Chapter 12 is entitled “Measuring Economic Performance. (p.185)” It begins by describing Gross Domestic Product (GDP)—a measure of the total goods and services produced in a country in one year. What do we think of this measure?
Many people have lodged many criticisms at GDP. I don’t know the details to judge the merit of their arguments, but they often include something about what is or isn’t counted toward the total productivity of the nation. For instance, many tasks that have been traditionally performed by women such as childcare, food preparation, and community work haven’t been monetized (or at least not as readily) as tasks traditionally performed by men. So work performed in the home has no value, even while the same work performed for strangers could have value. Other arguments center on whether the goods or services produced really contribute to quality of life. For instance, the production of weapons and other items in our vast military budget count toward GDP. But what do they provide for the nation’s quality of life?
But if we step back even further, using GDP as the measure of an economy’s “performance” implies that what we really want an economy to do is produce stuff. Goods and services. Is that really the primary function of an economy? Certainly it is important. And I will admit that I have always had the privilege of living in a society (and a social class within that society) where the ill effects of too much stuff are more obvious than the ill effects of too little stuff. I have never had to stand in a bread line, or wait in a gas line, or really experience a shortage of anything at all. So I probably do take production for granted to some extent.
Even so, aren’t there other things we want an economy to do? If all of us worked in factories producing stuff that only a couple families got to use, would that be a “performing” economy? Does distribution matter? How about employment, for that matter, another way of getting at the same issue? Don’t we want our economy’s performance to be tied somehow to the percentage of our citizenry that is able to earn their living? Later in chapter 12, employment numbers are described as coincident economic indicators (p. 199). Indicators of what? What is this ephemeral “economy” that employment is “indicating?” Isn’t employment the outcome, rather than just a subordinate indicator to some primary economy?
Of course, economists rarely just use one value to describe an entire economy. That would be like trying to describe a climate with only the rainfall totals. But it is worth considering whether our go-to economic indicators truly reflect what we as economic agents really want from our economy. Do we want stuff? Perhaps even distribution of resources? Or would we prefer stratification? How about weighing stability versus mobility? Do we want quality of life and is that measured in dollars? Do we want everyone’s needs met, or do we want rough and tumble individualism? There are many different options for what constitutes a high-performing economy, based on many different economic value systems. So measuring the economic climate requires a full meteorological bag of tricks.
Downey, Matthew. Contemporary’s Economics.
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