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Eureka: A fireside chat on qualitative economics
by Joseph Gatt
2018-11-13 09:27:02
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A lot of times we evaluate economic progress by looking at quantitative indexes, such as GDP growth rates or unemployment rates. Some countries do rather well quantitatively, with high GDP growth rates and low unemployment rates and the like, yet always seem to imply that there's a recession or economic hardship in their country even when indicators seem to indicate that the economy is healthy and growing and that finances are in order.

So let's look at qualitative measures that make or break the economy.

Emotional factors

In China, Japan or South Korea, company floors tend to be so noisy that people may show up at work at 8 or 9 AM, they only really start working at 5 or 6 PM when the company floor starts emptying and that there is less noise. During the day, the noise of phones ringing, bosses scolding their employees, employees chatting, keyboards clicking, mouse’s clicking, people moving around etc. in offices where 20 or in some cases 30 people often share a single office space. This means people show up in the morning but only start getting their tasks done when everyone leaves and the office is less noisy. So if a Korean leaves work at 3 AM it is not because they were showered with work, but because they really started getting their task done around 7 PM.

ecpnpm001_400Emotional factors contributing to the economy is the general emotional well being of society. In the East Asian case, of course most people would rather have a personal office so they can quietly work on their tasks and leave work on time. In tribal or militarized societies, growth is valued over emotional well being and most leaders don't take emotional well being into account. Teachers don't take the emotional well being of their students into account, company leaders don't take the emotional well being of their employees into account.

How do you measure emotional well being? By asking questions on the overall life satisfaction in society. People who tend to be in control tend to be emotionally satisfied and tend to have high life satisfaction overall. People who have too many factors beyond their control tend to have low life satisfaction and emotional well being.

Personal factors

Again, the economy can show signs of health, but what is it about the personal state of individuals within society? Can they afford housing, healthcare and education? Can they afford transportation? Can they ensure stable income? Can they pursue the finer personal pleasures of life?

I've chatted with Middle Eastern politicians at length, and one narrative that seems to be absent from their mind is personal factors in the economy and society. That is the overall personal satisfaction of individuals. Housing policy in the Middle East for example does not take into account the fact that people need to live near their workplace, otherwise have to go through long commutes for work which creates monster traffic jams. Yet, in the Middle East, the priority is housing individuals rather than creating a flexible housing market that would enable individuals to minimize commuting time to their workplace.

One thing the Middle East does get right is that in a lot of companies, rather than getting the weekend off, a lot of employees are offered to work alternative shifts, that is work three days and get one day off. This enables employees to get days other than the weekend off, which enables them to take care of private business on weekdays, when in most countries people have to juggle their schedules so they can take care of private business on weekdays when they have to be at work.

East Asia again does not take personal factors into consideration, as employees are often forced to show up to work on weekends or otherwise have their personal schedules interrupted. In the meantime, pay and benefits often do not match the economic reality of the country, as many employees get pay that does not enable them to rent housing or start a family. Job security is not provided either, in countries where finding a job if you're not between 25 and 35 is almost impossible.

How do you measure personal satisfaction? You ask people what their life satisfaction is, and what it is they would like to change about their lives.

Organizational satisfaction

In life, you need a steady stream of income, and you need predictable organizational structures when it comes to bureaucracies. Some countries have rather predictable bureaucracies, while others tend to improvise when it comes to bureaucracy, leading to corruption, abuse of power, and denial of basic rights. When your boss refuses to sign those papers, he tends to be implying that you need to give them a generous bribe.

Regarding steady streams of income, in a lot of countries, if you're under 25 years old or over 35 years old, finding a stable job with decent pay will almost be impossible. In such countries job security laws tend to be strict, but that often means inefficiency at the company as people who made great first impressions during job interviews are often not up to the task.

Because careers are social tracks rather than individual tracks, and involve worker's place within any given company and society at large, companies tend to use this at their advantage. They want control over the social mobility of workers and will make life easy for some and harder for others. Race factors are often considered, along with credential factors and economic background factors. People from minorities, of modest economic or educational background, will often have their mobility frozen within a company, which does not enable career mobility, as other companies will consider that lack of mobility within their company of origin means they often won't hire them.

How do you measure organizational satisfaction? By asking people how they feel about their institutions, how satisfied they are, and what needs fixing.

Ability to get the tasks done

I mentioned East Asians who start working when everyone else leaves until they can get relative peace and quiet. What matters the most to a student is the ability to get his school tasks done, and what matters the most to employees is the ability to get their job tasks done.

Ability to get tasks done involve three factors: clarity of instructions, overall emotional and organizational stability and material means to get the tasks done. I've worked at companies where instructions were not clear, where emotional stability was not the norm, where the bureaucracy was monstrous, and where we did not have material means like working computers or space for archives to get the tasks done.

How do you measure the ability to get a task done? By asking people if they do their tasks with ease, and whether they have all the means to get their tasks done.

In sum, the GDP might grow and unemployment figures might be low, while financial indicators could be healthy, and human development indicators could be high, but the overall life satisfaction could be low. These qualitative indicators could help fix some of the qualitative satisfaction with life.

Now to some mistakes economists make:

-Mandatory retirement age: many people want retirement at all costs, and many would not work for an organization that provides good retirement benefits. While optional retirement is a good thing, mandatory retirement has unintended consequences. People who retire tend to suffer from boredom, loneliness, isolation, or otherwise engage in more risky health behavior as in smoking, drinking or taking risky trips abroad that leads their health to deteriorate very quickly. People, who seemingly had no health problems until they retired, suddenly start experiencing fragile health as they retire, when a job would have probably prevented such health complications.

-Minimum wage laws: the idea is low skill low pay, high skill high pay. What minimum wage laws do is inflate low skill wages, while they deflate high skill wages. This often means that people with higher skills have to settle for lower pay, while people with lower skills get higher pay, which leads to decreased quality in the tasks provided. Simply because those with high skills who don't get paid as much as they should tend to be deliberately sloppy with their work.

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