Keeping score is critical in almost every human endeavor outside of, maybe, marriage and child-rearing. It helps us bring order from chaos.
We have highly customized scoring systems for everything imaginable — schoolwork, tennis matches, TV ratings, diamond quality, Twitter followership … you name it and we precisely track it, rank it and scour it for meaning.
But as we rip into the first decade of an information-driven economic revolution, with our world being remade by vast flows of streamlining data and the unpredictable dynamics of Internet-driven global interconnectedness, I believe we’ve got ourselves a funhouse mirror problem with our economic scorekeeping.
We’re looking for assurance and crisp signals from the economic activity data that the government generates and the media reports on, but all we’re getting are distorted, blurry images that leave us discomfited and uncertain about our economic future.
It matters because I believe it’s preventing us from seeing a bigger, clearer long-term economic picture, and that in turn is making us more fearful and even more mistakenly reliant on the next distorted statistic or image to come tumbling at us.
It’s a situation reminiscent of an old “Twilight Zone” episode in which William Shatner is frozen by fear at a roadside diner by a fortunetelling machine that keeps spitting ominous predictions at him. Every fortune that comes out is vague but threatening, and so he obsessively puts in coins for the next fortune and the next one after that. He spirals toward madness because he’s terrified that the machine knows disaster awaits him, and he simply can’t pull himself away.
Information overload
Think of that the next time you hear about Wall Street breathlessly waiting for the next clear-as-mud jobs report.
The government-generated data sets we’ve known all our lives — covering everything from unemployment to the overall output of our economy (GDP) to consumer spending and more — were all created to track the Industrial Revolution-forged economy that has dominated the history of our nation.
While the figures did a reasonably accurate job in describing a stable, relatively static industrial economy, the data is increasingly failing to fit in context with what’s gone before — more or less what you’d expect to see in a time of major structural economic change.
But that doesn’t seem to stop pundits and politicians from attempting to force-fit the results into conclusions that support their long-held world views.
Case in point: This month’s federal unemployment data suggested both lower overall unemployment and also a startling continued shrinkage of the U.S. workforce. So we’re told by both government spokespersons and private economists that millions of people have become “discouraged workers” — no longer, in their narrative, looking for jobs.
But what, in their estimation, are these millions of our fellow Americans doing? They’ve given up on life? Their feelings of defeat are so great that they’ve simply gone by the millions to lay down on their couches, penniless, to die?
Really?
Getting off track
As a New York Times article noted earlier this month, the U.S. government doesn’t statistically track individuals working as “free agents” — those among us who have become one-person entrepreneurs, “consulting” or otherwise selling their services on a short-term basis to the highest and most attractive bidder. These individuals could be using sophisticated crowdsourcing platforms and piecework websites like Crowdspring or Mechanical Turk, or they could just be responding to Craigslist posts seeking someone to paint a fence. But clear information flows have allowed them to earn a living without being anyone’s employee, whether by necessity or desire.
So, wait … our government isn’t tracking the most powerful trend in the world of work today (the use of information platforms by both companies and workers to blow up the very construct of a “job”), but we’re accepting its far-fetched explanations for what it does track?
That same distorted scoreboard effect can be seen through the lens of GDP statistics, with collaborative consumption offering information-enabled sharing of expensive durable goods (fewer sold, more efficiently used — think Zipcar or Airbnb), and in business investment figures, in which services like cloud computing and Internet-enabled outsourcing have vastly reduced the amount of start-up and expansion capital businesses need (through efficient shared use of technology and physical space).
My suggestions: Realize the scoreboard is broken, pay closer attention to the action on the field, and start keeping score yourself. Don’t trust any color commentator who only understands the game as it used to be, and keep your eye on the information forces driving the ferocious changes we’re all feeling.
Dave Maney, an entrepreneur and former journalist, runs . Reach him at davemaney@ .
Economic Revolution Dave Maney
