Averages and Expectations

In our economic lives, we live and die by averages and expectations.  We follow stock markets by averages like the Dow-Jones, expect individual stocks to rise and fall based on whether their sales or profits meet some expectation, praise or deplore some figure like unemployment rate depending on whether it rises or falls according to expectations or meets some historical average, agree willingly to some extreme financial condition in the expectation it will increase GDP.  The facts that those averages reflect the life experience of millions of people or that the expectations describe the future life prospects of those millions seems to escape us.  The averages and expectations have assumed a life of their own, devoid of ties to humanity.  They form a layer that insulates us from the joys and traumas of the people in the world around us.

The Washington Post this morning reports an update from the World Bank of its expectations for the world economy, and the report is filled with satisfaction that economic growth in emerging countries has slowed to “a sustainable level.”  The U.S. economy is expected to grow by 2 percent (the Bank notes it would have been more but for the “fiscal tightening”), world trade to grow by 4 percent, energy prices to go down by 14 percent, developing world economies to grow by 6 percent. Interestingly, the sour spot in the world picture is that the EU economy, home of the great austerity exercise, is expected to contract by .6 percent, though Japan, which has just switched away from austerity, is experiencing a resurgence of growth.  U.S. and Japan use stimulus, EU uses austerity, hmm. The fact that developing nations growth of 6 percent is down from previous expectations of 9 percent is lauded as a sign of sustainable “stability without volatility.”  That the change reflects a one-third decline in the prospects for future prosperity of millions of people is ignored.  We don’t want to feed hungry people too much too fast; it might upset their banker’s digestive system.

For that of course is the issue buried in all those numbers.  Whose goals are being met by our economic policies?  If you are among the millions who have a hungry family to feed, you seek immediate relief, even at the prospect that at some future point but at a higher level of prosperity you may face economic problems.  It is the banker, not you, that gets indigestion at the “too rapid” improvement in your fortunes.  For to the banker, that rapid growth may threaten a lessening of profits.  It is natural that the World Bank, a financial institution after all, should have bankers’ values, but that should not satisfy the rest of us. Greece faces 27 percent unemployment, loss of much of its public services and loss of its national TV system, all at the behest of EU bankers and the IMF, even after the IMF has acknowledged publicly that austerity wasn’t working; Spain faces similar trauma; developing nations around the world face stunting of their growth; all this to satisfy financial averages and expectations.

We didn’t evolve from a medieval world ruled by kings and emperors just to become one ruled by bankers and CEOs.  But we have acquiesced in the growing reach of such rule by succumbing to the allure of their numbers.  We accept unthinkingly that the numbers being lauded are those expressing mainly the gains of a few, not of the many.  We forget that the bankers’ and CEOs’ profits are confined mostly to them, while the miseries of millions, and their outcomes in wars and famines and turmoil are shared among all of us.

The World Bank noted that regaining a developing world economic growth rate of 9 percent was difficult, but achievable through opening up international trade, investments in infrastructure and investments in “human capital”, i.e., such things as education and health care.  The same applies to the U.S. economy.  There is nothing wrong with seeking economic growth, but it should benefit all, not just the profits of a few.  A world divided between the very rich and the very poor is no longer viable.  We know too much about each other and are too easily reachable.  We need goals that satisfy the needs of all, and that involves going beyond financial averages alone.  The Happiness Index being developed internationally is one such measure that may satisfy our thirst for numbers in a humane way.  We need more.  And we need to remember that numbers are not people, and it is the betterment of our common humanity, not just our profit, that needs our attention.