Growth vs. Improvement

The term “growth” can take many meanings, and it’s often not well defined when used in broad contexts. However, when it’s employed in economic terms, this word usually has a specific meaning. A one-year Master’s program in Economics can be intensely demanding, and in the process has a way of modifying cognitive processes (independently of the sheer acquisition of knowledge). Today, I’m reflecting back on a time during the previous term in which I was lost for answers; or the answers I came up with at the time were not acceptable to me. The question that entered my consciousness, and refused to disappear, was, “when does growth stop; both economic and personal growth?”

This thought arose from my present set of challenges. Mentally and physically, I had the demoralizing sense that I had peaked and that I was approaching the beginning of the end. I felt limited in my ability to retain information at the same rate as I once was capable of, and although I had been consistent in my exercise and conditioning regimen, I felt that, at best, I had begun to plateau. Similarly, taking into account trends in globalization, demographic trends, wealth concentrations, and technological innovations, it seems natural for the global economy to eventually reach a static equilibrium in which net growth (in economic terms) should approach zero. Caught up in the rigorous mindset required to prepare for exams, I was thinking reductionistically, as economists often do.

The answers came to me from combination of two sources which academics knows little about: faith and time. This wisdom clarified for me that I had oversimplified my question as a result of reductionist thinking.  One of the biggest challenges people (including economists) face is how to ask the right questions. The right questions are usually not satisfied with the conventional answer. I realized, growth must be redefined. It should be defined, in the case of personal development, not as an index of IQ, memory, economic knowledge, one’s vertical leap, bench press, or 40-yard-dash; or, in the case of economic growth, GDP. These may be markers, but these markers have many limitations in the evaluation of a person or a society, on the whole.

One could name a multitude of other factors that should weigh into a comparative analysis of an individual or a society, other than the conventional measures. In the personal case, it’s essential to evaluate how one lives and treats others (personal flows in economic terms), rather than simply one’s mental, physical, or economic assets (personal stocks). Likewise, economic growth is only relevant in the context of what that “growth” means for members of a society across a plethora of dimensions for all of its citizens such as health, happiness, and social mobility. Also, classically defined “growth” is often accompanied by trade-offs and externalities, which is why I prefer a readjusted or discounted measure of growth in the evaluation process.

This week, as part of an appropriate tribute to the recent passing of the legendary Tarheel basketball coach, Dean Smith, Kenny Smith recited some wisdom he was given by Coach Smith, which I think punctuates more precisely how we should define this ever-present objective we call “growth”. Dean Smith said he doesn’t care so much about winning because sometimes when you win, you actually lose, and sometimes when you lose, you actually win; therefore the goal should be to improve. Improvement is an idea that we should always strive for. It implies only net gains; it has already factored externalities and trade-offs, as well as the present and future consequences. This logic is beautifully simple. On the economic and individual level, I prefer the analysis of improvement which, empirically, is a little bit more difficult to measure, but, by construction, yields better outcomes. So whether it’s economic development or personal human-capital development, I think we should redefine our thinking less in terms of the superficial – which at times can be more readily measured – and more in terms of Coach Smith’s concept of improvement.

Given the fact that we are in a capitalist society, we still do not want to overlook not only what a corporation produces and its profitability but also how it impacts the environment, touches human life and whether it protects or undermines the dignity of the human person.

— Dean Smith

(Image © Benjamin Anderson 2014)

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Small Blessings, Big Wonders

Every day I have woken up in the magical city of Barcelona, located in the extraordinary world that we call “earth”, I’ve felt brand new. Like a baby captivated by the ordinary, I am awed by small things that in aggregate create an existence that is inspiring beyond the limits of imagination. Whether it’s the cooling, gentle sea breeze that whispers through the elegant palms on my walk home, or the people and animals all frolicking harmoniously together in the park on a clear, Mediterranean fall day; I am reminded of all the blessing bestowed upon me. These blessings, big and small, amount to something wondrous.

When I see what many small things can become, I extrapolate that concept to my purpose and vision; I imagine what small daily achievements can make my long-term accomplishments spectacular. Perhaps this is why expectations are sometimes met, but other times, they are positively shattered. It’s good to set goals, but I refuse to subscribe to the belief that a goal is a limit.

Yesterday is gone. Tomorrow has not yet come. We have only today. Let us begin.

