Physicists may be the only people who understand that the quest for exact measurement of the real world is a wild goose chase -- the Heisenberg uncertainty principle tells them that the more precisely they measure the momentum of a particle, the less they can know about its position (and vice versa).
Economists are positioned at the other end of the spectrum: Their impulse to measure economic trends is fueled by an absolute confidence that at the end of the quest lies exact knowledge.
That's the case Karabell colorfully makes in his new book, "The Leading Indicators: A Short History of the Numbers that Rule Our World." A commentator and financial analyst familiar to viewers of CNBC, Karabell places these statistics we seem to live by in historical context, and reminds us how much important information they leave out. (He'll be talking about the book at a Milken Institute Forum on Wednesday afternoon.)
The rule became the basis for post-recession austerity policies the world over, but it had a few problems. One was that it's absurd to juxtapose debt, which is paid down over decades, with GDP, which is a snapshot of an economy's size. Worse, the economists' calculations were based, as three University of Massachusetts economists uncovered, on erroneous data. It was a case of the quest for precision yielding less than zero.
But we do. Versions of the CPI govern how our tax rates change from year to year and how much retirees gain in cost-of-living raises, and factor in to our perceptions of how our investments are doing. When budget-cutters in Washington went hunting for ways to save money on Social Security, their bright idea was to tinker with the cost-of-living inflation factor.
"The gross national product," Kennedy said, "does not allow for the health of our children, the quality of their education, or the joy of their play. ... It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile."