October 31, 2011

Growing Our Values

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The United States is the wealthiest, most advanced, most successful nation on the planet … right?

Well, maybe — but it all depends on what you’re measuring.

The most popular metric for a country’s wealth is Gross Domestic Product, or GDP, which measures the total value of goods and services sold in a country in a given year. And indeed, looking solely at GDP, the United States is far and away the world’s wealthiest nation: With $14.7 trillion of output, our economy dwarfs the next largest (China) by nearly 50 percent.

Many are therefore content citing GDP (and military might) to hastily conclude that the U.S. must obviously be the world’s most successful nation. But this view of national wealth is far too simplistic, and overlooks a number of important outcomes that better evaluate the welfare of a nation’s citizens. Further, myopic fixation on economic size isn’t without consequence: By focusing heavily on the presence of growth rather than the nature of growth, policymakers stand to inflict tremendous harm on our country’s collective well-being.

So why not rely on GDP? Two limitations, in my opinion, prevent it from being the most useful means of evaluating national wealth.

First, GDP doesn’t distinguish between “good” output and “bad” output. Your purchase of a hybrid car or laptop computer is given the same weight as spending on prisons and cluster bombs. The output of an oil company that destroys a river is included in GDP, as is the money expended to clean up that same river. The unhealthy junk food we eat is included, and so is the money we then spend to cure our diseases.

In short, GDP allows us to punch ourselves in the face and call it growth. And while punching yourself in the face is technically doing something, I’d certainly hesitate to say you’re better off as a result.

Secondly, as a measure of aggregate output, GDP does little to tell us who benefits and who is harmed by our nation’s industries. A high per capita GDP may appear to imply that members of a society are generally productive or well off, but it in fact indicates nothing of the sort. And when a significant portion of that income is generated by an incredibly small segment of the population (e.g. the financial services industry), per capita output is skewed upward by an unequal distribution of wealth.

What lies at the core of these problems, then, is that GDP is a valueless measure of national output. GDP tells us that “stuff” is happening, but fails to distinguish whether or not that “stuff” aligns with our national interests or priorities. Sure, people may be working, but are they working towards bettering our country, or are we in fact destroying it in the process?

To be clear, my argument is not that GDP should be ignored. It remains the most visible measure for determining overall economic “health,” regardless of that economy’s composition. What I am suggesting is a change in perspective — a shift towards viewing GDP in light of how it relates to outcomes our society considers important. And returning to the statement I originally posed, how does the U.S. stack up in achieving those outcomes?

Not well.

With respect to income distribution, the United States is the 39th most unequal country in the world (the fourth most unequal of developed nations), performing worse than developing nations such as Cameroon, Cambodia and Uganda. We rank 37th in efficiency of health services, 50th in life expectancy, 13th in educational quality and 61st in environmental health. And so much for being “land of the free” — the United States incarcerates far more individuals than any other nation, both in absolute and per-capita terms.

We continually assert our national superiority, but the facts hardly substantiate the claim. Which shouldn’t be news, given that we rank 13th for quality of life and 14th for overall happiness.

Complicating our measures of national success may seem unimportant — a matter of semantics best left to be discussed by technocrats and academics — but this couldn’t be farther from the truth. A tunneled focus on overall growth dominates our political discourse; legislators have become so preoccupied with simply expanding the economy that they fail to consider the implications of how that expansion occurs. This strain of thought is most pronounced amongst conservatives, a vast majority of whom champion reckless deregulation in an attempt to spur business growth.

Maybe they’re correct in one respect — slashing taxes, cutting consumer protection, eliminating government agencies and stripping environmental regulation would probably boost industry profits in the short term. But to what end? So that an overwhelming portion of our nation’s citizens can become sicker, poorer and more likely to be taken advantage of? So our environment can be irreparably damaged? So that our vital national services, such as education, can continue to falter? This hardly seems like a government acting in the best interests of its people, though it perhaps explains why the concept of “progress” is so anathema to the right.

When thinking of economic growth, fixating on GDP is not enough. Our approach should be more values-driven, constantly tuned towards creating the sort of society I would imagine anyone — regardless of political affiliation — would like to live in: one in which its members are happy, healthy and protected from harm by others.

Is shifting our nation’s growth paradigm easy? Absolutely not, but it may very well be possible. The Occupy Wall Street movement undoubtedly deserves credit for inspiring a national discussion on this very question. It is now imperative not only to sustain this discussion, but also to ensure that it turns from words into actionable policy. Only then will we have a country that doesn’t just grow, but improves.

David Murdter is a senior in the College of Arts and Sciences. He may be reached at [email protected]. Murphy’s Lawyer appears alternate Tuesdays this semester.

Original Author: David Murdter