Tuesday, January 30, 2018

New Book Discusses the Misleading Economic Numbers that Don't Include Pollution

The new book The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations by David Piling indicates that we may be calculating the wrong thing in determining overall growth of our economy. The premise is that we are not calculating the costs of pollution. His ideas seem to make sense considering these are lost costs that eventually will come out of economic output. 

Local pollution is a cost while global pollution impacts overall economic output over all economies. This is a cost that according to the book isn't well calculated. 

These numbers are just numbers. They are samples and indicators but the real economy is often very different. The real economy is based on human behavior and costs and rewards of opportunities. In this case, we are taking advantage of today and not worrying about the higher cost of pollution tomorrow. 

That doesn't mean we can do much about it but as those costs rise there will likely be innovative ways of reducing pollution and managing waste. These are costs and production factors that should be calculated. 

Whether or not all countries will calculate them in the future is difficult to tell. It sounds like a negative drag on the economy. It already exists but we are not actually looking at them and that is misleading. What leader would like to encourage those numbers in their time at the top?

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