I'm an author and prize-winning journalist, and in my new book The Growth Delusion, I explore how we've ended up in a society in which heroin consumption and prostitution are worth more than volunteer work or public services. In a rational world we would learn how to value what makes economies better, not just what makes them bigger. We're prioritising growth without stopping to think about the costs.


Proof: https://i.redd.it/uz0tcdld0yb01.jpg

Comments: 37 • Responses: 12  • Date: 

emotionalgeeko9 karma

  1. What's your view on the black economy and white economy of India by comparison?

  2. Being a reporter, did you ever land an insider tip for stocks, commodities or such which you could have benefitted highly from?

  3. What do you think about China's economy, is it gonna crash or continue to boom ?

  4. What do you think about the future of Bitcoin?

David_Pilling13 karma

Hiya, you're really stretching my knowledge here. GDP is bad at grappling with the so-called black or grey economy, which is huge in India. Anything not taxed is hard to measure. Modi tried to regularise this with his demonetisation strategy, but it seems the parallel economy is pretty resistant. That means much of what goes on in India will never be captured by GDP. 2. No, sadly. Just ask my bank manager. 3. People have been saying China will crash for years and years. They've all been proved wrong so far. Don't bet against the folks in Zhongnanhai. Jim Chanos tried it - and by all accounts failed. Having said that, the Chinese leadership have implicitly admitted that lots of their growth was frothy (and boosted by the fact that they didn't account for the terrible pollution that was a side-effect of helter-skelter growth). They're now trying to do something about the type of growth they have - and as a result the economy is slowing. 4. As for Bitcoin, I know less than you I'm sure. Just ask my bank manager (see question 2)

NuclearFan19888 karma

Hi David!

I have two questions, a fun one and a serious one.

1) What role do you think virtual currency might have in an post apocalyptic nuclear war?

2) I see what you mean about GDP being a crude model for modern societies. What would you rather see be used in its place?

Thank you in advance for answering!

Thank you in advance!

David_Pilling12 karma

I take it the one about post-nuclear society is the fun one. You're obviously having a stressful day :) In seriousness, I guess it depends what infrastructure survives. If there's some semblance of government, then an official currency might revive. If there's not, then we'd move into virtual currency territory - but of course you'd need a computer network for that to work. Is that still standing? On 2) I am definitely not arguing that we replace GDP. I'm talking more about being a) sceptical and b) adding to the way we look at the economy so that GDP is no longer the king of numbers. I'd say, median household income, some measure of wealth, some measure of wellbeing and some measure of natural capital (you could c02 as a proxy or some measure using satellite imagery of natural resources). Some of these measures already exist, some are work in progress. But my strong message is that when you hear X is growing by 3 per cent, stop to think what 'growing' means.

bleepbloopbleepbloo64 karma

Do you think correcting these pitfalls requires some adjustment to how morality is interpreted via laws (what’s illegal or not)? Thanks!

David_Pilling6 karma

Definitely not. That's a whole other question. In one sense Eurostat's directive to the UK to start counting heroin and prostitution in GDP makes perfect sense. GDP is an amoral measure. We could have a more "moral" one - but of course that would depend on whose morality prevails. My favourite one is Maryland, which adjusts alcohol sales for "binge drinking". It uses academic studies to determine how much alcohol consumption is social and how much is anti-social (ie binge drinking). Instead of adding the latter, it subtracts it. This is very interesting. But as a journalist whose known to have a vodka or two, not entirely reassuring.

xhayles4 karma

What do you think Brexit will do to the economy?

David_Pilling9 karma

There's an interesting study that shows Brexit will knock about £350m off British GDP, precisely the same number that Boris put on that bus. Perhaps he forgot the minus sign! I am opposed to Brexit personally, but again the fact that British people voted for it is related to the arguments in my book. We have been taught to believe that the economy is sacred and we should never do anything to harm growth. In a funny sort of way, British voters ignored that. Bill Clinton has turned out to be wrong. It is not always, "the economy stupid"

lsmithTPT19893 karma

Hi David. What do you think we can do about the so-called 'expert fatigue' which has fallen out of nationalist uprisings in the West?

David_Pilling10 karma

My book is most definitely not an anti-expert book (despite the occasional jab). In a sense I'm arguing for more expertise. And I'm also arguing for a better-educated public that can be more engaged with what might seem like esoteric debates. Another message of my book The Growth Delusion is that numbers in general and measurements in particular are very political. We only measure something if we care about it. So let's measure the right things.

DiscombobulatedBall3 karma

Hi David! I have a few long winded questions, bear with me here!

  1. Could changing what counts toward GDP actually lessen the chances of countries falling into recession or even economic collapse? Or would it just be another way of massaging the numbers to make things seem better than they really are?

    1. Why do you think we're so wedded to GDP, even though in the grand scheme of things it's a fairly new concept?
  2. Do you think we should scrap it completely and measure the economy another way? If we were to get rid of GDP what could replace it? Are there any countries that are currently this?

Thank you!

