Date: 2024-12-21 Page is: DBtxt003.php txt00022895
MONEY
AN UNACCEPTABLLE ECONOMIC UNIT OF MEASURE
Money is a useful medium of exchange ... but a rotten unit of measure !!!!
AN UNACCEPTABLLE ECONOMIC UNIT OF MEASURE
Money is a useful medium of exchange ... but a rotten unit of measure !!!!
Peter Burgess COMMENTARY
The idea that money ... the US dollar ... is used as the core unit of measure in economics is, essentially, insane.
In most disciplines and unit of measure is characterised by its uniform size over time. Take the unit of length ... the measure does not change over time, though the way it is talked about may change, and the pricision may be improved over time, but the length itself stays the same !!!!!!!!
However, look at the size of the US dollar over time ... or any other currency, for that matter.
Something better is needed ... and though little progress has been made to that end .......
There has been a widely accepted economic policy that it is 'good' to have 'inflation' at around 2% per year. I have no idea what basis there is for this ... but it seems to be the conventional wisdom, or ignorance.
The 'unit of measure' for distance or length does not change over time ... though it does get more precise and different approaches to measurement have been developed over time to deliver more precision. A meter has a constant length no matter what and the manner in which its length is standardised.
Not so with money as a measure. It changes in 'value' depending on the economic conditions of the time, and in the case of the US dollar, its value in terms of 'buying power' has dropped signficantly over time as shown by the image above !!!!!!!
It is no surprise that using money as a measure of economic performance and social performance and environmental performance has not been successful. But that does not lessen the importance of finding a way to measure and report progress and performance in all the dimensions of the socio-enviro-economic system that we all inhabit.
While my thinking on this subject is still a 'work-in-progress', the use of three separate indices may be the way to measure social, environmental and economic progress in a way that is useful for each segment, and at the same time consistent in some useful way between the three segments.
Each of these indices should be related in some way with the totality of what is possible for all of planet earth. This idea has something in common with the way in which the unit of length ... the meter ... was established at is inception as a fixed fraction of the circumference of the earth!
A lot more on this to come .................
Peter Burgess