Have you ever asked yourself why a nation nearly twice as rich as it was a generation ago, actually pays its median workers less than before? You probably asked yourself also:
What did make the Genuine Progress Indicator stop growing? What did make only the Gross Domestic Product (GDP=The GDP is the total market value of all final goods and services produced in a country in a given year.), keep growing?
Well, let’s see why!
What’s the Economy For, Anyway? is the book that interested me lately and helped me have a better perspective about how the world works.
There’s a tip/warning, that after reading it, I do completely agree with:
“It’s time to stop chasing growth and start pursuing happiness”.
But let’s go further and see the bigger picture. Before starting I would like you to read this article without judging.
Because, as a writer, all I want is to express a thought and not build new rules.
Let’s move on now and allow me to share with you some thoughts about the struggle of our society to be happier.
What makes the second Gross Domestic Product (GDP) country’s population to envy other countries called: 10 top countries where to live?
The answer is really simple according to the book. The answer is: The King GDP’s rules.
The obsession the world’s economies have, adopting the GDP growth politics, doesn’t help in many cases. Most of the time (consider the US) it affects and disappoints all those hopeful people who are leaving their houses on the Election Day.
As we know, many times we weren’t able to figure out why the new Administration is cutting the budget in certain Economic areas.
I would like first to use a simple and recent example: http://on.freep.com/2lIyWEZ
According to the Detroit Free Press, the White House Office of Management and Budget calls for the Great Lakes Restoration Initiative to be cut from $300 million a year to about $10 million…
That means almost 97%…
To help us figure out what we should understand from this political proposal, is the fact that we don’t need to invest in Natural Resources. And the second and sad fact is: The lakes that I want to add to the category Natural Resources doesn’t contribute to the GDP growth. Why invest money on the Great Lakes Restoration Initiative if it doesn’t help the GDP growth?
The GDP has an ally and an enemy. It loves everything that brings capital and ignores everything that does not.
Here are some of the things that count positively toward the GDP:
- Pollution (“If grounded water is polluted, and we have to buy bottled water at a thousand time the price of tap water, the GDP rises.”)
- Crime (“GDP increases as we have to install alarms and bars or hire guards.”)
- Health damage (“Selling cigarettes and providing lung cancer cures helps the King GDP.”)
- Family breakdown (“A divorce can cost from $7,000 to $100,000, and definitely helps the GDP growth”)
- Debt, foreclosure and bankruptcy (“How much is $700-1400 time 1.5 million Bankruptcies?”)
- Paper transfers and bursting bubbles (“New financial products, such as derivatives and credit default swaps, were at the heart of the latest financial crisis, driving worldwide recession. These products count highly positively to the GDP because they increase the incomes of insurance companies and investment banks.”)
- Increasing scarcity (“Depletion of natural resources is a cost to future generations. Yet scarcity is often reflected positively in the GDP. Paying the gasoline twice its price, because of the scarcity, that for sure helps the King GDP.”)
- Risk (“ The GDP does not take into account the risk of catastrophic costs. Retail electricity sold from nuclear power plants counts positively in the GDP.”)
The enemies of the GDP are:
- Nature (“The obvious economic goods and services that nature provides every year to the country do not count in the GDP.”)
- Sustainability (“The GDP says nothing about sustainability and does not discern whether activities contributing to the GDP are sustainable.”)
- Exercise (“We all know it’s good for our health, but it only counts if we pay to go to the gym or otherwise spend money. Your daily walk it’s just a waste of time as far as the GDP is concerned.”)
- Social connection (“It’s the most important thing we can do to be healthy and happy. But unless money is spent, friends and family are also a waste of time.”)
- Volunteering (“If it’s unpaid, it counts for nothing.”)
- Housework (“Hire a nanny, hire a maid, hire a carpenter and GDP rises. Try to do by yourself, and you’re slacking in your duties to the nation’s preeminent measurement.”)
- Price and quantity effects (“The GDP does not separate between price effects and quantity effects.”)
- Quality (“The GDP overvalues lower quality higher priced goods and undervalues goods of higher quality and better performance.”)
The GDP is the total market value of all final goods and services produced in a country in a given year.
“Just imagine you’re stuck in a traffic jam, burning gas and choking on exhaust, requiring you to pool off and fill up the tank. The traffic jam has added to the GDP. If you got into a wreck, totaling your car and increasing the cost of your insurance while the wreck caused an even bigger traffic jam for everyone else, the GDP would rise even more. And if you’d had an expensive divorce that morning, and your house burned down that evening, and…”
Congratulations! The GDP today had a better day than yours.
According to this book, today, as an economic indicator, the GDP is obsolete: Counting expenses on pollution, crime, and sickness as positive while discounting good health, family time and much of what matters most to the population.
As individuals, after a short examination of our thoughts, should we still think of growth and embrace the collateral effects, or should we focus more on the pursuit of happiness?
As individuals, we should expect an Administration team that is day-by-day applying these words into action:
Reading What’s the Economy For, Anyway? helped me start thinking wisely about how the world works and helped me thinking that maybe we forgot what really means to be happy.
“We believe these truths to be self-evident: that All men are created equal; that they are endowed by their creator with certain unalienable rights; that among these are life, liberty and pursuit of happiness… that to secure these rights governments are instituted.
The Declaration of Independence, 1776
“It’s time to stop chasing growth and start pursuing happiness”.