When discussing economic prosperity, the conversation often revolves around 'how much' we're spending. The familiar Gross Domestic Product (GDP) metrics, employment rates, and consumer spending dominate the discourse. But, in this sea of numbers and percentages, are we missing a crucial question - 'What' are we spending on? In our quest for economic growth, we shift our focus from quantity to quality, from the volume of spending to its direction and impact.
This idea is not just about counting dollars but making those dollars count. It's about investing in initiatives that increase economic capacity and efficiency, such as infrastructure, education, and innovation. It's about recognizing and addressing the presence of 'BS jobs' that add little to our economic resilience, or to our joy of life. It's about building an economy that's not just bigger but better - more robust, sustainable, and better prepared for the future.
Understanding the Current Economic Perspective
At its core, mainstream economic thought is governed by the principle that 'more is better.' This belief posits that the sheer volume of economic activity predominantly measures the financial health of a nation. Whether it's increased consumer spending, more significant investments, or expanded government spending, the assumption is that these factors will inevitably lead to economic growth. The focus is on boosting these numbers, where the more money circulates, the healthier the economy is perceived to be.
Yet, the implications of this approach run more profound than merely guiding economic thought. They have a profound influence on policy-making. When the central premise is to spur spending, policy measures are naturally aligned to stimulate consumption. We see this in reducing interest rates to encourage borrowing, offering tax breaks to spur business investments, or implementing stimulus packages to boost consumer spending. On the surface, these actions seem to keep the economic machinery running, fueling a cycle of expenditure that propels the nation toward growth.
While mainstream economics celebrates a boost in consumer spending or investment, it often overlooks where these funds are directed. However, this approach also raises critical and ethical questions about the nature of our economic activities. Are we buying more goods and services that will be consumed and forgotten, or are we investing in assets that will provide value for years? Are we creating jobs that merely look good on paper, or are we fostering roles that enhance our productivity and resilience as an economy? Unfortunately, pursuing more significant numbers and the race toward higher GDP figures often overshadow these questions.
The Problem with the Mainstream Approach
The term 'BS jobs' was coined by anthropologist David Graeber to denote jobs that even the people doing them believe to be pointless. These are not jobs that produce goods or provide vital services; instead, they involve bureaucratic or administrative tasks that create the illusion of productivity. They are roles that could be eliminated without significantly impacting the organization or the broader economy.
Take, for instance, the layers of middle management in some corporations, where the role often revolves around generating reports, attending meetings, or supervising people whose jobs are equally unproductive. It becomes a cycle where productivity is measured not by tangible output but by the quantity of paper shuffled, emails sent, and meetings attended. Similarly, consider the legions of consultants employed to find efficiencies or develop strategies when often their suggestions are disregarded or their work only adds another layer of complexity to an already overburdened system.
Another example lies in the realm of financial services. Many jobs are dedicated to creating and trading complex financial instruments, which might boost financial industry profits, but do little to increase the overall economic capacity or productivity. These roles contribute to financialization, a process where the finance sector becomes increasingly dominant in the economy, often at the expense of the real productive sectors.
Similarly, think about jobs in telemarketing or roles associated with aggressive sales strategies. These jobs often prioritize profit over customer benefit, leading to a focus on selling as much as possible rather than enhancing customer value or societal wellbeing. In the broader picture, this doesn't increase the overall economic efficiency but shifts money around without creating real value.
While these roles may contribute to GDP figures and employment rates, they don't necessarily drive meaningful economic growth or enhance our economic capacity. We're simply pouring money into a system without questioning what it's accomplishing — and this is where a fundamental shift in our financial perspective is genuinely and urgently required.
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A Needed Shift in Economic Analysis
There's an emerging thought in the field of economics that suggests we need to rethink our approach. This perspective champions the idea that it's not solely about 'how much' we spend but critically 'what' we spend on. The emphasis here is on the purpose and impact of spending rather than merely the volume. It urges us to look beyond the dollar amount and pay attention to where that dollar goes and what it does for our economy. Does it feed into a system of redundant jobs and wasteful consumption, or does it enhance our long-term economic capacity?
