Bored yet? I am. As a former financial journalist, I’m well acquainted with the merry-go-round of indicators that blip in and out of our lives like digital dopamine, telling us how well we’re doing. As a human being, I’m increasingly alarmed that these are just irrelevant numbers that have little or no bearing on how well we are really doing.
Stock market indices have long been decoupled from what is happening in the real world. All they reflect is the performance of big private pension pots belonging to the haves (in Britain only 58% of people have private pensions and the majority of those really very small), and how big the bonuses of a few thousand money men (yes, mostly men) will be this year.
Indeed, a company’s share price rising might be an indication of a round of redundancies or other cost-cutting which makes shareholders richer at the expense of staff. The number of people who should celebrate the Dow hitting 20k is truly tiny. Most of them wouldn’t be much fun to go out for a beer with.
As for GDP, has there ever been an acronym as spellbindingly dismal as this? GDP goes up if you sit in traffic for an hour with the engine ticking over. It doesn’t if you stay at home, caring for a sick child. GDP has soared in China over the past 20 years. Now its people wear masks in the street to filter the smog. GDP can’t measure the things that are really important to us – our health, relationships, environment – but can and does measure when industries strip-mine the Earth to make gimcrack that nobody wants but which people buy anyway, and then throw away.
This is not to deride the herculean efforts of journalists who follow this stuff, like our own Graeme Wearden, who tries to makes sense of the blizzard of financial data spewed out every day here.
Instead, I’d rather suggest a series of other metrics that give a clearer indication of where humanity is at. Perhaps these are the key performance indicators we should hardwire into our reporting calendar:
Inequality ratios
One of the lessons of the 20th century was that inequality breeds revolt and revolutions never end well. One of the lessons of the 21st century is that people seem to be determined not to learn the lessons of the 20th century. The Gini coefficient is a crude measure of how unequal societies are becoming. Some economists have been toying with another measure, the Palma ratio, which is better at discerning how much richer the richest cohort are getting, compared with the poorest. Both tell us much about our direction of travel.Read more
