GDP up, but are you better off?

"One would raise the GDP here by putting in a hotel, a factory, and houses on this stretch of beach, then have it hit by a hurricane and starting the process over again."




The White House announced that it’s pleased with two conventional economic measures.  The last quarter brought us a 3.5% growth in the gross domestic product White House brief on "Economic Good News" and that unemployment rates are at record lows in states like West Virginia and Nevada.  This shouldn’t be news to anyone but the White House, but the GDP can be a very tricky measure of a nation’s well being during a war.  For one, it measures dollars spent on items like the manufacture of body armor, medical care for wounded soldiers, and the replacement of equipment destroyed during the course of war as the same event as say dollars spent in constructing a school or a low cost housing development.  While the Iraq War itself remains a relatively small percentage 100-200 billion/year of the US GDP of 12 trillion/year, one longstanding problem with the measure has always been that it looks at all economic activity as positive and growth itself as a goal as opposed to suggesting anything reliable about the quality of life in that society.

Robert Kennedy may have caught it best some 38 years ago:  
  “What the Gross National Product means and more importantly what it does not mean”

"Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

"Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans."

The point is that the President’s radio speech is just numbers. It’s not shocking, in an appearance a few weeks ago, it came out that he had no idea how one buys a car at a dealership.   Serious economics is asking the more difficult question about the distribution of goods and services and their impact on the quality of our lives.  Ask yourself the following.

1. Is it easier for my children to buy a home or secure housing than it was 5 years ago?


2. How secure is my own retirement?


3. What percentage of our income is taken up by basics like housing, medical insurance, education, food, fuel, insurance?

Perhaps most important, in fifteen years if my children do exactly as well as I have as an adult, will they be better off?  
Think about it.  If you have to pay for clean air, water, and a safe place to live, the GDP actually goes up compared to a place where these things just happen to be free.

In doing a quick refresher course on the impact of war on GDP, I found the following editorial from the Wall Street Journal from 2003 about the prospective cost of the war that salivated at the prospect of a small investment for political stability in the region and cheap oil for years to come.  Link to Wall Street Journal article from 2003 about cost of Iraq War, other than being more than a bit off about the numbers I noticed that it didn’t mention a thing about the possible cost of human life.  Funny how it so innocently reveals the corporatist mindset that may have gotten us into the war in the first place.


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