When We Get the Indicators Wrong

[marmar]

excerpt from David Korten's "Agenda for a New Economy: From Phantom Wealth to Real Wealth":



We intuitively recognize real wealth when we experience it, but because it is not available for purchase or sale, its value cannot be readily reduced to a monetary equivalent. Economists have dealt with this problem by turning to the market value of economic output as a proxy for human well-being. They call it the gross domestic product. It was a bad choice that has turned our priorities upside down and led to the destruction of much of what is most essential to our health and happiness, including family, community and nature.

Human health and well-being depend on a great many things that do have market value: food, housing, transportation, education, health care, and many other essentials of a healthy life. These, however, are means, not ends, and their real value is a function of how they contribute to improving human and natural health and vitality.

Note, for example, that the food component of the GDP makes no distinction between healthy and unhealthy food, or between healthy food consumed by a desperately hungry malnourished child and junk food consumed by an overweight compulsive eater. An increase in the market value of food consumed, which increases the GDP, does not necessarily indicate that our well-being has increased.

Or take transportation. An increase in expenditures on transportation, even adjusting for energy-price inflation, may simply mean people are spending more time stalled in traffic jams - hardly an improvement in well-being.

As these simple examples demonstrate, the GDP is a measure of the cost, not the benefit, of economic activity. The GDP can be rising in the face of simultaneous epidemics of child obesity and starvation. It can be rising in the face of disintegrating families and a vanishing middle class, increasing prison populations, rising unemployment, the disruption of community, collapsing environmental systems, failing schools, growing trade deficits, and costly but senseless foreign wars.

You probably noticed that these are not hypothetical examples. .........

[rgbecker]

1. My concern has always been women in the work force.

The increase in GDP quietly shows the increasing migration of women into the workforce. Many services done in the home which were never counted now are as these are shifted into the monetary economy. Childcare, house cleaning, food preparation many other things.
These are now paid for in after tax cash and then taxed again. This is reported as huge increase in "Product" but actually have always been done and there is really no actual increase. As the economy is monetized, the wealth shifts to top 1%, and everyone else thinks they are doing great "Look how much money we made this year!" but everything is spent, and nothing has been gained.