Balneus

Australian Lefty on Politics, Governance, Science and Info Management

Rightsizing is better than Recession

Posted by Dave Bath on 2008-11-30


The "R" word discussed by politicians and pundits should not be "Recession" but "Rightsizing"

The finance sector needs rightsizing compared to the rest of the economy, as it grew from 10% of US corporate profits from mid-eighties to 40% in mid-noughties (source The Economist).

Appetites need rightsizing: the diabesity epidemic shows we consume far too much on average.

Executive pay, acquisitiveness, population, … rightsize them.

Mind you, to get rightsized compassion and intelligence, we’d all have to yell "supersize me" compared to current statistical norms.

The problem is that we have had no real discussion of what it means to rightsize the economy as a whole, and the relative sizes of the sectors that make up the economy.

Perhaps we should look not at metrics of economic activity such as GDP, but more at the results of economic activity for human welfare.  As outlined in If only Castro had run the world, not just Cuba (2007-3-11), similar results for health and education metrics have been achieved by Cubans on a pittance of the cash required by western economies for similar results (indeed, Cuba’s infant mortality figures are better than the USA!).

Let us give more thought to the indicators that should make up Gross National Happiness instead.  Personally, if my family has food in their bellies, roofs over their heads, the availability of decent health and education facilities, levels of stress that are not unhealthy, and can contribute useful work, then why should I care how much money is in the bank or whether I have the latest gizmos.

There are some advantages to political parties if they started such conversations, proposing balanced scorecards covering their agenda and what they hope for our society.  They might not be able to control the econometrics, but they can certainly focus on human outcomes and report on those.

This requires a change in what we want out of our economy.  "Rightsizing" might be exactly the same as a "Sea Change" – concentrating on the things that matter most.

The perfect time for changing our economy is now: as with everything, it’s far easier to change direction when you have slowed down.

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5 Responses to “Rightsizing is better than Recession”

  1. lonelypond said

    interesting

  2. The problem is that we have had no real discussion of what it means to rightsize the economy as a whole, and the relative sizes of the sectors that make up the economy.

    Just let the economy run freely. Don’t try to mess with it, or government tweak it to appeal to a special interest group, or prop up sectors that aren’t able to survive on their own merits. Then you’ll already have had your ‘discussion of what it means to rightsize the economy as a whole’!

  3. […] ike Sutcliffe’s comment to my first "rightsizing" post (2008-11-30) is worth a response in a separate post or two.[…]

  4. […] "Rightsizing is better than recession" (2008-11-30) talks of a corollary of increased nationalization, the policies allow us as a nation to escape the rat race, take a "Sea Change" […]

  5. […] Economic destruction is terrorismKrugman echoes in favor of nationalization « Balneus on Rightsizing is better than RecessionKrugman echoes in favor of nationalization « Balneus on Oz climate policy levers Jeffed by […]

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