Ever since I read Umair Haque’s “Betterness: Economics for Humans,” I’ve been sold on the idea that we need measures other than GDP if we want a more meaningful picture of an economy’s health. He likened GDP to a car’s speedometer – a one-dimensional measure that simply tells us how fast or how much, and nothing else. Yet we care about much more than the speed of our car: we should also be measuring our fuel efficiency, how many RPMs are needed to get us up to that speed, and if we were up-to-date on our maintenance. By creating and publishing new measures of the economy’s performance, we could begin to broaden our conception of what makes a healthy economy. This new concept would be informed my measures of things that actually mattered to human happiness: people’s reported work-life balance and job satisfaction, the rate of environmental degradation and the resulting human costs, and the stability of our economy over time. The list of measures he and other economists have proposed goes on for much longer, and this list is only my quick recollection of the ideas he mentioned. And these measures aren’t new ideas – we’ve already measured most of them for awhile; the point is that by collecting them more rigorously and publishing them more frequently and broadly, we could promote a more nuanced picture of economic success.
All of this explains why I was excited when I read the headline, “The US government could soon reshape how we measure the economy.” It also explains why I was disheartened to find that the new measure was actually Gross Output. I recommend you read the article for an explanation, as it does a much better job than I could. The key takeaway for me is that while this measure shifts the focus away from consumer spending’s effect on the economy – which I like – it also shifts the focus towards “savings, business investment, technology, and entrepreneurship.” This measure fails to broaden our view of a successful economy to include environmental and social concerns, and instead places a great emphasis on how businesses and the elites in our society are doing. That haven for job creators, the op-ed page of the Wall Street Journal all but confirmed this as the author wrote: “[an emphasis on GDP] has led to the misguided Keynesian notion that consumer and government spending drive the economy rather than saving, business investment, technology and entrepreneurship.”
Business owners, investors, corporations, people who fastidiously save their money, technology firms, wall street bankers, manufacturers – all of these groups are crucial to our economy’s success. Hell, if they get excited about Gross Output, let them have it. It’s never a bad thing to have more information about how an economy is performing. Yet our economy (and our political system) already caters to these groups’ interests and is too dominated by their whims. If we’re taking a hard look at new measures of economic prosperity, why not explore measures that help us re-balance our economic priorities, instead of driving it closer to the “growth at any cost” mentality?