Why You Shouldn’t Believe Those G.D.P. Numbers

Mark

A NY Times opinion piece by David Leonhardt

"Americans are dissatisfied, and have been for years, largely because the economy as most people experience it has not been booming. G.D.P. — or gross domestic product, the economy’s total output — keeps on rising, but it no longer tracks the well-being of most Americans. Instead, an outsize share of economic growth flows to the wealthy. And yet G.D.P. is treated as a totemic measure of the country’s prosperity."

"A team of Commerce Department economists has been working on a new version of G.D.P., one that will show how much of the economy’s bounty is flowing to different income groups. The headline number would still exist, but the new data, known as “distributional accounts,” would make clear who was and wasn’t benefiting. The department expects to publish a prototype statistic next year."

ARTICLE

msf

It's not just that less money is flowing to the working class. It's also that so much work isn't valued at all. Literally. Unpaid work, whether housework, or home care for the elderly, or charitable labor is not only not rewarded, it is not even counted towards GDP.

It never has been. Written in 1920:

if a man hires a house and furniture belonging to somebody else, the services he obtains from them enter into the national dividend, as we are here provisionally defining it, but, if he receives the house and furniture as a gift and continues to occupy it, they do so no longer. Again, if a farmer sells the produce of his farm and buys the food he needs for his family in the market, a considerable amount of produce enters into the national dividend which would cease to enter into it if, instead of buying things in the market, he held back part of his own meat and vegetables and consumed them on the farm. Again, the philanthropic work done by unpaid organiser, Church workers and Sunday school teachers, the scientific work of disinterested experimenters, and the political work of many among the leisured classes, which at present do not enter or, when there is a nominal payment, enter at much less than their real worth, into the national dividend, would enter into it if those people undertook to pay salaries to one another. Thus, for example, the Act providing for the payment of members of Parliament increased the national dividend by services valued at some £250,000. Yet again, the services rendered by women enter into the dividend when they are rendered in exchange for wages, whether in the factory or in the home, but do not enter into it when they are rendered by mothers and wives gratuitously to their own families. Thus, if a man marries his housekeeper or his cook, the national dividend is diminished. These things are paradoxes. It is a paradox also that, when Poor Law or Factory Regulations divert women workers from factory work or paid home-work to unpaid home-work, in attendance on their children, preparation of the family meals, repair of the family clothes, thoughtful expenditure of housekeeping money, and so on, the national dividend, on our definition, suffers a loss against which there is to be set no compensating gain. It is a paradox, lastly, that the frequent desecration of natural beauty through the hunt for coal or gold, or through the more blatant forms of commercial advertisement, must, on our definition, leave the national dividend intact, though, if it had been practicable, as it is in some exceptional circumstances, to make a charge for viewing scenery, it would not have done so

Arthur Cecil Pigou, The Economics of Welfare (4th ed.) (London: Macmillan, 1932).
https://oll.libertyfund.org/titles/1410#Pigou_0316_113

Old_Joe

The more things change...