A short and worthwhile one-sitting read – she can’t help in the end being an economist of her time and place, but she’s at least a critical one…
p. 13-14 Simon Kuznets in the US during the Depression was trying to calculate national income – his figures in January 1934 showed it had halved 1929 to 1932. But he saw his task as trying to measure welfare rather than just output. Quoting him “It would be of great value to have national income estimates that would remove from the total elements which, from the standpoint of a more enlightened social philosophy than that of an acquisitive society represent dis-service rather than service. Such estimates would subtract from the present national income totals all expenses on armaments, most of the outlays on advertising, a great many of the expenses involved in financial and speculative activities, and what is perhaps more important, the outlays that have been made necessary in order to overcome difficulties that are, properly speaking, costs implicit in our economic civilization. All the gigantic outlays in our urban civilisation, subways, expensive housing etc,… do not really represent net services to the individual comprising the nation but are, from their viewpoint, an evil necessary in order to be able to make a living.”
But of course there was a war coming …
“It is startling to look back over the decades and realise how recent consumerism is. … it wasn’t until 1950 that 75% of US households had a washing machine, and the same benchmark wasn’t reached in Europe until 1970. Cars did not reach three-quarters of the US population until the 1970s but the European countries didn’t catch up until the late 1990s.”
Many of the critics of PPP [purchasing power parity] conversions also argue there is an ideological bias, although usually entirely unconscious, in the process. taking the PPP-based GDP comparisons on this basis at face value makes the trends in world poverty levels and income distribution look more encouraging than they really are. And if poverty has been declining rapidly and inequality between countries not getting wider but rather possibly diminishing, as the comparisons suggest, then there is no reason to worry about the process of globalization of international trade and investment that characterised the 1990s and 2000s. This is obviously a pretty fundamental question … To some extent the answer is obvious from the way everyday life in Chinese cities has visibly changed: there has certainly been a big increase in living standards for a large proportion of China’s urban population, and that’s enough to affect the global picture. Beyond that, though, the answer does depend on how the GDP of different countries is converted on the same basis.”
“By 1968 there had been a quarter century of absolutely extraordinary growth. … Western living standards had approximately trebled since 1950… There was a job for everyone who wanted one… A man could act as a breadwinner for the whole family, reasonably secure in his job and well paid with a secure pension.’
“Until relatively recently, there was very little evidence on which economists could base their views about how economics grow. The number of countries for which GDP data were available increased slowly, and only reach 60 as late as 1985. For many of these, the data were of poor quality. … Even those who had been gathering some kind of national income statistics for a long period did not have data series that were consistent over time … the empirical work … was augmented by historical studies using data on GDP for a range of countries going back to the year 1000. Angus Maddison … extraordinary International Comparison Project undertook the immense task of finding from a wide range of historical sources all the raw statistics needed to construct GDP, on its modern definition, backwards through history .. now an essential resource…(but) economists now use Maddison’s statistics blithely, without the due caution required… involved a lot of assumptions and clever guesswork.
p. 82 “Wal-Mart is the leading example of how a business can transform its productivity using their technologies. McKinsey estimated that Wal-Mart on its own accounted for a substantial proportion of the pickup of American productivity in the late 1990s. To achieve this, the company developed a model of sourcing goods from China and other low-cost countries, through an extremely sophisticated logistics operation, and retailing the goods in massive out-of-town stores.” [To which of course I'd add, massive external costs not accounted for, from the health care of their workers, met by the government, to the emissions from transport and pollution from production of those goods.... and more...]