 19, 2008 by 50%deposit