DRAFT

Chapter 1
Systematical Accuracy vs. Theoretical Accuracy: a look at documented cause and effect of indicators

Economic indicators are statistics about the economy that allow analysis of economic performance and the shaping of management and policy making. The noticeable importance of an economic indicator is that it has the power to shape future policies. Thus, we would hope that the economic indicator is as accurate as can be. Quite the contrary, the means as to how and what the indicator develops and measures can theoretically be analyzed as accurate standard guidelines. Depending on what theoretical background is being considered, these guidelines can be helpful or systematically inaccurate.
Economic indicators are created under a set of rules and characteristics. Typical characteristics are: specificity, measurability, usability, sensitivity, availability and cost effectiveness. Specificity means that the economic indicator must clearly relate to outcomes that are being sought. Measurability refers to the numerical aspect of the indicator. In other words, it must be a quantitative value. Usability of the indicator says that it must have and provide help or usage in terms of guiding management and/or policy. It Usability must change as circumstances change; it must be sensitive to change. Availability implies that it must be a relatively easy and obvious task to collect the necessary data for the indicator, no matter the type of data. The most confusing characteristic is the cost effective characteristic. This portrayssuggests that an economic indicator should not be expensive to obtain.[1]
More in depth, one of the goals of this research was to exploit these simplified characteristics. The act of creating an indicator under these characteristics lies on the governmental need for a standard. Bureaus and other governmental departments often assume an indicator can be applied anywhere around the world where there is a common situation that needs an indicator to produce change and outcome. The governmental institutions produce a standard indicator so they can easily compare and contrast world happenings. This procedure is cheap and makes the information available, specific, measurable, and usable; thus, making it ideal for a governmental indicator analysis department.
An indicator is there to indicate progression and problems. With this in mind, we can notice that indicators tend to leave out a few expensive values. Expensive data tends to fall under the category of specific and time consuming research. Current neoliberal influence on indicators relies on data within the market. The market as far as consumption and commodity is concerned. In other words, the questionable systematic approach to the accuracy of data does not count things like women’s work or peasant economic activity. Basically, the system manipulates information to get it to measure what they need to be measured, if something is worthy of being counted but is too hard and expensive to research then it is left out.
A specific example is Gross Domestic Product; which measures: GDP = consumption + investment + government spending + (exports − imports). The assumption is not that the data is false or invalid but rather systematically inclined. Currently, GDP measures commodities exchanged in the market. Neoliberal or mainstream economics values all that is counted within the GDP equation. Even though other theoretical economical approaches value certain aspects of the equation, they still view the indicator as questionable. Such ideas come from those economists who are interested in the workers or development, a.k.a Marxists and post-colonial economists. These economists want a better measure of well-being.
The Human Development Index (HDI) is a comparative measure of life expectancy, literacy, education, and standards of living for courntries worldwide. The number one argument with this index is the western influence of standards. The world needs a base line to work towards development, so the colonial powers were able to define that standard. The problem of inaccuracy here is that each country needs separate and specific data that pertains to the country’s region, not a world wide floor model.
The HDI has provided a standard means of measuring well-being. It is used to distinguish whether the country is a developed, a developing, or an under developed country, and also to measure the impact of economic policies on quality of life.[2] In other words, it is used to distinguish the Millennium Development Goals, which were instated to improve well-being for the poor. The question then arises, is the systematic accuracy that dominates today’s policy a true measurement of what is needed? It has been argued many times in this research, that some economists value what is being counted, yet there is a need for expansion.
Let us get specific again with GDP, the purchasing power parity. Basically, the PPP is factoring in exchange rates. The PPP says that the price of a commodity should be identical irrespective of where in the world it is sold.[3] This is significant to GDP, because if prices are higher in one country relative to another, then the higher prices will generate a higher GDP. [4] With economic development under the mainstream influence, the higher a country’s GDP is the more help and support they receive. So, the original equation of GDP can be manipulated by price increases or decreases.
What use is GDP as an international indicator for the MDG’s performance if $1 buys a different quantity of a good across different countries? This is a good example of a standard measurement. The current equation of GDP allows a standard to be imposed on the world, so it is easier and more accessible to analyze economic development.
Note another problem that arises is time intervals of measurement, given that all countries suffer an element of inflation. (Maddison, 1983) As Morse explains it, the prices of goods tend to increase with time, though slower in some countries than others. When looking at GDP based on expenditure one can get an increase in GDP purely by increasing the price of goods and not the quantity being traded. Again, the higher the GDP for a country the better-off they are. Are the leading countries really more advanced or are the numbers systematically accurate to show that they are?
The quality of data upon which a calculation is based is perhaps not given the attention that it should receive. Poor quality inputs can give an unreliable output. With this output it is obliging at times to accept the figures at face value and not question the accuracy of the calculation. If GDP is higher then economic development is higher, which is the goal for all countries, according to the neoliberal model we live under. The more economic development you achieve the more aid and support you get internationally. Note that it is not being said that coordinators are surpassing this lack of quality; it simply has not received enough consideration, though the World Bank and the United Nations have listed this as a concern.[5]
The question at this point in the research is who defines these characteristics of indicators and who decides what should and should not be counted? The actual coordinators of data are organizations such as the World Bank, the World Trade Organization, European Union, etc. Indicators reflect the people who create and use them.
In light of this class, economic development itself is the originating cause of inequality with in indicators. Looking further into post-colonial economic theory, economic development was a concept that had arisen after WWII by powerful countries. Economic development is shaped by the indicators that verify there is a need for change. So, the foundation of indicators was based off of the powerful countries that geared change. Such happenings can be seen in the MDGs. The United States CIA provides 65 percent of the indicators,[6] I estimate about 10 percent of that 65 percent are direct features and reasoning for the goals. Post-colonial theory says that the overall concept of indicators was based on colonial dictation. Colonial powers implied this school of development; therefore indicators are influenced by colonial powers that exist in this post-colonial society, bringing to the table our next topic of discussion, the quality of data.[7]
We can apply a few economic theories to this situation. Post-colonial theory hinders on the presumption that the “who” are the colonial powers that shaped policy and managed development after World War II.[8] Feminist theory sees the “who” as a person of the influence in male dominancy.[9] Another theory, Marxism, points to the “who” as being the capitalist or someone who acts in the interest of a capitalist. This entails that the capitalist or the person with the power of means of production is suppressing the worker through these regulations. With these theories in mind we can conjure that the “who” is not recognized or considered in the analysis of current economic indicators. This creates a contradiction.
It is not being argued that economic indicators are completely miscalculated. The indicators do not accurately and fully measure what they are trying to represent. The use of economic indicators is vastly relied on to explain management and policy incentive. Ergo, if the goal is accuracy and future prediction then economic indicators must be the place to start.
So, what happens if these future predictions are not theoretically accurate? Suppose that the government was under the pretense that the economy will be booming in six months, and this announcement was based on false data. Oh and Waldman revamped a series of leading economic indicators to test this hypothesis that such an announcement would have a positive effect on future activity. According to Oh and Waldman, during the time period 1976-1988 the expected shocks measured by economic indicator revisions explain over twenty percent of the fluctuation in the quarterly growth rate of industrial production.[10] So, if the government followed this idea of implying more specific economic indicators, which is what Oh and Waldman did, then future predictions would be more accurate and timely evident.
Overall, economic indicators spell out future policy making, which directly affects each human that lives under those policies. Therefore, economic indicators should not be composed to create a universal standard of measurement but rather a nonstandard set of data that exhibits the actual happenings. As shown earlier, we can analyze why we have such limitations with in the economic sector of indicators. Theoretically, what is being counted depends on who controls the values calculated.


