SHARE THIS SHOW:
RECENTLY ON TOL:
TOL Our Town
- A tumblr site dedicated to the people and places that make up Oregon and Southwest Washington.
TAGS:
2012 conventions
2012 election
2013 session
2013 special election
arts
arts and culture
author
ballot measures
bomb
books
budget
bullying
business
charlie hales
children
clackamas
climate change
coal
courts
crime
culture
culture club
democrats
drugs
economy
education
environment
family
film
fluoride
food
gay rights
guns
handguns
health
health care
health insurance
high school
history
housing
immigration
international
internet
kitzhaber
law
legislature
lgbt
literary arts
living
marijuana
medicine
mental health
military
minor parties
mohamed mohamud
movies
music
native americans
news
newspaper
obama
olympics
oregon
our town
parenting
pers
photography
police
politcs
politics
port
portland
portland business journal
portland mayor
president
prevention
public safety
religion
republicans
rnc
romney
rural
salem
sam adams
sandy hook
schools
science
shooting
sports
suicide
supreme court
taxes
television
terrorism
theater
third parties
timber payments
transportation
union
university of oregon
violence
washington
water
wildfire
women
see all tags >>
In the early days of his 1968 presidential campaign, Robert Kennedy gave a speech about what he saw as the limited scope of the measurement known as the GNP (Gross National Product), which after a few tweaks, now goes by GDP (Gross Domestic Product). "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," he told a crowd at the University of Kansas. What it does measure is consumption and spending, and so growth in the GDP is often cited as a way to gauge the nation's economic health.
Almost exactly 40 years after Robert Kennedy's speech, a subcommittee of the U.S. Senate is taking a hard look at the GDP-- what it calculates and what it leaves out and what that means for policy decisions. The Glaser Progress Foundation will be represented at the hearing tomorrow because one of their missions is to "ensure people understand the limitations of the GDP statistic." For example, the Glaser Progress Foundation points out, the GDP does not measure economic inequality, environmental costs, and healthcare expenditures that could have been avoided by wider insurance coverage.
Do you pay attention to the GDP? Is it an accurate measure of economic health? What are the alternatives? What is your personal economic barometer?
GUESTS:
- Martin Collier, Executive Director of The Glaser Progress Foundation
- Joe Cortright, Chair of Governor Kulongoski?s Council of Economic Advisors and Vice President and Economist at Impresa Inc.
Tagged as: gdp
-
I judge it by how comfortable I, and those of my aquaintence, are with spending money and making large purchases. By that measurement, the economy is truly in trouble. No one I know sees this as the right time to buy a home, new vehicle, or a large purchase. With more and more commercials on TV advertising Bankruptcy sales for furniture, and vehicle sellers offering "deals of a lifetime." I would guess that more than just the people I know are waiting to see how bad the economy gets.
-
I don't know enough about how exactly the GDP is calculated to talk intelligently about its accuracy as a measure of our nation's economic health. I think a more important question is -- what other measures of our nation's overall health should we be looking at? Healthy businesses look at financial, quality, service, people, and growth measures. And doing well in one area at the expense of another is not the key to long term success. What would happen if we had a pay for performance system for our elected officials that was tied to the percentage of their constituents who were proud to be an American? Or felt that they had influence in the decisions made by their government? Or were satisfied with government services that they had accessed? AND a healthy GDP?
-
Why do we use the GROSS domestic product? Why not a NET domestic product? The current measure rewards waste and destruction instead of health and efficiency. When we produce more garbage, the GDP goes up as labor, fuel, and equipment are used to dispose of it. When a couple gets divorced, the GDP goes up when two households are created with all the consumption they require. When more policemen are hired to handle growing crime, the GDP goes up. A more sensible measure of economic health would take all we produce and subtract all the waste that is created to sustain it. Things like new prisons, a bigger military, and waste disposal should not be considered positive indicators of economic health.
-
JarodBishop,
I'll definitely bring your question onto the show -- it's central to the hour, I think. But one follow-up: do you get the sense that we as a society can agree on what "waste" is? -
I think everyone sees waste, but deciding on what the "official" definition is may be as complex as deciding what "sustainable growth" means. With that said, I think that the conversation about it may be as important, if not more important, as the "final answer." I am home with the flu, but looking forward to hearing the show.
-
I agree with you that military, prison, and emergency assistance spending should not be included.
-
One of my primary goals in life is not to add to the GDP. My main problem with the measure is how it is abstractly applied to quality of life and thus, happiness..... I believe the GDP is a better indicator of suffering. If people want to talk about quality of life, they need to consider crime, health, literacy, etc. I feel a better measure of economic health is the relative value of our currency.
-
GDP fails to account for disasters. Rebuilding a single home after a hurrucane or tornado adds to GDP. Try convincing all those whose homes have yet to rebuilt that they are better off.