David_Pilling4 karma

I'm bearing with you just fine. Good questions. Briefly. If we were more careful about what we counted as growth, there's a chance there could be less boom and bust (though I'm not betting on it.) An example: in the run-up to the financial crisis we let banks get out of control because - measured by GDP - they seemed to be "contributing" so much to our economy. Much of it was a mirage. The growth was in bits of paper being traded between banks and had little bearing on the real economy. And the taxpayer footed the bill. We then entered austerity. So much of that growth was not "real". 1. GDP was a very clever invention. Though Simon Kuznets, the man who "invented it", warned that it should never be confused with wellbeing, we tend to do exactly that. The genius of GDP is that it squeezes all human activity into one number - like shoving a large frog into a small matchbox. That is also it's flaw. Part of what I'm arguing is that we should look at other numbers too and pick GDP apart a bit. I prefer to see it in humanistic terms: "Release the frog".

David_Pilling5 karma

Realise that I never got to your last question. No, as I've written elsewhere on this thread, there is no single number that could replace GDP. But we need measures of: distribution (ie inequality) sustainability wellbeing one quick example from America: it's economy is booming, but life expectancy has fallen for two straight years. What on earth is going on? You're never going to find the answer by looking at GDP

almondparfitt3 karma

Hi David, how are tech companies impacting these pitfalls? Thanks!

David_Pilling8 karma

Look at Wikipedia: all human knowledge (well a lot of it) available to everyone (well anyone with access to a computer). An incredible addition to human wellbeing. It's contribution to GDP? Zero

Chtorrr2 karma

What is your writing process like?

David_Pilling7 karma

I write best in the morning before I get distracted by Twitter, news, daily problems (and Reddit of course.) Intros for FT stories come to me in the shower (TMI??) Deadlines are key. Give me a deadline and I'll give you some words. No deadline, no dice.

Hdonald892 karma

I completely agree about GDP being a crude model for modern societies. What can an ordinary (non-economist!) person do to help bring in a new system?

David_Pilling3 karma

Question the numbers you're given, realise that measurements are political. Educate yourslef. Oh - and buy my book :)

David_Pilling3 karma

Thanks for all the great questions. In case anyone is interested (and in the interests of my personal gdp per capita) here is a link to The Growth Delusion, out this week, on Amazon: https://www.amazon.co.uk/Growth-Delusion-Wealth-Well-Being-Nations/dp/1408893703

Attygalle1 karma

Hi David! Sorry, don't think I have a question related to (the topic of) your new book. Hope you like to answer on other subjects as well!

You're the FT's main man in Africa, right? I work in Asset Management and before that I worked for one of the world's biggest utility companies. In both jobs I see/saw it happen that we see opportunities in Africa, but ultimately decide against investing there for two main reasons: lack of infrastructure and political instability. When I was young and naïve I expected this to be a very temporary thing and was sure that Africa was going to be the next China/India. But in all those years (about 12 years now), I really don't see a change in this respect. This always fascinates me somehow. When talking about Africa, I exclude South Africa, BTW.

  1. Is Africa really hardly making any progress at all?
  2. What exactly is refraining Africa from entering the world stage as a "serious" player?
  3. Do you foresee a better future for Africa or will things remain the same in the short to medium run?

Thanks for answering!

[edit] typo

David_Pilling7 karma

Thanks for the question. It is related to my book by the way, which incidentally has a whole chapter on Africa. Here's a quick go:

  1. You're right that infrastructure in most African countries is lagging. (Remember there are 54 countries so it's dangerous to generalise.) It's related to GDP because by that measure some countries have been doing very well. Until the crash in oil prices, Nigeria and Angola in particular had been growing at spectacular rates. Angola at 10 per cent annually, year after year. But if you'd have looked at wealth accounts - which GDP doesn't measure - you'd have seen that, while natural assets (namely oil) was going down, there wasn't a compensating increase in produced assets (namely infrastructure) or in human capital (horrible term, but basically health and education, skills etc). So some form of wealth accounting - of the sort the World Bank is now working on - would have blown the whistle on the fact that all that growth wasn't what it was cracked up to be. GDP only gives you half the picture at best.
  2. These are very young countries, with borders that were drawn by colonialists with very little knowledge of realities on the ground. They were horribly exploited. When the British left Zambia there were only a handful of graduates in the whole country. So I don't think it is surprising that many countries have struggled. You can't blame everything on colonialism, of course. There has been some terrible leadership and lots of corruption too. But you do have to understand where most African states were coming from.
  3. There are many encouraging signs. Much of Africa today is doing far better than it was 20 or 30 years ago, on a variety of measures. There have been very few wars between African nations, there are fewer and fewer despots for life or coups and many African leaders are rejecting aid dependency and trying to build their own strategies. Developments in southern Africa in the past few months show just how much can happen: Mugabe, Dos Santos and Zuma all replaced (as party head) and at least the semblance of a new dawn. And growth rates - however imperfect that measure is - are pretty high in a number of African countries from Ivory Coast to Ethiopia. I think by some reckoning six of the top ten countries in the world in terms of gdp growth are in Africa. Though be warned: some of that is population growth. It always makes much more sense to look at GDP per capita!