Debunking the GDP: Absurd Economics

The Global Accounting Scam
Jonathan Rowe, Enough!
Alternet

Several months ago a professor at the University of North Carolina published findings that turned beliefs about the economy upside down. Health improves, he said, as the economy goes down. When the economy declines, to a point at least, deaths, smoking, obesity, heavy drinking, heart disease and some kinds of back problems all decline as well.

"Sounds unlikely," said the New York Times. And indeed it is, by the standard reckonings at least. We all know that an expanding economy makes us better off -- or do we? Another study, this one in England, found that shopping, which is the drive train of the entire economy, and which is supposed to make people feel good, actually can make them depressed. "For significant numbers, dissatisfaction is now part of the shopping process," one of the authors said. (As though we needed a study to tell us that.)

What's going on here? How could we feel better when the experts say we should feel worse, and worse when they say we should feel better? Could it be that economists don't know up from down to begin with?

This is the nation's hidden accounting scandal, the one that neither government nor media will touch. It concerns the accounting for the entire economy, the way the government purports to determine whether things are getting better or worse. This accounting is called the Gross Domestic Product or GDP. It is central to the big policy debate in Washington, and is the template for the policies the United States projects upon the world. The media regard it with a reverence bordering on awe. The Wall Street Journal recently called the GDP the "world's most reliable economic indicator."

Yet like the books of Enron, Tyco et. al., the federal economic accounting is a sham. It portrays regress as progress and misery as economic advance. If you ever have wondered how you could feel so harried, stressed, maxed out and under siege, even when the government says the economy is doing well, the answer is here. If the president really is looking for chief executives who "cook the books," he might well take a look at the economic books over which he himself presides. They truly are a mess.

Adding It Up - and Adding, and Adding...

Imagine an accountant who can add but can't subtract, and who is so nearsighted he can't see past his nose. That is the mentality behind the GDP. The GDP simply adds up the money Americans spend and calls the result growth and good, regardless of where the money went and why.

By this reckoning, the more medical bills you incur, the more junk food your kids yammer for, the more you sit in traffic and the more your credit card company rips you off with hidden charges, the better the economy is doing and the more the politicians can brag about the nation's "growth."

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