Here I am this morning, furiously trying to avoid online distractions and Red Sox news at the breakfast table, when I stumble upon this Eric Zencey op-ed in the New York Times. Sure enough, the content of this op-ed is rich enough in stupidity that I have no choice but to spit out my coffee and declare, "to the Blogcave!"
Zencey's basic argument is about the use of gross domestic product as a metric for economic well-being. He points out that because GDP measures only economic activity, it misses out on a lot: volunteer activities, nature, etc. Furthermore, GDP overstates the benefit of reconstruction efforts -- like, say, post-Katrina spending -- because GDP counts it as new economic activity rather than salvaging pre-existing assets.
So far, so good -- anyone who takes an Econ 101 class is told this immediately after they are introduced to the concept of GDP.
The problem with the op-ed is two-fold. First, the NYT editor was apparently asleep at the wheel, because otherwise sentences like this do not ever see the light of day:
In general, the replacement of natural-capital services (like sun-drying clothes, or the propagation of fish, or flood control and water purification) with built-capital services (like those from a clothes dryer, or an industrial fish farm, or from levees, dams and treatment plants) is a bad trade — built capital is costly, doesn’t maintain itself, and in many cases provides an inferior, less-certain service.
Why, yes, I look back with nostalgia when the natural-capital provision of flood-control services was in its heyday. I believe it was called "flooding." Ah... good times. The modern-day system is definitely an inferior product.
This is a venal sin in the op-ed, a case of an editor not helping out his writer. Now we get to the mortal sin. Here's Zencey's core argument for why we should discard the idea of GDP:
Wise decisions depend on accurate assessments of the costs and benefits of different courses of action. If we don’t count ecosystem services as a benefit in our basic measure of well-being, their loss can’t be counted as a cost — and then economic decision-making can’t help but lead us to undesirable and perversely un-economic outcomes.
OK, that's an interesting argument. And I would be persuaded to take it seriously if the op-ed provided a single data point to back up that assertion.
Instead, we get.... nothing. Nada. Zilch. No evidence is provided whatsoever that reliance upon standard GDP measures has distorted U.S. economic policies.
Someone needs to sit the op-ed team at the New York Times down and explain to them the concept of "opportunity cost." Because the cost of publishing this unedited dreck instead of something more interesting was pretty big.
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