Member’s Thoughts – The Measure of Prosperity

Geoff Naylor

Friday, 27 May 2016

Compass member Geoff Naylor asks how do we measure prosperity today?

The great misfortune of present day life is that we have forgotten the purpose of work and become confused by the pseudo-science of economics. Work should lead us to prosperity by following the simple rule of only doing what advances prosperity and eschewing what does not. But economics has led us astray into a complex maze of statistics where we fail to separate what we do from how we measure it, so that we have lost sight of the goal.

This, of course, begs the question: what is prosperity? Those of earth’s creatures that prosper take from the natural world just enough to sustain life and provide well-being and comfort, and so it could be with humans. We are also the most favoured of creatures, possessing the intelligence and ability to protect ourselves from the elements and control, to a limited extent, the adverse aspects of nature. But what about the adversity we create for ourselves?

One would think that in a country that was the first to industrialise, with a toiling workforce out of a population of over 60 million inhabitants, and with all the advances in technology and science in the last 200 years, that everyone in the UK would be living in prosperity by now; but homeless rough sleepers abound, increasing food bank necessity and payday lenders on every high street. Obviously, something is wrong. Could it be we have taken our eye off what we do and become focused instead on how we measure it?

Money is a measure of what we do. It has no intrinsic worth of its own but is simply a means of exchange, unit of account and store of value. Could it be we are valuing the things we do that hinder prosperity as equal to those that advance it? If this were true, would it not devalue the money we are using as the measure?
Let us take as an example: the arms trade. From a global perspective, consider for a moment the vast resources: human, material and financial, expended in their manufacture and subsequent use and then consider the outcome on people and the natural world. Is this an efficient use of all the resources used up? Does all this effort improve the life of anyone? No, quite the opposite, but most importantly the manufacturer’s balance sheet and the country’s gross national product state it does. We are measuring what we do to produce adversity as equal to that to produce prosperity.

In reality, because of the absence of any beneficial end result, the process of arms manufacture could be argued to be destroying existing wealth in the form of the resources consumed and to be devaluing the money we are using as the measure. If this were the case, would it not be a cause of price inflation in essential goods and services? A previously hidden explanation for the increasing cost of the necessities of life: those that sustain us and provide shelter and comfort – the historic purposes of work?

The cardinal reason for this situation, I suggest, is poor economic evaluation: a problem of deeming all we produce, and what people and governments are willing to buy, to be wealth creation and of positive value, even when some of it is contrary to the individual or common good and the furtherance of prosperity for everyone.

There is another serious aspect to this practice of assessing all production to be of positive value: taxation of harmful goods and services. Let us this time take as an example the tobacco trade and the argument often used by the pro-smoking lobby that smokers support public services through the tobacco taxes they pay.

If we accept the proposition that the production of things which are injurious to people should not be classed as wealth creation and of positive value because there is no advantage accruing to anyone from the use of the product, and, because there is no worthwhile outcome, the actual process of their manufacture destroys existing wealth, it is reasonable to conclude that one cannot tax tobacco products – there is nothing there of meaningful value to tax.

What is really happening is that governments are using the tax revenue from the sale of tobacco as a means – a currency conduit – to tax the real pool of wealth produced by beneficial activities elsewhere. Economists do not appear to understand that you cannot get good from bad: cannot fund beneficial public services from the taxation of harmful merchandise; governments do, but it is an illusion.

The tobacco and arms trades are only a part of an increasing global economic problem of what I maintain is negative production that adversely impacts on international currencies, living standards and the natural world; it is, in other words, a currency pollution, over which we have little or no control in the global economy we inhabit today.

The UK and other nations may choose to permit the manufacture of arms and tobacco products but, in my view, these and similar questionable endeavours should not be measured as a positive contribution to global wealth, as they clearly have no benefit for the bulk of humanity; but for as long as they are, it will delay the advent of universal prosperity.

 

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