As the Office for National Statistics have noted this morning in this chart, growth in the UK is fading away:
The obvious conclusion to draw is that by focusing on growth, Labour has either chosen the wrong metric on which to claim success, or they are miserably failing.
Since I cannot be bothered to discuss yet another miserable failure by Labour, let me instead muse on the question of whether they have chosen the wrong metric for success.
As I have noted here many times, gross domestic product, or GDP, is notoriously difficult to estimate. It also provides almost no indication whatsoever of growth in well-being. What is more, it is entirely indifferent to distribution, meaning that just because GDP has grown there is no necessary suggestion that any particular person might have benefited. In addition, this data is not adjusted for population, and so an increase in growth might actually imply an overall decrease in GDP had a population. The ONS has not commented on this particular issue in their press releases this morning.
The overall point is, if you were to choose a metric to indicate success, GDP is, in an era when the reliability of statistical data is becoming increasingly hard to gauge, a particularly poor one to choose.
That is, perhaps, most especially because it creates the risk of alienation. Claiming success at a time when many people will be feeling that the economy is working against them, rather than for them, is only going to ostracise many voters, as is very obviously happening.
So, what should we be doing instead? The following might be more useful:
- A focus on income per head.
- Measures of changes in median income.
- Fluctuations in inequality.
- Changes in real rates of investment.
- Success in tackling climate change.
- Measures of achievement in the delivery of public services, such as health outcomes, education outcomes, and so on.
- Changes in the sense of well-being.
- The reduction in the share of GDP attributable to rent, interest, and other forms of rent extraction from the after-tax income of those in the UK.
- Recognition of the value of unpaid work within and beyond the home, and placing a value upon it, and changes in it.
- Measures of social cohesion.
I could, of course, go on. This is a topic that is always worthy of deeper consideration, but at this moment, these provide a clear indication that there are, very obviously, better indicators of success that could be used within our economy, and yet Labour is choosing to promote one of the most divisive forms of indicators that Labour could have opted for.
Why did they do that?
Was it just because they really do think that every form of state spending is dependent upon private sector growth for its funding? Are they really that stupid?
Or, did they select GDP as their criterion because they aren't interested in things like distribution, well-being, and even the risk of alienation, so long as they keep the wealthy happy?
We don't know, because they do not explain their choice, relying instead upon neoliberal thinking that is spoonfed to them, day in day out, by a far-right neoliberal media and think tanks, whose ideologies they appear to embrace.
That, though, is precisely why I do ask the question. After all, someone's got to.
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Well said as per usual.
My view is that this is a very insular government – sofa style – with a small coterie of private sector based advisers who just operate on the basis required by their funders and providers of freebies.
In some sense, it is a government that is represented by Peter Mandelson – starry eyed in the presence of money and power to the point that modesty and scruples go out of the window.
A real prime minister should be thinking of how capital can be of use to the country – not just themselves, or capital itself.
I agree with your criticisms of GDP as a target
…… but even if one didn’t, monthly GDP data really is a waste of time. FT Alphaville wrote on 10th September “Abolish Monthly GDP data” pointing out that the size of the revisions make its first release almost meaningless.
Agreed
What is your take on the council election results over night. Hugely disappointing and I was staggered Reform took Glamorgan. Poor night for the Green’s too. I was hoping we would see a bounce with all the attention that has been on Zach. Can you offer any hope?
It was depressing
Unless the left agrees an alliance we are in trouble – but this is by election stuff
The UK is in recession, based on the traditional economic definition. Expect the situation to get worse.
In the Times today ” Merck is scrapping a proposed a new headquarters in London and plans to discontinue its discovery research operations in the UK”.
Blaming ” the lack of meaningful progress towards addressing the lack of investment in the life science industry and the overall undervaluation of innovative medicines and vaccines by successive UK governments”.
No steer and Rachel are focussing on growth that they believe can only be driven by the private sector.
But hang on. Merck are shouting we cannot do anything because the UK government is not investing!
Is this lack of investment code for” we will not do anything unless we get massive subsidies, tax breaks , agreed product price resale price hikes and other freebies”?
Does that not suggest the no steer and Rachel should be investing in the UK?
Or am I missing something here?
