Blake Borgeson, in blog form

suspected facts. validated opinions.

what does a higher gdp get you? national influence, not citizen happiness

with 3 comments

I was reading the leader in the 4/11 economist regarding america’s slowing growth, and the following line of the economist made me think about gdp, happiness, spending, etc: “spending will be supported by tax rebates in the second half of the year”. I feel like it relates to some things that umair (umair haque–see my blogroll) has discussed recently, though a lot of it comes from some of the ideas behind god and gold–that national influence comes first from economic strength.

Briefly, reading this statement made me go through the following connections, which I thought just passed the interestingness bar for something worth sharing.

  • The government thinks consumer spending is good, and will give people money to spend when they see the economy (gdp growth) slowing.
  • The reason they see consumer spending as a good thing is not out of any particular care for the happiness or well being of people in the short term, but it’s because they want the size of the economy to continue to grow, in terms of output and consumption.
  • The reason they want output and consumption to grow is behind a lot of the discussion in god and gold as to how england realized that commerce was driving their ability to lead the world in military power and general influence.
  • The more the country produces and consumes, the harder the country works in general, and even if the wealth decays (people buy crappy tvs at walmart that break in a year and get thrown away), people working harder means the government has more possibilities to accumulate and grow militarily, and it also means the government can use that economic turnover as leverage in dealing with other countries.
  • This isn’t doing any good for the people in the country necessarily per se, except that it allows the country to have its way with the rest of the world, enforcing its values and interest.

Just to sum up, I’m not saying that I think economic growth and development is pointless (I think national influence can be and generally is a good thing) or harmful (unless it comes at the expense of peace, general prosperity, or other sources of value on a national or global scale). All things being equal, and as long as the costs of environmental damage and resource usage are properly allocated, which they currently aren’t, I think economic growth is fundamentally a very good thing, and that progress and technological development make the world a better place. But focusing only on national and world gdp, as currently measured, as our main measurement of progress doesn’t perfectly target what we really should value. We just need to be aware of where our metrics don’t line up with our true goals, and work to change and hone those metrics.

Please feel encouraged to drop a comment and let me know what you think.

Written by blakeweb

April 20, 2008 at 2:38 pm

Posted in politics

Tagged with , ,

3 Responses

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  1. I am really skeptical about all of this… GDP growth creates jobs and more of the citizen can have more stuff… but “citizen happiness” is more psychologically and culturally influenced more than based on a certain standard of living. … also, this is the worst comment ever…

    soundslikeaustin

    June 8, 2008 at 4:55 am

  2. I’m glad you wanted to take the discussion up with me–that’s the best thing blog comments are good for. Plus, it gives me an excuse to clean up and qualify my position a bit.

    Another point I’d make against my general tone here of gdp not necessarily being a good thing is that gdp _generally_ means more stuff for the citizens. And the government being, in theory at least, here to serve in the best interest of the citizens, and the citizens of this country pretty universally wanting more stuff, it makes sense that the government should try to give it to them, as long as it’s heeding the spirit of their desire and not just the letter (ie, not screwing them over by giving them what they ask for without them understanding the consequences).

    The reason I emphasized “generally” there is in line with the position of my post–that in many more cases than people are aware of today, because of environmental, social, and other cost allocation being incomplete or incorrect, incrementally higher gdp can indicate people being as a whole worse off. If a city is flattened by an earthquake or a flood and insurance pays for it all to be rebuilt exactly as it was, the gdp goes up. When more criminals in a city destroy more property, the gdp goes up in 3 ways off the top of my head: the property has to be repaired or replaced; more policemen are employed by the city; more prisons are built and prison guards hired. We know that crime in fact isn’t good for anyone, but at least in the immediate-tem, it’s good for the gdp. What are your thoughts on that?

    blakeweb

    June 8, 2008 at 7:58 pm

  3. Also, don’t forget WWII pulling us out of the Great Depression by providing lots of jobs. Generally war is considered a bad thing as well.

    Not really sure what is being argued here. GDP seems to be an economic indicator and the argument about whether an improving economy makes people happy is a much harder question to answer…people dying today or getting robbed today or having their homes destroyed by earthquakes today seems bad. But really, if it ends up stopping starvation or joblessness down the road, is it bad in the long run? Sounds like a utilitarianism question to me.

    Dan Graham

    June 8, 2008 at 8:35 pm


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