When it came to data, Kuznets was meticulous. But what, precisely, should be measured? He was inclined to include only activities he believed contributed to society’s wellbeing. Why count things like spending on armaments, he reasoned, when war clearly detracted from human welfare? He also wanted to subtract advertising (useless), financial and speculative activities (dangerous) and government spending (tautological, since it was just recycled taxes). Presumably he wouldn’t have been thrilled with the idea that the more heroin consumed and prostitutes visited, the healthier an economy.
.. The first thing to understand about GDP is that it is a measure of flow, not stock. A country with high GDP might have run down its infrastructure disastrously over years to maximise income. The US, with its ageing airports and less-than-pristine roads, is sometimes accused of precisely that.
.. Take a table setting of a knife, fork and spoon. In output terms, a setting of three spoons is equally good. In quality-of-life terms, clearly not. Coyle calls GDP an “artefact of the age of mass production”.
.. If banking had been subtracted from GDP, rather than added to it, as Kuznets had proposed, it is plausible to speculate that the financial crisis would never have happened.
.. The most obvious is housework. There is no monetary value at all assigned to cooking, cleaning, child-rearing and caring for older or disabled people at home. That is partly because such work, often done by women, is undervalued.
.. As author Jeremy Rifkin points out in his recent book The Zero Marginal Cost Society, the price of many products – online music, internet-enabled car-sharing, Wikipedia, solar energy, Skype – is tending to zero. How do we value economic activity if it doesn’t command a price?
How Much Are the World’s Ecosystems Worth?
$142.7 trillion annually, according to one new estimate
Back in 1997, ecologist Robert Constanza and a team of researchers set out to quantify a seemingly unquantifiable abundance: the value, in dollars, of the world’s ecosystems.
.. In other words, deforestation and other damage we’ve inflicted on the natural world has wiped out $23 trillion a year in ecosystem services. To put that loss into perspective, consider that the gross domestic product of the United States is $16.2 trillion.
The Downward Ramp
At the turn of the 21st century, however, the I.T. revolution entered what the authors call a “maturity stage,” in which much of “the new capital is in place” and “cognitive task workers are only needed to maintain the new capital.”
.. Mal-employment involves working in jobs that do not require a four-year degree or higher level cognitive skills.” It’s not just baristas, either: many college graduates are working in stores like Target or Whole Foods.
.. The E.P.I. report, “Raising America’s Pay,” points out that “entry-level hourly wages fell on average for both female and male college graduates from 2000 to 2013 (8.1 percent among women and 6.7 percent among men).”
These trends are certain to reverberate into the political system.
Growth Has Been Good for Decades. So Why Hasn’t Poverty Declined?
Conservatives tend to attribute the persistence of poverty, even amid economic growth, to the perverse incentives that a welfare state creates against working.
But the reality is that low-income workers are putting in more hours on the job than they did a generation ago — and the financial rewards for doing so just haven’t increased.
.. That’s the real lesson of the data: If you want to address poverty in the United States, it’s not enough to say that you need to create better incentives for lower-income people to work. You also have to devise strategies that make the benefits of a stronger economy show up in the wages of the people on the edge of poverty, who need it most desperately.