Ponzi scheme
Tim O’Reilly just published probably the most interesting Posting in this very young year. He quotes two economical experts who describe the current financial crises as an imbalance between true real wealth and fictional financial wealth. They argue that the true reason for the current crises is that financial assets outgrew the natural growth and the real assets on our globe. O’Reilly is even approaching one of the greatest heresies in today’s society: There might be no endless growth anymore.
Erhard Eppler, a German thinker and politician very popular in the 80ies, differentiated already back then between qualitative and quantitative growth. Not every growth is good. If people get sicker, the more money is spent on medical expenses which are shown as economical growth. The focus should be more on qualitative growth that reflects people’s quality of life.
Interestingly enough, it comes down to measuring the right things. It seems we are still measuring the wrong things (=quantitative growth) instead of establishing metrics that have real meaning (=qualitative growth). Since we are measuring the wrong outcome, we are focusing on the wrong thing. It could be an interesting exercise to develop a metrics system focusing on how marketing creates qualitative growth for the targeted consumer.
posted by Michael Fassnacht at 11:33 AM
5 Comments:
Isn't the fact that we need a certain amount of quantitative growth to ensure that we maintain employment and thus standard of living?
Measuring qualitative growth is all nice and warm and fuzzy, but in the end if we are going backwards in quantitative terms while going forward in qualitative terms, the bottom line is that the number of 'losers' in society will grow.
I don't think that the right qualitative metrics are just nice, warm, and fuzzy. I recommend measuring qualitative growth metrics like "Literacy rate", "Percentage of High School graduates", "Life Expectancy", "Early Cancer Detection Rates", and so on. They are still growth centric metrics but with a qualitative dimension.
I still don't get it.
Sure, it's nice to have an increasing or high literacy rate. Same goes with life expectancy, or the percentage of the population with tertiary qualifications.
I'm not arguing that these are bad things to look at or consider when assessing the success of any given economy. After all, there is no point having say 20% economic growth if all of the benefit goes to 1% of the population.
But the bottom line is that in any society, we need some level of positive economic growth to maintain the status quo of said society.
Suggesting that using economic growth as a macro indicator of an economies success is 'wrong', I think, doesn't make sense when you take everything into consideration.
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