America’s Go-To Economic Indicator Is Blunt and Obsolete
The all-important GDP is incapable of measuring crucial aspects of the economy such as environmental externalities and racial inequality.
America’s economy today is not the same as America’s economy yesterday, and over the years, the nation has come to recognize that some goals—protecting the environment, or working toward racial and gender inequality—are a lot more important than it once thought, and are tied up with questions of economic growth. A lone percentage indicating how much the GDP has moved up or down quarterly or annually is an inadequate reflection of the performance of the present-day economy, and as early as 1934, Kuznets was aware of the statistic’s limits. That year, he told the U.S. Senate: “The welfare of a nation can scarcely be inferred from a measure of national income.”
.. The public has grown interested in countries’ Gini coefficients, or how CEOs’ earnings compare to those of the front-line workers they lead. These figures are out there, but government bureaus have chosen not to elevate them to the status of major indicators.