– Mother Teresa

(Image © Benjamin Anderson 2014)

Miscellaneous Happiness in Barça Life

Life in Barcelona can be as fast or as slow as you want it to be. Since classes have started, the pace for me has been more of the former. However, I do pause and appreciate throughout my day. With a mixture of big events and many elements of simple life all converging in the same city, people here are living their lives their way. Instead of chronicling a big event or major attraction, I’ll focus on detailing a few of the little things that allow me to slow down! Here are a few small miracles I appreciate the most:

  • The beckoning scent of croissant con xocolat wafting out of the bakeries during morning jogs,
  • the bursts of laughter among friends echoing up to the apartment from the neighborhood tapas bar at the corner of our pedestrian street,
  • the feel of the fresh, cool Mediterranean breeze coming off the water, ruffling through the palms in the park on the walk to class,
  • the energy and excitement of the children playing various games in Plaça Barceloneta well into the evening,
  • watching the diversity of people passing by from my favorite bench looking on to the beach; some exercising, some en route to a destination, and some with nothing to do at all,
  • the tranquility of the streets before the sun rises over the sea,
  • the resounding roar of the lions feeding in the zoo while I, too, eat my lunch in the campus courtyard,
  • the determination and energy of the countless runners, cyclists, basket-ballers, cross-trainers, skaters, roller-bladers, and walkers,
  • the glow of the moonlight over the sea as commission-less artists craft sandcastle masterpieces in the foreground while wind fills the sails of boats in the distance,
  • the looks of amazement from tourists as the emerge from the underground metros in perhaps their first view of the city.

These are just a few of the things that make life special. Perhaps this is also just a small list of reasons why people seem to enjoy their lives so much here, despite any negatives! In Barcelona, regardless of your preferences, it seems to be easy for people to find what makes them happy in this vibrant, diverse world.

Happiness is a virtue, not its reward.

– Baruch Spinoza

How to Achieve Enduring Innovation

Last week, as I treaded through the Prado museum on ailing feet — with the Thyssen-Bornemisza museum still ahead of me — I marveled at the deluge of treasures from different points in the evolution of modern history. These periods yielded innovations in art and technology drastically eclipsing the pace of generations immediately preceding. I began speculating about the exact set of conditions that fueled these “golden eras”, and how these conditions could be met globally to facilitate most conducive climate to another “enlightenment” period of great human advancement. Another leap forward would be significant to presumably produce technological and intellectual treasures enhancing the lives of future generations.

The set of conditions that seems like the most logical starting point (backed by historical cases), would undoubtedly include widespread access to and dissemination of information, knowledge, and education. On the historical timeline, we live in an age in which one could argue that there is already an abundance of free knowledge and information. It is also true that the world has made great strides in the global fight against poverty. BUT, what if, we consider the opportunity cost of poverty (both absolute poverty in the cases of undeveloped countries and relative poverty in the cases of wealthy countries)?

Improving educations and economic opportunities at all levels on the human development ladder would indisputably lead to new bounties of transferable knowledge and improvements, thereof. Educational and economic opportunities will make the global information markets more conducive to discovering and maximizing talents. Would the opportunity cost of fighting poverty include accelerated innovation in clean energy, efficient healthcare systems; or even more simply by stifling violence, environmental damage, and excessive population growth? Healthcare, for instance, even in the most advanced societies can benefit from merging the focus on extending lifespan with the concept of improving healthspan (optimal holistic health and wellness throughout one’s lifespan). Likely, future innovations would extend to areas unseen and benefit generations, as well as the global environment they’ll be living in.

Aside from the inherent altruism, fighting poverty makes artistic and scientific participation more inclusive by attacking asymmetries in information and knowledge. In our modern world of extreme capital wealth, such necessary investments in human development are possible to achieve! We have the tools to realize unprecedented innovative participation. Human and economic development can be both a means and an end!

You must let suffering speak, if you want to hear the truth.
― Cornel West

(Image © Benjamin Anderson 2014)

Economic Inequalities – Where to Start?

Entering my brush-up courses for graduate school in one week, I ponder the most pressing challenges for the future of a policy economist focused on development and more equitable economic opportunity for all. The (unsatisfactory) growth of human capital with relation to aggregate incomes and the distribution of personal incomes within and across societies plays an increasingly central role in political debates and the demands of citizens worldwide, as information improves global awareness of forces marginalizing the conditions of those with the lowest incomes.

