Thursday, March 7, 2013

Statistics and Numbers (GDP)

  • Re: Economic Growth Terminated

    Postby nameta9 » Thu Mar 07, 2013 6:23 pm
    Statistics and Numbers (GDP)

    Models, models, language itself, all abstractions, all abstract language creations pretending to correspond to reality, condensing reality into a few logical segments and debating these segments and pretending that you can actually influence reality by talking about it, debating it, by politics and choices and new laws and so forth.

    Aggregations, putting things together and adding them up and making a number that is supposed to imply something, mean somthing, like there are 1 million empty homes in china that means they are headed for a crash and housing bubble. Really ? not really, the numbers can imply anything according to any linear model, models and models all conveniently located within the controlled and comforting environment of your mind, the little world that your mind thinks the world actually corresponds to: nothing further from the truth, those houses are being used as a "Money Store", are just a "symbol" are just a make believe kind of wealth, most likely they will never be used at all, the most important thing is that the value of those houses remain high, actually, those houses and building exist only as a function of the value they represent, this is something completely different from a housing bubble or price bubble as imagined operating in the EU and USA (and even in these 2 places, houses are mostly proxies for value, for imagined value, are a money store, are simply dollar bills written in bricks, and rarely do the prices go down much, always just a little, especially in the EU). China won't crash because of this. And then these numbers always overlook all the little details, but it is all of the little details, all of the little decisions each person makes, what each person actually does that creates reality, always a very little reality that doesn't extend much in space and time and doesn't ever imply laws, trends or general laws, actually, it is all of the little quirk, random, arbitrary decisions of people doing whatever that breaks down the validity of all numbers and statistics in economics, that breaks down all trends and all theories, macro economic theories always.

    But the mistake is in the numbers adding things up and then using the numbers to mean something else: GDP is the best example, this number was invented in the 1930s, a very short time ago, way too short for the economists to be so Presumptuous to believe that is actually anything more than a little invention, a little make believe device useful to create other imaginary numbers and creations, a new creation, a new construction, a true metaphysical construction mixing the most different things and putting them all in one bag and then dealing with the bag as if it was something real, represented something real and such, and then this new fangled measurement, GDP was invented for the USA and in the 1930s a very specific place and specific time, it is hard to believe that it is valid and can apply for everyplace and all time as they all want to make you believe: this number, GDP, is the result of the huge advances technology made in creating ever higher production levels, jobs, standards of living all happening only in the last 200 years or so, way too little time to be sure that it is a law of nature that will always operate, way too unsure to extrapolate into any future and into any trends.

    Aggregatons, numbers are used constantly in all economic endeavors to then pass as true imaginary trends and laws and making believe that numbers can be converted into other numbers, like for example, the rich have become richer, they now have 80 billion dollars more wealth as compared to a year ago, with that wealth you could hire 400,000 people for 10 years and give them a salary: but you can't convert one number into another like that even though poltical economy always pretends you can, no one will hire people to do no one knows what, since today the real problem is that no one has any idea what real actual work people should do, is worth doing, what gives any return, what is necessary and all in order to give them a salary, no one has the faintest idea of how to let 400,000 people pass 8 hours a day and how that should correspond to a salary, what manipulations, what input -> manipulation -> output is necessary, brings a profit, brings a return for society or even for other individuals, since very few activities really produce much value anymore, much profit, much gain, the diminishing returns of work and labor in general no matter what. That is maybe why real estate becomes a store for value, keeps its values high, its prices high, it is something everyone could need, it is something that remains, that you can actually use, it is not invisible information that doesn't make any difference at all, if it is there or not, that can have any value at all arbitrarily according to how you want to value it, artistically, aesthetically, and so forth. And that is why Health Care costs so much: something you could need, something that forces you to use it, hence health care has now become the dominant economic sector of the USA; since all other things obviously have such little value compared to health care, and "education" but education only because you can make believe anything has any value since your education "will make you land that good job" (and then always based on the faith in the future, the hope of the future, you will be hired and get steady raises in the future, this also created all of the debts, since everyone thought that this system of life was a given, something that happend only in the last few decades became a law of nature, something that was an exception and a quirk, a one time fluke of history, and very uncertain if it could continue, became a certainty and created a faith in the future (and student loan debts) that was never really justified).

    Or you could use those 80 billion dollars to build 400,000 houses with cheap rents: but no one will do this since you build to make a profit. But then again, if nothing makes a profit then the rich are better off just keeping that cash, what they actually do, and tell society to go fly a kite, who cares. All of political economy, economists, all politics is always in this mode of adding up billions of dollars here, cutting here, deciding to do something else with those billions of dollars there, constantly converting one thing into another, only tied between eah other through numbers, these numbers are truly fantastic metaphysical devices, converting everything into everything else, connecting everything into everything else, anything can be converted into anything else by their dollar value and such.