My key to the state of the economy was the announcement that "women's apparell" sales had declined. Our family life cycle involved having young children during the early 80's. I used to tease my wife that she deserved a medal for single handily stimulating the Reagan Recovery. Things are bad when moms cut back on spending on themselves. -
Thank God you changed your intro song! The last one was horrible! The new one isn't great, but anything is better than that alarm clock you axed.
-
Amen!
-
Could you do something like Change in Investment:
Beginning Capital, plus income, less expenses (including non-cash: pollution, in-kind), plus contribution to capital, less depletion of capital equals Ending Capital -
This would account for things like Foreign Investment, depletion of natural resources, and investment in infra-structure.
-
Thank you for covering this important topic.
Riane Eisler's recent book "Real Wealth of Nations: Creating a Caring Economics" promotes the economies of household, community and the natural environment as equal in inportance to the market economy on which our society is focused. There is an emphasis on the values of community & indivduals working together. Portland now has a local representation of these ideas with The Real Wealth of Portland project (RealWealthpdx.com) and is currently working on an indicators report to be announced at a meeting during a workshop on April 20th. These indicators will reflect a measurement to access local & regional business in ways that they benefit our communities on a variety of levels so that others can support them as they contribute in ways that people in our community value.
Also of interest are the writings & lectures of Catherine Austin-Fitts.
-
I the the GDP to be a least a bit more useful than the government's unemployment figures. Most people don't pay attention to the fact that the government only releases numbers on the number of people who are receiving unemployment benefits. So, when you hear on the news that we have a 3% unemployment rate. It is VERY misleading. It doesn't account for those who's unemployment has ran out, did not qualify for unemployment, or did not file for unemployment. So, that 3% unemployment rate is very misleading and the news media rarely clarifies the truth behind that figure. At least with the GDP, as imperfect as it is, it does provide us a snapshot of whether or not money is being spent domestically.
-
Bhutan has what they call Gross National Happiness and has for quite a while. It measures the well being of individuals. Of course it's subjective, but, to me, it's a better measure of a nation than cold financial numbers.
http://www.grossinternationalhappiness.org/
Mike -
Are GDP numbers adjusted for inflation and population growth? I always hear what the official annualized GDP numbers are for the fiscal quarter but never do I hear whether they are showing real growth or just tracking inflation. For example, oil prices have been going through the roof so one would expect GDP to rise since the price of oil factors into the cost of just about everything. This is just one example that I can think of where the GDP rises while the real wealth of the population goes down.
I don't know, the use of GDP just seems crude and misleading to me. -
In Portland, if you have someone sleeping on your couch, your doing good.
If you are sleeping on someone else's couch, your doing bad. -
HA! I love it, Chad!
-
Very good point
-
Let's get a specific example. Metro, one of the unique government agencies in our area, had a five year process I was involved in to count volunteer hours. Government accounting ruls don't count volunteer hours, while the non-profit rules (FASB) allow it. So switching Metro to thinking like a non-profit took about five years. Now, the most politically "safe" job at Metro is the volunteer coordinator because all policital folks there know that thousands of hours of volunteer work would be lost if that person quit doing their job. We have not quantified those hours, but they are a value t the community.
Think what we would have by simply requiring governments to keep track of volunteer hours. Schools would be viewed differently in the eyes of voters. Many agencies don't do this and wonder why funding folks don't see their value.
While not a cure all, it is one activity we are doing HERE. And getting to what the speakers want. They just might not know it is happenin.... -
I think the GDP should be designed to show which investments are adding to the quality of life and which expenses are taking away from the quality of life. I'm sure this is oversimplified, but an equation of beneficial investments into the welfare of the country minus the detrimental expenses to the country would equal our GDP. Some beneficial investments would include education, infrastructure, preventive healthcare & insurance, food, manufactured products, etc. Some costs to our country would include prisons, pollution, war, etc. great topic.
-
The GDP does well what it is supposed to do. The GDP provides sound information for policy makers to determine how to encourage business and how much tax revenue will be received. Many other policy decisions would be better informed by quantifying non-market values. For example, calculating the inherent Columbia River salmon into GDP (or what would be GPI) is would greatly benefit policy-making in areas affecting salmon. In fact, though, several think tanks and economists already measure GPI. The stickler is finding how to used GPI instead of GDP, in other words, how not only to raise the public awareness of GPI but how also to make it the binding measurement upon our policy-decisions.
-
I have to say, this conversation is very uncontroversial. No one is going to argue against making valuation of GDP better. Wouldn't a magazine-format of this issue better than a forum-format to discuss this issue on OPB?
-
I am conservation director at The Xerces Society for Invertebrate Conservation, based here in Portland, Oregon. We manage a large pollinator conservation program. As part of this, I recently published a paper on assessing the value of ecosystem services provided by insects in nature. The short of it is that insects are critical for the transer of over $60 billion in services, such as pollination, pest control, and recreation. This certainly does not get included in GDP, and leads to a significant undervaluation of our natural areas.