Imagine a scenario where our dollars were directed towards areas that actively expand our economic capacity and improve efficiency. Consider, for instance, investments in infrastructure. Building better roads, improving public transport, or enhancing digital connectivity doesn't just create jobs in the short term; it boosts our productivity and efficiency in the long run. Similarly, investing in education equips our workforce with skills needed for future industries, ensuring our economy remains competitive. Funds directed towards research and development can lead to innovations that open up new markets and opportunities, setting the stage for robust, sustained economic growth.
The idea here is simple and logical: if we strategically channel our resources towards areas that enhance our economic capabilities, we lay the foundation for a resilient and efficient economy. It's akin to planting a seed and nurturing a tree that bears fruits year after year, instead of purchasing fruit from the market every day. Therefore, this shift in economic analysis calls for us to think long-term, strategically leveraging our spending today to ensure a prosperous and sustainable financial future.
The Impact on Economic Capacity
It's essential to clarify what we mean by 'economic capacity.' It refers to our economy's potential to produce goods and services. The higher the economic capacity, the more we can make using our resources — labor, capital, technology, and more. But this isn't a static number. Various factors, including the state of our infrastructure, the skillset of our workforce, and the extent of our technological innovation, influence it.
Think about infrastructure, for instance. Goods and services can be produced and delivered more efficiently with well-maintained roads, efficient public transportation, a reliable energy supply, and robust digital networks. Businesses operate more smoothly, workers commute more efficiently, and information flows faster. Similarly, a skilled workforce is essential for maintaining and enhancing our productive capacity. When well-educated and trained, workers can adapt to changing economic needs and contribute to high-value sectors like technology and engineering. Technological innovation can unlock new ways of producing goods and services, opening up new markets and enabling us to do more with less.
Now, let's imagine redirecting our spending toward these capacity-enhancing sectors. Instead of fuelling short-term consumption, what if our dollars were invested in improving our infrastructure, upskilling our workforce, and fostering innovation? This shift wouldn't just enhance our capacity in the short term but increase our ability to produce more efficiently over the long run. It's about turning the wheels smarter, not just harder. That's the heart of economic efficiency — maximizing output with minor input. And in the grand scheme, this will lead to sustainable, long-term economic prosperity.
Quality vs. Quantity in Spending
Germany offers a prime example of strategic economic spending. Renowned for its high-quality infrastructure, the country has consistently invested in transport, energy, and digital networks. Moreover, the dual system of Germany's outstanding vocational education and training system is deeply integrated into their labor market, ensuring a steady stream of skilled workers for their industries. This focus on infrastructure and vocational training has led to a solid industrial base and a skilled workforce. As a result, the German economy is often noted for its resilience and efficiency, withstanding global economic shocks better than many of its counterparts.
Japan also provides valuable insights. While having limited natural resources, Japan has become an economic powerhouse thanks partly to substantial investments in sectors like technology, manufacturing, and education. Like Germany, Japan has a tradition of focusing on quality infrastructure and human capital development. The strategy underscores the importance of enhancing economic capacity and productivity through quality spending rather than merely increasing the volume of the expenditure.
On the contrary, consider the case of Spain and its housing bubble in the early 2000s. Much spending was poured into real estate development, resulting in a construction boom. But when the bubble burst, it left behind a wave of economic volatility, job losses, and ghosttowns of unsold homes. This is a stark reminder of the potential pitfalls of an economic focus centered mainly on boosting consumption and investment without enough regard for long-term productivity and capacity.
With its infamous 'ghost cities,' China presents another cautionary tale. Over the past few decades, massive infrastructure and real estate projects have driven much of China's economic growth. While some of these projects have contributed to economic development, others — often termed 'white elephants' — have resulted in underused or completely vacant cities. This suggests that even large-scale investment can lead to inefficiencies and economic waste without a strategic focus on spending quality.
Lastly, let's look at Greece, which experienced a severe economic crisis starting in 2009. One of the factors contributing to the problem was excessive public spending, including on large-scale projects like the 2004 Athens Olympics, which later turned into underused facilities. Furthermore, Greece's public sector was characterized by inefficiencies and a bloated bureaucracy — a classic case of 'BS jobs.' As a result, despite high spending levels, Greece faced significant economic challenges, highlighting the importance of spending towards productivity-enhancing capacity-building areas.
