How do you read the Economy?

How do you read the Economy?
by Alex Merced

 Many people always ask me, since I'm so critical about using any type of statistics to measure whether the economy is doing well or bad, how would I measure the performance of the economy? I wouldn't, while I believe some economic environments are better than others, I don't really buy into measuring the economies performance as a whole for many reasons including;

1. Regional Differences in culture and resources
2. Does the country really have it's own economy? Aren't the borders just arbitrary lines? So what makes such a drastic difference being on one side of the line other than the governments?
3. Aggregating data smooths out outliers in the data, unlike somebody's grades those outliers can be very important economic events that effect peoples quality of life, which statistics erase with vast amount of aggregated data.

Albeit, even using that macro data, many Austrians have still been able to see standard free market principles hold up, but it seems fruitless. There is so much value in joy versus despair in peoples lives that can't be measured by wages, GDP, unemployment numbers which aggregate too much information to mean anything despite their sometimes questionable methodology.

Although, one of the things you can infer from data is how well is the market doing it's job, creating innovations and getting them widespread adoption. Happiness, that's our job, a good or bad economy is still world where you can be happy if you try. Although, it doesn't hurt to have new gadgets and tools to make my day to day life easier and free up my time to pursue that happiness... and that's the roll of a free market.

So if I'm assessing the economic environment on any level I ask myself many questions;

What is the most recent big innovations? (example: smartphones and e-readers)

What is the adoption of that product?

If the adoption is high, is savings increasing to provide capital to develop the next innovation?

If savings isn't increasing, is there another innovation or good that I'm missing?

I ask these questions because it's that adoption of new technologies to me is a much better sign of growing standard of life than most wage, employment, and GDP statistics. I know people who are perfectly content to stay unemployed in their parents basements with their gadgets, and they're happy. Not everyone can be rich, nor should they, the only benefit to being rich is having a say in what gets produced, which ends quick if you choose wrong.

So letting the market sort out the best people to wield power over capital, and allowing real incentives for people to save when there is no innovation to adopt is important to keep this real growth in the standard of life important.