GDP Measures Agency. Less Agency, Less Liberty.

The Gross Domestic Product, GDP, of a country in a year is the sum of all financial transactions in that country during that year… Measured in the local currency converted in US Dollars (which is roughly equivalent to the EUro). GDP is simple, all too simple, and thus has come under heavy criticism since it exists (including from yours truly). However, GDP measures WORLD AGENCY, it’s therefore an excellent first approximation (especially as agency, also known as war in its strongest form, makes a noticeable return in the collective psyche). Ignoring GDP means ignoring liberty, not just prosperity. Let me explain.

GDP measures transactions, not necessarily meaningful agency. A financial bubble, a traffic jam, burning natural gas in an oil field to get rid of it, speculative trading, or healthcare overbilling, and corruption in general, inflate GDP without necessarily increasing national competence or liberty… This is why I introduced the notion of AWE, Absolute Worth Energy.

Conversely, unpaid caregiving, scientific curiosity, volunteerism, or family support generate valuable humanism while remaining outside GDP. measurements So GDP is an imperfect measure of agency — though often the least bad large-scale metric available, as I will argue.

In a country such as France the national association budget is 35 billion Euros, more than the budget for high education and research combined. Such an expense is mostly outside of GDP: the association typically helps, but does not sell, so they are not GDP producers. This is certainly one of the reasons (there are also others contributing) why French GDP per capita used to be the same as in Switzerland fifty years ago, and is now half (there are also association budgets financed by French regions and cities, on top of the 35 billions). The idea was to create a socialist society where everybody would help everybody. 

In practice though this anti-GDP, anti-for profit economy, has just weakened France, preventing France from imposing her social, environmental or sovereign views on the rest of Europe. Now, increasingly, this starts to be understood in France (as it has been in Italy). As China has shown since Deng Xiaoping, the best way to do socialism is with a flourishing capitalist sector.

GDP is a measure of activity, in other words, agency, on a worldwide basis.Roughly, if a country has ten times the GDP, it can buy ten times more, sell ten times more and influence ten times more. 

Until the full-blown invasion of Ukraine, Europe decided to outlaw or discourage many practices which were viewed as non virtuous  from drilling for hydrocarbons (because that damages the environment) to state support for industrial champions (because that’s against free trade). Very high taxes against the middle class were supposed to redistribute income. The result was Putin’s invasion of Ukraine in 2014. When the Russian dictator saw that Europe was still keen to be increasingly impotent, he launched the march on Kyiv… In 2022. That finally woke up sleeping beauty Europe.

The result has been much less GDP growth in Europe than the USA or China and thus an ever greater dependency on both. Poverty has increased and now even the healthcare systems are becoming too expensive. Meanwhile Europe is desperate for capital and makes it so that plutocrats pay little tax. 

 

In the last couple of years, Europe has started to understand the importance of GDP better than in the preceding two decades. Reasons? Trump, Biden, Putin. Putin showed raw power worked until it didn’t because Biden pursued Trump’s policy of giving weapons to Ukraine (which Obama did NOT do, to his eternal contrition…) Biden also showed that Trump’s MAGA policy made sense economically and through tariffs…. Obama had started it to some extent, financing Tesla and SpaceX because Musk was photogenic like him?… And launching the “Pivot to Asia”… But with Obama it was mostly words… When Biden extended Trump’s tariff policies against China, the EU partly followed… Hence the overtaking…The UK is not in the graph above, although it should be, and would add roughly 5 trillion dollars to it to the EU yellow line…

***

When the Frankish generals saw the Roman state sink in theocratic terror, they saw, like many Romans embracing the ancient values, that this was not going to end well. Hence in particular the decision of Arbogast, Frank and Roman army chief, to side with Eugenius, school principal slected as emperor by the Senate. That did not end up well, because the Catholic fanatic Emperor Theodosius used the Goths (and corruption). In the next seventy-five years, the Roman state collapsed to the point only the Ostrogoths, Wisigoths, Burgonds and Franks were holding what was left up. The GDP collpased as the global economy did, and in many parts famine appeared and populations vanished. Mass production of daily items like pottery, wheat or drinkable water, disappeared. The lesson was not lost on the Franks, who constituted the successor regime (the only one viewed as part of official Roman power). For an economy to exist, one needed power. That is military power, otherwise AGENCY disappeared. Thus the Franks defeated all the other German invaders cum caretakers (Goths, Burgonds, Lombards, etc.). By 800 CE, the official one and single Roman emperor, Charlemagne had been crowned in Rome (with Constantinople’s unamused agreement).

Henceforth, Europe believed in agency and thus military power. China was more into Confucianism and Buddhism, two disastrous philsophies as far as agency was concerned (the enormous population growth was greatly caused by new rice cultivars doubling the yearly yields…). From the will to agency (hence GDP) grew a lot of superiority… And this is why China, following Japan, adopted the GDP/agency model from Europe… China had discovered the hard way, in the last 18 centuries, that:

“A civilization that refuses power eventually loses the ability to defend its values.”

Europe now has to learn that very old European lesson anew: no power, no agency, no values. Europe, know thyself! So up with GDP!

Patrice Ayme

#Agency #China #Economy #EU #Finance #GDP #MAGA #MEGA #NATO #politics #Russia #Trump #Ukraine #USA