I wrestle with what seems like an overlooked starting point to this issue. As a person born, raised, and educated in the developed world, isolated from extreme poverty, what is more critical – to focus on alleviation/elimination of extreme poverty that affects the developing world, or relative poverty that persists in the developed world alongside massive wealth? Will decimating relative poverty exacerbate the poverty plaguing the undeveloped world by contributing to a concentration of capital that creates a dichotomous world, similar to the growing inequality trends occurring within many of the world’s richest nations (in particular the U.S. case); or will a disproportionately large increase in the wealth and well-being of the relative poor create an economic climate of socially responsible globalism and development aid that fulfills the economic proverb preached by some since the dawn of the modern conservative economic era in the U.S., that “a rising tide lifts all boats”? Both ends have good intentions, but which produces the greatest net gain (measured in all indicators of quality of living)? In order to answer this question, both require carefully researched, coordinated, and executed policies to achieve the optimal effect. Both must holistically assess and measure costs and benefits, seen and unseen, such as:

  • Number of lives positively affected
  • The net effect on said lives
  • The magnitude and direction of effects on differential aspects of life
  • The marginal returns to improvement in factors contributing to quality of life stratified by the individuals’ and populations’ utility preferences
  • Risks of failures and implementation
  • Who is hurt in the short-run
  • What is the “breakeven point”, or the point at which people have opportunity for growth, a “foot on the ladder” of development, and development is sustainable with no further need of planned aid because people have the tools they need to grow
  • Might rich countries and multinational corporate powers perceive potential threats coming from new competition, and might this pose a political barrier to action
  • Might controversy and class “warfare” regarding relative power and influence somehow emerge as a result of more equitable societies; or other negative unforeseen consequences

Secondarily, but necessarily, the costs and benefits to the financiers/rich for investing what’s necessary to fight poverty must be accounted for. Theory would support a long-run gain for those investing the capital – opening and expanding new markets and bolstering demand – via empowering growth.

These are complex issues, not to be oversimplified, and necessitating analysis by multiple disciplinary perspectives working together; not to mention political cooperation and united, competent implementation. Truthfully, I think some of these questions are beyond the capabilities of human understanding, and are much deeper and more significant. What is certain is that love is at the roots of the solution. What is also certain is we must not simply pontificate, but we must labor to understand and analyze in the most efficient way we know how. We must utilize and build upon the academic arsenal available to take on these challenges.

Laziness, selfishness, and apathy are the enemy of the fight against poverty and severe inequalities in capital. Unfortunately, these traits are part of human nature and a significant component of the inertia of the rich world today. How can one begin to tackle problems so complex and with innumerable interrelated drivers? Most importantly, we must act! Bring on the books, and bring it on, world!

Social distinctions can be based only on common utility.

– Declaration of the Rights of Man and the Citizen, article 1, 1789

(written 8/24/14; image © Benjamin Anderson 2014)

Carpe Diem

After recovering from my initial jetlag, I have been riding an extreme adrenaline rush. I suppose my new surroundings and the endless opportunities to discover new things are impossible to moderate. So that’s why I’m writing at 5 in the morning. Despite my apparent endless amount of energy, I still wonder how I can achieve everything that I want to do. I often get this feeling with respect to my daily plans, but I frequently address my life goals and get the same feeling. C’est la vie.

There are a couple of things I have to do today including registering with the Spanish government, stopping by to check out options for phone providers, shopping for a few necessities for the apartment, and update my budget. Beyond that, I want to exercise, eat well, marvel at the Gracia festival, take pictures, write, explore my neighborhood and district, read from some of the many economics books I am so far behind my goal on, shop for gym memberships, and study the prep materials for my graduate program. I’m sure there will be other things too, but there won’t be time for them all. My only consolation is that I believe that the only way you can actually waste time is by trying to worry outside of the moment. By staying in the moment you succeed, at least, by taking some action. When action is taken often enough, we become more efficient at making choices that benefit us and we learn valuable lessons even when we don’t intend to. Carpe Diem!

What destiny does not do is home visits. You have to go for it.
― Carlos Ruiz Zafón, The Shadow of the Wind

(written 8/21/14; image © Benjamin Anderson 2014)