The Dow of China
A couple of hours ago, US stock investors finished taking a bath -- the worst since 9/11 -- precipitated by a collapse in the Shanghai market. And front and center on its home page, the New York Times already has up a minute-by-minute chart showing today's progress for the Dow Jones Industrial Average. (Hint: it's mostly down.)
Fair enough, I suppose. Measurement is important. And if the stock market ever deserves media attention, today is the day. But I have to confess that I'm baffled by a couple of things.
First off, the DJIA is a terrible indicator of general stock market performance. It's an antiquated relic based, in part, on a fear of long division. We've already gone into this in some detail, so I won't repeat it all now.
Second, why do we insist on clocking and and endlessly discussing every movement in stocks in a way that we do for little else? Are there no other important economic benchmarks? Or is it just that we're collectively obsessed with shiny new numbers, no matter how irrelevant they may be?
Want to know about trends for middle class incomes in your state? The most recent data are 2 years old. And you can't break it down by household size, so it lumps single-income households in with two-earner groups. The data have a number of other problems too.
What about poverty? Nope, sorry. The only reliable data for poverty and child poverty are also 2 years old. And the best analysis of those outdated numbers showed poor Americans heading off a cliff like the Dow did today. Too bad we won't know what happened in 2006 until sometime next year. And even when we get the new numbers, they'll be based on several specious assumptions.
There are many more examples, but I'll spare you for now. I simply think it's worth noting that what is measured well, we obsess over, and we try to improve. It would be nice, then, if what we measured well reflected the values and priorities of all of us -- not just the highest-earning 1/5 of Americans, who own 90 percent of all stock market assets. And not just whatever bright new numbers happen to be readily at hand.
The UK of North America
I'm a bit late on this (that's my new thing), but things just keep getting bigger and better when it comes to climate policy. Arizona, California, New Mexico, Oregon, and Washington are joining forces to reduce emissions. Kudos to all five governors who pledged that:
...within six months they will set a regional target for lower emissions. A year after that, they pledged, they will devise a regional cap-and-trade system, which would let companies that can't meet their emission reduction targets buy credits from those that reduce emissions more than required.
There's even icing on the cake: British Columbia is likely to join in, which makes sense given that North America's energy grid is pretty well integrated across national boundaries.
It strikes me that the combined commitment is good for at least two reasons: 1) It pressures each of the member states to take their goals seriously; 2) The sheer size creates an ever more effective market for reducing emissions, one that is big enough to force meaningful action from national governments. In fact, the combined population of the five states and BC is roughly that of Italy, France, or the United Kingdom (or, if you prefer, as large as Canada, Australia, and New Zealand combined).