No
You are looking at a free-rider complaining that they can’t get enough free-riding revenue in the UK
Merck is not arguing for neoliberalism , when the chips are down. They are not that daft. The private sector hasn’t been investing in Britain for a long time; whatever Government has been in place. The fact major international businesses complain about lack of public investment should make people stop and think; why is it the press/media complain about public investment, when it is public investment, not private investment that drives overall investment recovery and business confidence, when an economy is flatlining and we are in difficulty? The private sector never leads. It prefers to follow; leading is too risky.
Because the Press are wholly political, and neither care or wish to understand how an economy actually works. It is nothing like the delusions they are paid to sell; and the public so easily and gullibly believe.
Starmer has U-turned twice this month already, by sacking Rayner and Mandelson.
He now has to get through Trump’s visit (yet ANOTHER Epstein bosom pal), party conference and the deputy-leadership election (when the remaining members get a VOTE, damn them) – he will be in reflex spasm till at least October, caused by all the “doubling down” he has to do in the meantime.
I don’t think he will have the time for changing his (economic) religion even if it is letting him down badly.
Anyway, Morgan McTeam has got things lined up ready to dump Reeves if necessary, and make Darren Jones Chancellor (singing from the same hymnbook of course) once he’s unearthed an economic indicator that’s headed in the right direction. What about the flags and red paint – the UJI? That’s a boom sector at present.
You’re right of course. The GDP spin from Downing St., McTeam, the Treasury, and the press will be entertaining, if a little more politically complicated than usual and we shouldn’t miss the opportunity to throw some economic truth into the mix.
Now that Reeves and Starmer are no longer joined at the shoulder (thanks to McTeam), the choreography on the economy will get a bit more complex as we move towards Reeves’s departure from the dance floor.
As long as Labour continues with the disastrous austerity/fiscal rules policy they are going to fail on every metric, especially personal wellbeing. Looks like they are stuck on a path of failure unless they sack Starmer and Reeves and adopt a policy of investing in public services.y
Meanwhile Douglas Alexander, Scottish Secretary, and another badly judged appointment by Starmer, who rolled over Ian Murray and Scottish Labour to appoint him ; has been interviewed post-Mandelson on BBC, GMS. Alexander said that nobody could justify Mandelson being in the job, and then rationalised Starmer’s appointment, praising Starmer for sacking Mandelson, and vaguely passing the responsibility elsewhere. Alexander claimed the Developed Vetting would have been done properly. The problem here, is Harriet Harman doesn’t think so. She argues DV is applied to Civil Servants. Harman is not sure that DV would necessarily have applied for a political appointment.
Then Alexander tried to wrest credit from the First Minister, who led the important Oval Office interview to discuss Scotch Whisky Tariffs. Mandelson attended the meeting, and the Embassy had played a supporting role. Alexander attempted to turn the whole Whisky Tariff strategy into a long-termUK Government exercise; it wasn’t.
The giveaway word Alexander used was “facilitated” the meeting; in other words, the UK Government acted as gopher. The Oval Office meeting on whisky, supported by the US bourbon industry and the Scotch Whisky Association was a smart idea executed by the First Minister, when he attended the opening of Donald Trump’s second new golf course in Aberdeen; and worked to facilitate Trump’s course being granted a DP World Tour Championship, held successfully this July. The Scottish Government spent £180,000 to help make the Championship happen (and were criticised for it); but it changed the dynamics of the relationship between the Scottish Government and the White House, and opened the way for the meeting on whisky tariffs. Alexander is now trying to spin this as a British government operation. This is Starmer’s government in Scotland; a confection of fairy stories.
I was laughed at in a political group I’m part of when I suggested that the measure of a government’s success should include wellbeing and equality, which are inextricably linked, in my opinion.
Staggering…
Sadly, I am not surprised.
There are some people (not friends) we know who give a strong impression of judging others by how wealthy they are – the more wealthy you are, the better you are as a person. I judge a person by how they behave, how they treat others, how they try to help and not by the size of their house or the cost of their car etc.
Craig
This is so good, as ever, a master of complexity and accessibility.
Totally agree solidarity is the only way people have successfully challenged oppression.
Reading this I am wondering what would be the best lever to try and upend neoliberal bullshit.
In solving this I then wonder which neoliberal lies are most reinforced by the right wing corporate media, (I am assuming the lies pedalled the most would be more important to mass mind control. )
it seems to me the lies pedalled the most are are efficiency, maxing the national credit card, austerity, TINA which are all welded into the public imagination and then there is GDP….
What would happen if GDP was demoted and other more useful metrics were promoter? Would this upend the bullshit?
