The GDP is a Poor Measure of Progress

by on July 1, 2016 · 1 comment

in Culture, Economy, Environment, Health, Politics

By John Lawrence

GDPGross Domestic Product does not measure the well-being of human beings.

War, natural disasters, incarcerations all add to positive GDP growth. Profits from casinos, drug sales, cigarette sales, junk food all add to economic growth.

Stock buybacks contribute to GDP. GDP is based on distorted values. If I pay down my debt, that does not add to GDP. If I borrow more money and go into debt and go out and buy stuff, that increases GDP.

Wall Street insistence on short-term profits, as opposed to long-term growth, does add to GDP. GDP is f’d up, yet for every politician and government functionary it’s the sine qua non of economic indicators. Every swindler that parts someone with a buck contributes to GDP growth.

Every saver that saves a buck contributes to lowered GDP and perhaps a recession. 70% of GDP is consumer purchases. Lowered consumption means lowered strain on the environment, but also lowered GDP.

The more the fossil fuel industry fracks and extracts and sells gas to gas guzzling cars, the more GDP goes up and the more the destruction of the planet is hastened from global warming. Converting to renewables won’t contribute to GDP after initial costs are paid because the sun’s energy is essentially free.

At that point, the Koch brothers will be out of business as will Exxon Mobil and all the rest of the associated industries. But the conversion is absolutely necessary and essential if planet Earth is to remain habitable by humans. The insects will always hang on even after the last human exits the planet, so that’s something. Lowering the contribution to GDP from the fossil fuel industry will of necessity change the economic system.

If I grow my own vegetables, fix my own car and live frugally, this does not add to GDP. George W Bush told us after 9/11 to go out and shop. This was his prescription for fixing the economy. Just go out and buy, buy, buy. Buy a whole lot of junk you don’t need. Then rent a storage locker to store the stuff that’s overflowing your garage. That adds to GDP.

All this worthless garbage that “grows the economy” could be better done without. The money saved would be better spent helping the most impoverished in the US and around the world, helping the climate change refugees in Bangladesh and Indonesia, helping the people suffering from natural disasters in West Virginia and the Philippines.

Riane Eisler says GDP does not measure human well-being, does not measure environmental sustainability, does not measure even long-term economic success. A hedge fund that destroys a company’s union adds to GDP because profits go up, but that’s not long term economic success especially for the workers involved.

The US with its vaunted GDP has the highest infant mortality rates, the highest maternal mortality rates and the highest child poverty rates in the developed world. Our economic values, the economic values of capitalism are completely distorted. We need a measure not of economic growth, but of economic well-being. That would comprise the values of a society in which no one lived below the poverty line and which economic inequality was reduced. How many billions does a billionaire really need in order to have every luxury known to the human race? But they don’t stop there. They use their access to control the political system guaranteeing that their class will prevail ad infinitum.

Do we want to have a society comprised of an elite class of super wealthy combined with a class of minimum wage working peasants? Whatever happened to the promised utopia where robots would do all the work and the humans would have a life of leisure combined with ample material goods?

Instead, we have a dystopia where wealthy elites own all the robots and the rest of us, the 99%, make minimum wage as retail workers, teachers, baristas and Uber drivers. It’s precisely a dystopia because wealth isn’t widely shared. If it were, all people would have to work perhaps a 15 hour work week doing the work robots can’t do while our ownership of widely dispersed wealth would guarantee us an income sufficient to buy whatever it is we can buy now working a 60 hour week or requiring two or three incomes to purchase a home and a car.

Imagine everyone being wealthy enough to receive a monthly dividend check for $5000. for doing nothing like the wealthy elite does. Except their monthly dividend check is more like $1 million.

sustain v growthI’m tired of hearing politicians like Bernie Sanders, whom I dearly love, say things like, “In the wealthiest country in the world, why are children going hungry?” FYI, Bernie, we do not live in the wealthiest country in the world. There are some private individuals and families that are extremely wealthy; that does not a wealthy country make. In fact, the US government (meaning we the taxpayers) is extremely impoverished. We borrow billions of dollars each month, month after month, just to pay for our war machine.

We have trillions of dollars in needed infrastructure repairs. Roads and bridges are crumbling. It’s a scenario that fits right in with disaster capitalism that will play out after the next big disaster brought about by a bridge collapse.

Republican politicians will say that government is incompetent because it can’t do the needed repairs and the roads and bridges should be privatized so private corporations which are much more efficient can do them. Then they erect toll booths and extract rent. Formerly free services now become profit centers for some, income drains for others.

We can’t even provide safe drinking water for our citizens. We are not a wealthy country. We have a wealthy elite and that wealthy elite are not even really citizens of the US as they take their financial dealings offshore to tax-free jurisdictions. Actually there are more Chinese billionaires than US billionaires. So, Bernie, please don’t keep saying that we are a wealthy country.