These cases underline the central argument: it's not just about 'how much,' but 'what.' Strategic quality spending can lead to more robust and more efficient economies. In contrast, an exclusive focus on boosting spending without considering its direction and impact can result in economic volatility and waste.
Where the US Comes Up Short
The US may be the wealthiest country, for now, but much of its efforts have gone up in smoke or down the proverbial rat hole. Who can forget the last 20 years, where trillions of dollars were wasted in Iraq and Afghanistan, and neither the Iraqis, Afghans, nor Americans are better off? And what about the trillions in tax cuts to the wealthiest who absconded to international tax havens or pissed away their money on grossly high-priced artwork, homes, jet planes, mammoth boats, and other self-indulgent playthings? All the while leaving the bottom 50% scrambling for their promised American Dream.
Here's what the money should be spent on:
Infrastructure: The American Society of Civil Engineers gave US infrastructure a C- grade in their 2021 report. Despite spending significant sums on infrastructure, the focus often falls on constructing new projects rather than maintaining and upgrading existing structures for long-term efficiency.
Healthcare: The US spends significantly more per person on healthcare than any other country, yet health outcomes such as life expectancy and rates of chronic diseases are not proportionally better. This suggests that the spending is not translating effectively into quality healthcare for all.
Education: Despite being among the top spenders on education per student, the US often falls behind other developed countries in mathematics, reading, and science. More money is spent on the system, but the outcomes do not reflect equivalent quality.
Defense: The US military budget is the largest in the world, often prioritizing quantity regarding hardware, weaponry, and worldwide military bases. Critics argue that a more quality-focused approach could include better support for military personnel and veterans and more strategic investment in diplomacy, conflict prevention and conflict resolution.
Inefficient Government Programs: There are several examples of government programs, both at the federal and state level, where large amounts of money are spent, but the returns are not commensurate with the investment. Examples include wasteful spending in large procurement contracts, poorly planned IT projects, and other bureaucratic inefficiencies.
Prison System: The US has the highest incarceration rate in the world and spends a significant amount on maintaining this system. However, high recidivism rates indicate that spending is not effectively contributing to rehabilitation and societal reintegration which would be a more qualitative use of resources.
Agricultural Subsidies: The US spends billions yearly on agricultural subsidies, much of which goes to large agribusiness rather than small farmers. These subsidies often encourage the overproduction of certain crops like corn, wheat, and soy rather than a more diverse, sustainable, and nutritionally varied agricultural output. These subsidies are not only unnecessary, but the over-consumption of these food items ends up adding to our health care costs.
Fossil Fuel Subsidies: Despite the growing urgency of transitioning to clean energy, the US spends billions annually subsidizing the fossil fuel industry. This perpetuates reliance on unsustainable pollution-creating energy sources rather than investing qualitatively in renewable and clean energy infrastructure.
Housing Market: The US government provides considerable tax benefits and subsidies to the housing market. Yet, these policies often incentivize expensive, larger homes, contributing to urban sprawl and inefficient use of resources instead of more sustainable, affordable housing options.
Highway-Dependent Transportation: The US often prioritized building and maintaining highways, promoting a car-dependent culture. Despite the considerable spending, this approach has often overlooked more sustainable, efficient, and high-quality public transportation options. This results in problems like congestion, environmental damage, and the exclusion of those who cannot afford personal vehicles.
The Roadblocks to Change
Given the compelling case for a shift in economic focus, one might wonder why this transformation hasn't taken root yet. The reasons are multifold, each as complex as the problem at hand. One of the most prominent reasons is the relative ease of measuring 'how much' over 'what.' Quantity is tangible; it's easier to quantify the number of goods produced, the volume of sales made, or the number of jobs created. It's straightforward to calculate GDP or track employment rates. Policymakers and economists can conveniently wrap these numbers in a report and present them as indicators of economic health.
