Wednesday, November 11, 2009

Economic Indicators of Recovery and the Reality on the Ground

Joseph Stiglitz provided the following quote in a recent interview:
"Very clearly things are better than they were a year ago. We have pulled back from the precipice. But in a meaningful sense the global slowdown is in sight. Economists refer to crisis in terms of a series of quarters of negative growth. But for most citizens the recession means [whether] they can get a job. For homeowners it means whether there is equity in their home, whether its prices go down 10-20-30-40 percent, for business it is whether they can sell the goods that they have the capacity to produce. In these perspectives the recession is not over, and in many respects, particularly in employment, it might get worse.

For the US the official unemployment rate is 9.8 percent,
but the broader unemployment rate shows that one out of 6 Americans cannot get a full-time job. The broader rate calculation includes discouraged workers, workers who have stopped looking for a job but are not employed and those who accept a part-time job because there is not a full-time job available. There are hundreds of people who have applied for disability pay who would be working if they could get a job. It’s true that the labour market situation in America is worse than at the outset and from this point of view the recession is going on. "
Stiglitz highlights a key point related to the inconsistency between reports of economic recovery and the reality experienced by citizens in our community. I've been increasingly reflecting on the idea that even when people are employed, seldom are they able to be as productive in their employed position as their inherent training/capacity allows them to be.

For example, a friend of mine was recently evicted from his home because he hasn't been able to pay rent for a number of consecutive months. He was working a security job at a construction site for a while, but as construction slowed down, there was no reason for his employers to keep him around. This same friend was providing wonderful services to his neighbors and other community members whenever he could. He would mentor kids that lived on his street, show them how to cook, cook food for his roommates, etc. Every day, he would go out to look for a job - any job - and would often find himself doing some sort of landscaping work just to have enough to get by at the end of the day.

I kept thinking to myself, this man is highly capable of being productive either as a chef, landscaper, construction worker, daycare worker, etc. His only shortcoming, if it can be called that, was that he was unable to figure out how to be productive within the context of the market dynamics in Durham and did not have the start-up capital to pursue an entrepreneurial career. There are no structures in place that would allow him the necessary insurance/security blanket to pursue an entrepreneurial passion, which would allow him to be far more productive than he would be with any job.

This scenario plays itself out in less dramatic fashion for far too many individuals in society. I feel that much of this stems from the inclination for many people to think of labor as a commodity rather than a necessary component of human civilization. What I mean by this is that our indicators for success (GDP, financial indices, etc.), as mentioned by Stiglitz, do not direct us to make policy decisions in a manner that recognizes the dignity of the human station and acknowledges the unique talents and capacities that individuals possess. There are a couple related questions I will think about as I continue my daily reflections:

  • How would economic policy be shaped if ability to work was a right that we would incorporate into social reality?
  • What sorts of indicators (other than poverty levels and unemployment) can we use to demonstrate economic success? How would micro-indicators differ from macro-indicators? How would they be able to indicate worker satisfaction vs. worker discouragement? Would this be akin to saying that the worker feels as though he/she finds purpose and stability in work?

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