Einstein said, “You cannot solve problems with the same thinking that created them.” We need to think outside the box.

Noam Chomsky said that the political movement that Bernie Sanders has created needs to continue regardless of the election cycle. It should be seen as something that will not go away as soon as the election is over.

Bernie’s campaign, in my opinion, is not important in the sense of whether or not he will win or lose, but because of the fact that he is getting revolutionary and much-needed ideas and possibilities out there and into the minds and consciousnesses of the American people. And he’s dealing with tangible items that affect the middle class and the young like student loan debt.

Riane says that we need an economic system that gives real value to caring for people and caring for our Mother Earth. That’s what will create real wealth. Right now financial legerdemain, trompe l’oeil, adds to GDP. All sorts of hedge fund activity like buying companies, loading them up with debt and then paying the principals handsomely, the kind of thing Mitt Romney did with Bain Capital, adds to GDP. Building a company from the ground up with the goal of long-term financial and economic soundness doesn’t. Wall Street demands short term profits not long term growth.

Worker-owned enterprises spread the financial rewards more widely while working for the man in minimum wage jobs just contributes to the menialization of American workers. Self-employment and co-operatives hold the promise of long-term wealth accumulation while student loan debt holds out the promise of nothing more than lifelong penury and indebtedness.

Americans are delusional if they think that a BS degree and $50,000 of debt is going to enable them a to have a better life than would a free apprenticeship in some practical skill which has a market demand in the local economy and no debt.

Gross National Happiness is a much richer objective than GDP or economic growth. In GNH, material well-being is important but it is also important to enjoy sufficient well-being in things like community, culture, governance, knowledge and wisdom, health, spirituality and psychological welfare, a balanced use of time and harmony with the environment.

GDP does not value the caring economy: the mothers’ work in the household economy, the pre-school teachers who love and nurture the children in their care, the work of volunteers who drive seniors to do their grocery shopping and provide companionship, the nurses and CNAs who care for patients while making a pittance in salary.

At the same time GDP overvalues those who sit in corporate boardrooms, the cronies who give the CEO stock grants and options and then vote to buy back stock so the CEO and other executives as well has hedge fund activists can make a killing, the “angel” investors who give millions to questionable start-ups, the IPOs that create instant billionaires thus driving the economic divide.

Meanwhile, those with 401(k)s are being led to slaughter like lambs and will be the primary sufferers in the next financial meltdown. Seniors will be hung out to dry if Republicans like Paul Ryan get their way and convert social security to vouchers. They will wind up with a Wall Street controlled social security program similar to a 401k and subject to the vagaries of the market.

In a caring society the status of women will be more an indicator of the general quality of life and long-term economic success than GDP. So why don’t politicians and other economists take these indicators into account? They don’t really care about the values pertinent to women and children. They devalue their interests in favor of short term profits of corporations. Caregiving values are associated with women who have been historically disenfranchised in favor of masculine values, the values of money making.

Gross National HappinessCaring for Mother Earth, caring for children and caring for those who are vulnerable and helpless, caring for the homeless have no economic value in terms of the masculine values of capitalist economic systems. And I say capitalist systems in the plural because so-called communist systems like China have in fact capitalist economic systems.

A Chinese insurance corporation just recently bought the historic Hotel del Coronado in San Diego. They also own the Waldorf Astoria in New York as well as many other luxury properties in the US.

GDP doesn’t matter. Lowered GDP doesn’t matter. What matters is not goods produced in China and elsewhere overseas and then shipped to the US in big containers ships. These represent outsourced American jobs.

What matters is developing the local economy in terms of co-operative enterprises comprising worker-owners. This distributes wealth and makes us less dependent on huge international corporations. If a recession follows, so be it. GDP is mainly an indicator of the health of large financialized corporations.

What is needed is the health of the local economy, the wealth of the caring economy, the economic indicators which value lifting mothers and children out of poverty, the economy that puts a floor under the income level of individuals and families. If this shoots GDP all to hell, so be it.

We don’t need Wall Street banks to run the economy. Local bartering systems can substitute for monetary exchange needs until a public banking system is developed. Perhaps even Bitcoin can bypass the US dollar as the measure of all things.

Supporting the local, caring economy the economy that insists that everyone is well housed, well fed and well educated and has their basic needs met in terms of health care is more important than GDP growth.

{ 1 comment… read it below or add one }

Avatar mjt July 1, 2016 at 11:48 am

I love the idea of cottage industries. Bring it all back home.
We are suffocating in bureaucracy. Throw out all the laws from the last forty years and start over. Stop electing lawyers to public office , empty our jails.

Let me wander into the cactus patch and suggest that Donald Trump will do more to foster these goals then bought and paid for Hillary Clinton

Not only is Trump not beholden to anyone, he has an axe to grind because both sides are against him.
Trump is a third party candidate. He may be out there for many, but he is the change candidate.

Hillary has been, and baggage Bill have been in rerun for far too long.

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