Why a statesman would always choose TFR before GDP!

October 12, 2014

Some time back ago when I was fellowshipping with a group of youths. They asked me what I considered to be the most important KPI to measure the wealth and health of a nation.

Quite predictability even before I could sit down. Someone from the crowd shouted out GDP!

I was asked for my response and I told them I am not totally convinced it can be GDP. As since that meaningless metric only measures a very myopic band of growth and elides everything else. It’s not so different from gauging the métier of a farmer based on yield only. Focusing on a narrow performance indicator doesn’t even tell you stuff like whether that farmer is yielding crops in a sustainable way or cannibalising the well being of his land holdings to deliver that sort of stellar results.

I went on to share with these youths. How one decides to measure the wealth and health of a nation isn’t just an issue that relates to methodology. But frequently it even has the effect of shaping how policy makers will craft solutions along with moderating how government and quasi government agencies would set about goal setting.

The paradox can at best be illustrated when a glass factory in Kiev circa 1960’s in the now mothballed Soviet Union decided to measure productivity based on square footage of glass processed. This incentivized many glass factories to produce thin walled glasses that were so fragile most broke during shipping and handling which bumped up the cost. Since they needed to be handled like eggs and required specialized handling and additional packing cost.

To resolve this problem. The soviet central economic planning unit changed the metric from square footage of glass processed to tonnage instead. And when that became the new KPI. Glass factories thru out the Soviet Union started producing glass goblets which were so bulky and heavy, they were actually used as paperweights rather than vessels to hold drinking liquid which led to massive shortages of drinking glasses.

The lesson to be gleaned from all this is the same as using GDP to measure the wealth and health of a nation. Absent markets/prices, the value/usefulness of a product to the user is not the primary concern, and outputs of production plans, even if significant in terms of volume, usually translates into Byzantine waste, lost opportunity and worst of all it fuels the illusion progress has been made. Wonder no more why sovietization decided to pack up one day like a traveling circus and disappeared from the annals of human history!

Mindlessly pursuing GPD is why the World Bank can celebrate moving people from subsistence farming communities in which they have no need for money, to urban slums, in which they struggle to survive on minuscule incomes of a dollar a day as progress even though it means people are giving up lives of marginal sufficiency for lives of desperation and violence.

At the crux of the philosophical question is whether growth (the corrosive culture of chasing GDP growth at every turn and opportunity can continue indefinitely) – that idea I suspect would only really be possible – if we can be assure mankind can continue to live in environment of abundant global resources.

In reality, mankind has already depleted most of the earths available resources that once made the idea of perpetual growth possible.

It’s conceivable we may have already reached the peak….peak for oil, peak for environmental resources and perhaps even peak growth.

Beyond the tipping point of peak consumption. To continuing winning. It’s no longer the simple art of beating the curve by mindlessly chasing GDP.

As it is the very practical idea of living the best we can with the many constrains brought forth by resource scarcity.

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‘I am not a futurist. I am a farmer. But if I had to put money on a guess concerning the not too distant future – I would probably plumb in 10 or possibly as early as 5 years from writing this.

The traditional and classical metrics in which the wealth of a nation is determined will gradually shift from the monetary to something intrinsically more basic – such as the ability for humankind to perpetuate its species i.e total fertility rate.

Politicians by nature don’t like to talk about TRF. The like even less the idea of tackling this problem head on. But if you think real hard about – if people don’t opt to have kids, what they’re saying in the clearest possible is, ‘Hey, I don’t have any faith in the future!’ To paraphrase, I don’t believe in the idea things will get better….I actually see it getting worse. That’s why politicians much prefer to fix their eye on GDP. As not only does chasing that idea appear much more serious, but since it’s an econometric, they even come across as cool.

That to me is the real difference between a statesman and a politician. The later just goes for the sensational, the one that delivers the maximum bang, but will always be short. While the former fixes his eyes on the mundane, but cogent and even jugular!

The reason why I remain convinced by this reality is because there is such a strong correlation between economic growth and reduced TFR to even suggest the whole idea of pursuing growth may not be sustainable.

Sure….policy makers may decide to shortcut this argument by suggesting that the problem can be mitigated by transmigration. But they’re only too willing to remain silent or worse still gloss over the undesirable effects of this patch.

Neither is it constructive in my opinion to take cold comfort in the idea – this is a trend that is happening worldwide….so it should be treated as the ‘new normal.’ I mean that’s a lazy man’s method of arguing a case. As it assumes the problem of low TFR cannot be reversed!

But in reality the main reason why mankind has found itself imprisoned by this conundrum is simply because of the method we have chosen to measure personal and organizational growth I.e thru only monetary metrics. My point is HOW, a nation selects to measure success plays a preponderant role in shaping policies, schools of thoughts and even supplies the very raw material to make possible the whole idea of a self fulfilling prophecy.

Neither does it help when politicians keep kicking the can down the road by holding steadfast to the idea – the low TFR has something to do with young people and their supposedly self-centred values. It is often argued rather lucidly that in developed societies, we now live in a “post-materialist age”, where individuals do not have to be so concerned about basic material conditions to survive. Thus people, especially the young, have become more focussed on the values of self-realisation and the satisfaction of personal preferences, at the expense of traditional values like raising a family.

A stronger version of this view is even put forward by Japanese sociologist, who refer to grown children in their 20s and 30s who have left school and are employed, but remain unmarried and continue live at home with their parents. These young people are often described as ‘parasites’ ‘spoilt’, and interested only in their own pleasure.

But all these accounts in my opinion has to mislead no matter how cleverly scripted they appear.

As when we consider the length and breadth of our long human history. This phenomenon where our species has consciously decided to terminate its capacity to perpetuate itself has really only manifested in this timeline and no other.

This suggest there has to be another reason accounting for the low TFR.

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