Hannah Blog

December 10, 2012

An Economic Conundrum

Filed under: Hannah's views — hannah @ 6:29 am

On reason what happens in the economy, the trade and exchange of goods and services, is largely unknown or inaccurate, is that the definitions used are often not functionally comparable. For example, the equation of not collecting sales taxes from certain enterprises (a negative or non-function) with providing a subsidy (free access to resources or direct grants of money, positives) is not valid. Not having to pay taxes is not the same as getting a present, but much economic analysis would have us believe that it is.

Accounting assumes that credits and debits are the same thing seen from different perspectives and so putting things in one category or the other seems insignificant. But it is not. Who carries out a function and whether a function is actually carried out are critical if what’s being considered is real.

Of course, if it is all a virtual or vicarious enterprise (projects on paper that never show up, which much economic development turns out to be), then it doesn’t much matter. Indeed, if the projection and planning aim to simply provide employment for the army of public and private developers that has sprung up and are, if not intended, designed to fail (not come to fruition) then the classification of the input does not, in fact, matter. “Projects” become like legislation that gets routinely submitted but is never expected to pass. That’s the advantage of erecting castles in the sky. They don’t have to stand up.

Much community development never got to the stage of putting shovels in the ground because the horde of middlemen was/is into “churning” (moving things around on paper) instead of getting anything built. Indeed, I’d argue that much of the so-called economic “growth” of the Clinton years was the result of moving things around with little to show for it in terms of goods and services. Infrastructure and capital assets continued to deteriorate, work that used to be “free” (child care, food processing, household repair, clothing care, elder care) got paid for minimally by conditioning cash subsidies from the federal government on employment in the private sector, housing occupancy densities decreased, medical needs increased, educational participation increased but the achievements decreased. The economy registered more work for less money because of churning, including people relocating themselves for no additional benefit. Then some percentage got siphoned off and relocated overseas as the churning at home slowed down and the waste produced by the military complex got deposited in dumps somewhere else.

Perhaps the single best indicator of economic failure is the growth of dumps and other forms of waste accumulators, including wastewater plants which churn up the food stuffs we don’t even eat. How much of the food we produce goes into garbage disposal memory hole to be lost and discounted forever?

Economic analysis does not consider waste, either of materials or time, even, I would argue, the efficient use of materials and time is the object and the source of any surplus produced and available for trade and exchange. Time is of the essence, but binary accounting doesn’t have any room for the dynamism introduced by time. Financial accounts are static, only accurate at a particular moment of time. Which is why they are out of date by the time they are published.

Perhaps this is what accounts for the persistent effort to regularized behavior. If all the aspects of production and distribution and sales can be made uniform, then it might be possible to make accurate predictions. But, if that’s the case, then we would have to conclude that much of our regulatory effort was directed towards producing more accurate accounts, rather then a better quality good or service. In which case, much of the regulation and accounting would have to be considered not just a waste, but a negative, since it focused attention on how much, rather than on how good. And what we got was much bad.

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