Chapter 2
The Application of Projects that are Based Off of Indicators

With the knowledge of my position, we can now look at a project that I worked on in Cordoba, Argentina. In February 2006 I was volunteering for los voluntarios de la Universidad Catolica de Cordoba. We were working on a project to better the energy sources of rural towns. This project is what gagged me towards the analysis of indicators.
The best way to go about this is to highlight certain aspects of the project and better explain them in English. But before we do that I must address that this proposal was made on the bases that there was need in these areas for further development. Yet, as I became more knowledgeable of the project and the areas the project was gearing towards I started to notice some funny details that the coordinators over looked.
Now, we will go through the proposal and translate certain parts and then describe how indicators were made and manipulated into “benefiting” these rural areas.


I AM CURRENTLY TRANSLATING AND EXPANDING
AND THE BLOG WILL NOT LET ME POST THE PROPOSAL



Footnotes
[1] Morse, Stephen. Indices and indicators in development: an unhealthy obsession with numbers? London; Sterling, VA: Earthscan, 2004.

[2] World Development Report. Entering the 21st century. New York: Published for the World Bank, Oxford University Press, 2000

[3] Morse, Stephen. Indices and indicators in development: an unhealthy obsession with numbers? London; Sterling, VA: Earthscan, 2004.
[4] Yamarone, Richard. The trader’s guide to key economic indicators, 1st ed. Princeton, N. J.: Bloomberg Press, 2004.
[5] Haque, Nadeem. The economic content of indicators of developing country creditworthiness. International Monetary Fund, IMF Working Papers, no. 96/9, 1996.
[6] World Development Report. Entering the 21st century. New York: Published for the World Bank, Oxford University Press, 2000

[7] Baumohl, Bernard. The secrets of economic indicators: hidden clues to future economic trends and investment opportunities. Upper Saddle River, N.J.: Wharton School Pub., 2005.
[8] Black, Maggie; The No-Nonsense Guide to International Development; “Development is Political,” New York, 2002; p. 111-118.
[9]Ehrenreich, B. Global Woman. New York: Metropolitan Books, 2002; p.24-30.
[10] Oh, Seonghwan; Waldman, Michael. The macroeconomic effects of false announcements. Quarterly Journal of Economics v105, n4, November 1990


Chapter 3
Bringing this Idea Home: Making an indicator that recognizes the need for an increase in H2A worker’s protection

In this section we will attempt to construct an indicator that recognizes the need for safer working conditions towards H2A christmas tree farm workers.

INSERT FLOC INDICATOR AND EXPLANATIONS (It won't let me paste the document-- too many charts)


Chapter 4
Bringing all of these ideas addressed to comic relief

In my research, it is apparent that indicators exist to point our bureaucratic minds in the “right direction.” Thus, the next step is to produce a satire.

Insert PLAYWRITE here (with writer’s and director’s comments)