Updating our Economic Model - Three Upgrades
GDP, Housing & Birth Rates
A major mistake we are making is having GDP growth a core goal and this a primary cause for excessive debt and our inability to stop. Instead, we should never make one metric a goal, but we should have a wider vision, and use a number of metrics to navigate towards that vision. It would also be advantageous to look at economic strength as a balance sheet, and to recognise human capital. This would show debts, and strength rather than just activity. It would incentivise investments in education, healthcare, and infrastructure, rather than how we reward "any spending" with GDP.
Land is no longer a factor of production. We are no longer in an agricultural economy. Land should be seen as essential infrastructure, like roads (basic needed for the operation of a society or enterprise.). These should not be profit maximised and we should instead seek to maximise consumer surplus for best benefits. It's like putting tolls on roads which raises costs for the whole economy and makes it uncompetitive (hence why it's far cheaper to outsource to Philippines). Cheap, workable, high quality infrastructure is an economic advantage.
The primary reason Birth rates are falling is because of unaffordability and limited housing, which is caused by GDP distortions - to protect the wealth of voters and maintain GDP. Carrying capacity (the biological concept) - as it has been proven in animals, humans consciously and unconsciously know on an instinctive level when we are nearing the limit of resources and will reproduce according to the resources in the environment. To expand beyond the limits of our resources is extremely dangerous for an individual and species and we have an innate biological mechanisms (and common sense) to stop it. Carrying capacity is something we perceive when housing is limited and / or there is little to no consumer surplus. Housing is essential and inelastic, and so with GDP as the goal, the price will continue to rise to the highest level, which is sucking out value from the productive economy. It is essential to maximise the consumer surplus of housing and make it as cheap as possible, so people feel they can expand again. But this is not in our economic model.