    And notice the whole deal with banks, money, billions of dollars here, trillions of dollars there, trillion of dollars of debts and so forth, all of these aggregations, all of these numbers, the unemployment rate, is always the same trick: add up things coming from different sources and things and situations, from so many different people, make it become one number, and then talk on behalf of all of those people using one number, make your personal view and will power correspond to that of millions of people, when this is not true at all: all those people putting money in banks and creating large numbers for banks, creating the billions of dollars, all have different lifestyles, choices, different jobs or no jobs at all, all kinds of disjoint unrelated ways of thinking and doing things, and choices, and decisions, and instantaneous random decisions: this trick of using a single number to represent a complex, infinitely complex reality is what generates debts, and political economies and such. And even the debts, all added up really means adding up so many unrelated, disjoint costs and activities, always adding everything up and putting it into one number.

    We have all been brainwashed by this mode of operation, I have used it millions of times myself: if the US spends a billion here, that money could be used for this or that, if JAPAN now has 1 million people less in population then that corresponds to 300,000 extra homes available, the mode is simple: take any number and convert the value into anytihng else that adds up to the same value: the FED is printing 80 billion dollars a month, you could do anything else worth 80 billion dollars instead of giving it to the banks and so on. But this mode of reasoning is deeply flawed even though hard to see where: take the JAPAN example, yes there are the equivalent of 300,000 homes of extra floor space in the country since the population went down in the last few years, but the floor space is invisible and cannot be aggregated all together, it may be one room on one house, antother bed from a hospital and so many other completely unrelated, disjoint places and items, that there is no way to add them up, to aggregate them in reality, it is just an imaginary construction adding things up pretending that they can be added up and put together, pretending that a trend is going on and that it could represent another excess real estate bubble, when this is impossible (it may even play out in the end as excess real estate and a price crash, but I wouldn't bet on it).

    But the real reason why all of these additions, aggregations, equivalencies, economic policies are flawed is even simpler: they all suppose that there are no other will powers opposing the aggregations, wanting to do things differently, choosing different aggregations, doing all kinds of things disrupting any kinds of aggregations: so the JAPAN has more rooms available, well guess what now dad can use the new room to put a new fangled stereo in it and so forth, these kinds of things are never considered in economy, in aggregations, in political economy and such.

    Anyways, the bottom line is this: GDP has been around for only a few decades, it is an invention, it doesn't correspond to any law or truth, it is just a quirk trend that played out in the very recent history of civilization due to huge technological changes and huge advances of standards of living and so forth. We have been in a high standard of living society for not even 80 years, such a short time that no extrapolation is possible at all, we are at the very beginning of a trend or economic development, if there even is a trend or if this "economic growth" trend (or myth?) even continues. It is not normal to live in rich societies, humanity has always lived in poverty, we are in an exceptional situation, a real quirk, a real work in progress without any possible clue of how it will play out, not only in the USA, EU and JAPAN but also in China or Indonesia or Brazil.

    We all got spoiled, we all thought that our present (1970s, 80s, 90s, 2000s ?) standard of living and lifestyle was a given, an absolute, was an established law (and hence we created debts to be paid back for in the future expecting the economy to keep on growing forever, to offer always so many new jobs and possibilities and advances and opportunities and so forth (the idea of having to change the kind of job you do every two years has recently gone out of style, obviously the economists finally saw how absurd such an idea was when most people can't even figure out what their "first" job type can possibly be!)), but it seemed so only for a few decades of exceptional stability and wealth after the second world war, then so many other disruptive forces started to influence everything, other countries gaining manufacturing capacity, other workers in other countries, technologies disrupting everything, economies of scale, energy prices and changes, and so forth.

    Nothing points to how things will play out, the problem isn't oil or peak oil or resource scarcity, the problem is much deeper and general: no one knows what work is needed or will be needed and how to organize a society for little work, or how to distribute wealth when so little work is necessary and the only channel to distribute wealth is through work; no one knows how other countries will evolve, like China (building millions of empty homes as a form of cash, instead of dollar bills, buildings ?) no one knows how poor the developed economies can become, how will technology influence all of this and so forth. There is no clue, no one has any answers.

    And then you have the examples of Germany and Scandinavia where "you are not allowed to not work" and the welfare state finds you jobs no matter what, so everyone is employed, but these places are so particular, with such a particular culture, kind of "work ethic" or whatever, and then it would be interesting to see exactly how much of the labor done in these countries really produces anything, any real output given that the standard of living of these very rich northern european countries is only twice as high as the poorer southern countries like Spain and Italy, but anyways, another study of these countries is necessary (and then, if you can even apply these models to cultures and countries and societies with such different customs and ways of doing and mentalities and such, Italy is not Denmark for example no matter what).

    The bottom line is the conflicts, fights, political fights, this constnat drone of information, new information creating debates, controversies, contrasts, conflicts, confrontations, worries, new problems, debates and so forth, but mainly the fights and conflicts are making all of our societies so much poorer than what they really are and could be.

    Will we reach an Infinte Resource Society and colonize the Solar System ? Maybe, but I wouldn't bet on it, the peak oil doomsters may even be right in the end, who knows...

    spark plug

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