By John Cochran, from March 2014, includes “In a review of Diane Coyle’s GDP: A Brief but Affectionate History, aptly titled “Measuring the Unmeasurable,” James Grant highlights many of the difficulties involved in aggregate statistical attempts to measure economic activity. Grant summarizes critical problems in one succinct sentence, “Imagine deciding which nation produces what in a global supply chain. Or correcting price for quality improvements. The mind boggles.” And well the mind should boggle. Even worse than the measurement problems associated with GDP is the potential for misuse as in the most recent, but not the only, failed attempts to manage the economy with stimulus and other wrong-headed monetary and fiscal policies. An early opponent of statistical measurements of economic performance, as noted by Grant, was Sir John Cowperthwaite, Britain’s longtime financial secretary of Hong Kong whose introduction of free market economic policies are widely credited with turning postwar Hong Kong into a thriving global financial center. …”
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