Would solidarity on demoting GDP help more people see through the neoliberal mind control ?
I would love to have the time to muse on and answer that now – but I haven’t.
But the stories we tell do definitely change the outcomes we get – which is why I talk about narratives so often.
Thanks.
You do, and are a major creative of the new narrative.
Unlikely there is a magic wand , but some actions will be more effective than others.
I do think pulling on the GDP string will cause some unraveling otherwise why do they bang on about it, but you will be able to understand the significance of GDP to holding the neoliberal narrative together, not I.
If it is significant One way would be to identify good alternative metrics for all groups to use. As a way to eat into the dominant narrative.
The ACE aware Trauma Informed community might be an example as those with higher well being scores are likely to have more protective factors and resilience.
Local government data collection another, to then use as evidence of political failures.
Normalise good alternative metric alongside the long standing critique of GDP….
Thanks.
You do, and are a major creative of the new narrative.
Unlikely there is a magic wand , but some actions will be more effective than others.
Perhaps pulling on the GDP string will cause an unraveling but you will be able to understand the significance of GDP to the cohesion of the neoliberal narrative.
Sorry, but that should be “alienate” (or similar), not “ostracise”. “Ostracise” is what the voters will want to do to the politicians.
Why would LINO focus on GDP?
Perhaps the other metrics you suggest would paint an even worse picture…?
Worse for who?
The penultimate suggestion in your list, recognition of unpaid work, is one that I would 100% agree with as it is something that my wife and, to a lesser extent, I have carried for many years in support of our two neuro-divergent sons.
Craig
Good luck.
Simon Kuznets invented GDP as a measure in 1934, essentially a quick and easy way of comparing the sizes of economies in the depression, More accurately the US Senate commissioned a study on how to measure the output of the American economy and Kuznets aim was to capture all economic production by individuals, companies, and the government in a single measure, which should rise in good times and fall in bad. He was appalled at the way it later became used but also warned of its limitations from the start, including against treating his aggregate measure as possessing a precision it did not have
“The above detailed classifications provide a fair description of the various groups of services which are included, at their market value, in the national income. But they are far from an exhaustive account of the possible contents and scope of the national income measurement.” (1934 Report)
He went on to list some obvious exclusions
“The first of the omissions he lists are the non-paid activities of family members, explaining that “the organization of these services render them an integral part of family life at large, rather than of the specifically business life of the nation” (p. 4). [and] Illegal activities (“such as bootlegging”, Prohibition was repealed on 5 December 1933, a few weeks after Kuznets completed his report).” (GDP: origin, uses and abuses, John Weeks, 2019)
He also wrote in the report, “the welfare of a nation can scarcely be inferred from a measure of national income as defined above.”
Uses and Abuses of National Income Measurements begins on page 5
https://fraser.stlouisfed.org/title/national-income-1929-1932-971?page=17&deep=true
One reason neoliberals like it so much it that is purely a monetary measure
Thanks
Richard,
I liked all your suggestions for metrics that might be a lot better for appreciating the state of the nation than GDP.
I know I’ve mentioned this before and so have others too but when I was a lad the 6pm news would often cover the monthly, YTD etc export and import figures.
The UK is a trading nation and if there is a deficit that should be on our minds the trade deficit would definitely be a candidate.
Is there any chance you can muse on this topic?
Neoliberalism has not enabled the UK to be a more successful trading nation. Infact our capabilities in this regard have declined hugely.
There is a story to be told here that exposes neoliberalism on its on turf so to speak of income/wealth/power but I don’t think anyone is telling it.
I have to admit trade data simply does not worry me: markets have chosen to behave as they do. So?
But I should address this, I guess.
Richard,
You ask the question “So”.
This deserves a response so I will have a think
Accepting that your list of alternative measurements to monitor the economy was incomplete, I note that you do not include our trade balance with the rest of the world. The last time I raised this point, you kindly directed me to the disturbing paper from Sheffield University – “The UK’s finance curse? Costs and processes”, which shows the damage the City has done to the UK economy, including by failing to support and invest in productive industries and keeping the pound higher than would support productive exports. But that paper does not answer the question: if we don’t tackle this trade balance problem, how do we avoid essential money creation to invest in the country, failing to circulate round our economy and shooting off to China, South Korea, etc.?
That paper does answer the question: we shrink the size of the City and then our exports are competitive. That is it. We have a trade deficit because we have a finance surplus. That is how it has been done.