Quality, on the other hand, is a more elusive concept. Measuring quality involves dealing with uncertainties and complexities, making it more challenging for those accustomed to exact figures and immediate results. How does one assess the value of an investment in infrastructure versus a spending boost in consumption? How do we weigh the potential of funding education against a short-term employment drive? These assessments require a more nuanced understanding and involve judgments about potential, future outcomes, and societal impact.
Another critical roadblock lies in the inertia of established interests and systems that benefit from the status quo. Businesses built on consumption-driven models, industries revolving around 'BS jobs,' or political agendas tied to immediate economic numbers might resist change threatening their primary interests. Consider, for example, industries relying heavily on consumption patterns, like fast fashion. Shifting focus towards more sustainable, quality-oriented spending might disrupt their business models. Similarly, sectors riddled with 'BS jobs' might resist attempts to streamline processes and eliminate inefficiencies.
Change, as we know, is seldom easy. The shift from quantity to quality in economic focus involves embracing complexity and uncertainty, confronting entrenched interests, and perhaps even radically redesigning our financial systems. But as the saying goes, "the best solutions are rarely the easiest." To create a resilient, efficient, and sustainable economy, we must muster the courage to question the status quo, navigate the complexities, and step up to the challenge. The health and sustainability of our economy — and indeed, our future — depend on it.
Steps Towards Implementing the Proposed Shift
While the challenges may be daunting, the task is far from impossible. There are concrete steps we can take to foster this shift in perspective and bring about a quality-focused economic system. The first step lies in policy. Governments play a pivotal role in shaping the economic landscape, and they can lead the charge by enacting policies that encourage strategic investments. For instance, they could prioritize funding for infrastructure projects, not just for repairing bridges and roads, but for future-proofing our societies with digital infrastructure, clean energy systems, and efficient public transport. Similarly, they could invest in education, particularly in areas critical for the future, such as technology, science, and environmental sustainability.
Companies should be incentivized to focus on long-term productivity and sustainability rather than short-term gains. One way to achieve this is through tax incentives for research and development or subsidies for industries contributing to sustainable economic capacity. For example, a company investing in automation technology that could improve its efficiency and competitiveness might be eligible for tax breaks. Likewise, a firm that provides training programs to upskill its workers, equipping them with skills necessary for future industries, could receive subsidies. These incentives would encourage businesses to view spending as an investment in their future productivity rather than a cost to be minimized in the short term.
A Final Thought
Quality spending is not just about investing in big-ticket items like infrastructure and education. It is also about investing in the people who make up our economy. This includes providing access to quality healthcare, affordable housing, and a safe and supportive environment. Investing in the people and the planet can create an economy that works for everyone, not just the wealthy few. And by investing in our economy today, we can build a stronger and more prosperous future for ourselves and our children.
The shift from quantity to quality in economic focus is a necessary one. It will require us to think differently, challenging established norms and embracing the complexity of financial systems. But with strategic policy measures, business incentives, and public education, I believe we can make this shift happen.
Lastly, the shift toward quality-focused economic analysis will require the concerted effort of economists, policymakers, thought leaders, and educators. They must advocate for this new perspective, emphasizing the need for a long-term vision over short-term statistical gains. Economists can conduct research highlighting the long-term benefits of quality spending, and policymakers can enact legislation to promote it. Thought leaders can use their platforms to generate discussion and shift public opinion, while educators can integrate this perspective into their curriculums, shaping the economic thought leaders of tomorrow.
About the Author
Robert Jennings is co-publisher of InnerSelf.com with his wife Marie T Russell. He attended the University of Florida, Southern Technical Institute, and the University of Central Florida with studies in real estate, urban development, finance, architectural engineering, and elementary education. He was a member of the US Marine Corps and The US Army having commanded a field artillery battery in Germany. He worked in real estate finance, construction and development for 25 years before starting InnerSelf.com in 1996.
InnerSelf is dedicated to sharing information that allows people to make educated and insightful choices in their personal life, for the good of the commons, and for the well-being of the planet. InnerSelf Magazine is in its 30+year of publication in either print (1984-1995) or online as InnerSelf.com. Please support our work.
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