To read a copy of the paper (published in BioScience), you can visit the following site. http://www.xerces.org/pubs_merch/Econ_Value_of_Insects.htm
Best,
Mace -
I like that more things are being shown to be of value but I also see a real danger in financializing them. The seemingly insatiable demand for more and more wealth and power makes it inevitable that some people and corporations will want to "privatize" everything and that of course would include the pollinators you study.
Monsanto and their "Roundup-Ready" genetic engineering is an example to be studied and their methods and results ought be fought and prevented in areas like yours.
I think it would be better that things currently in the Public Commons be shown to have value and that Privateers be forbidden to harm them in any way. -
I think of GDP as a metric used by the superwealthy to measure how efficiently wealth is redistributed from the lower classes upwards to the those at the top. It shows what they value, property, and what they consider to have no value, human beings, and so it is very much a traditional Conservative idea.
I look at two pages in the Conservative The Bend Bulletin newspaper to demonstrate that, the Stocks and Bonds and the page requesting Volunteers. The stocks page values property and the volunteers page shows that human beings are considered to be of no value and so are left to their own devices.
I like that you guys are considering other values, including human beings but that is very Progressive and will be fought hard by Conservatives. -
In my experience Wealth is almost an inverse measure of happiness. I was fortunate early in my life to work at a job in a very expensive ski lodge to be around very rich people and found they in many ways to be much less happy.
I was lucky to learn early to focus on quality of life not wealth. I believe that is one of the things Oregon does well, many people in this state have long demonstrated that Quality of Life is more important that GDP. We as a state have do a lot through our Land Use Planning laws for example to preserve Quality of Life. I think this is of much greater value than GDP and should be measured. -
During the early 1990s, I worked as a Research Analyst for the World Resources Institute - a Washington DC Environmental Think-tank. We did a lot of measuring for publications and GDP was often discussed as a limited measure. The challenge of being able to measure an indicator over time was a key problem.
One of the things we did was publish data that utilized purchasing power parity (PPP), which basically involved analyzing prices paid for commodities (or a baskets of goods) in national currencies.
The PPP gave a little better picture of what a person can purchase in their country compared with what other people pay in other countries. What is the status of PPP now? Is it used by economists? Or why not? -
PPP is very useful when comparing different economies. The 'Big Mac Index' (published by the Economist magazine) attempts to do this simply. Exchange rates don't mean a lot when you're talking about people because a 1:1 purchasing ratio doesn't exist. 1 rupee doesn't buy you in India what 1 dollar buys you in the USA, so the exchange rates only make sense when you know what a meal costs or something like that. 7 yuan in China is 1 dollar, but buys you much more than it does in the US. PPP accurately reflects this.
-
Aren't we mixing apples with oranges? GDP was never meant to be a measure of personal well being, but of national or government health. Doesn't that explain the frustration of those who can't rtelate to it personally? GDP definitely does not adequately measure our national economic health any more, and separately perhaps we also need a measure of personal well being,but that measure would vary greatly depending on where you live (.e.g. U.S. vs the Sudan for example)!
Jon, an economics teacher -
I agree with a previous caller that Social Capital as defined by Robert Putnum is a better measure of happiness than GDP. Any conversation of this sort needs to talk about HOW an alternative to GDP can be widely used. Marketing says you need to hear an idea fourteen times to get it.
-
To add to Jon's comment, Mark Anielski, an economist, has published a book called The Economics of Happiness that discusses the issue of how to measure what he calls Genuine Wealth. He has tried using a democratic process, asking citizens of a Canadian city to describe what they value, and to form wealth indicators from their responses. Like today's discussion, it's very provocative and interesting.
-
It is time to rethink the most basic goal of our economy. GDP is not a useful measure of progress. The goal of growing the economy or continually increasing GDP has become harmful as we bump up against the carrying capacity of our ecological systems. It is time to change the goal from unsustainable growth to a sustainable economy. There is an alternative -- the steady state economy. In a steady state economy, population and per capita consumption are relatively stable, and the scale of the economy is managed within ecological limits. For more information, see
. -
Do you pay attention to the GDP?
Not much, and I'm in business and sustainability. It doesn't measure the things that I'm after because it doesn't measure non-monetary benefits.
Is it an accurate measure of economic health?
No, because social problems, such as health care issues and environmental cleanup, are positives in the GDP. Unemployment is not accurately measured in this country either. But it is the least expensive method because of the systems we have in place; our systems are designed to track dollar movements, and creating a new one will take some effort and investment in ourselves--investment that I think would be worth it but is currently being squandered elsewhere on projects that will never pan out economically.
What are the alternatives?
NDP: Net Domestic Product, some sort of economic and social metric, such as lands preserved, waste being recycled/reused/reduced, and farmland being organically harvested. Combine that with mean and median incomes, unemployment, population growth rate, and even a happiness index (http://www.grossinternationalhappiness.org/) and you may get a clearer picture as to what is going on. The problem with statistics and numbers, especially when they are one-sided, is that you don't get a quality for the numbers. A NDP would, to me, reflect the negative aspects of society and deduct them from the GDP: as I mentioned before, health care, environmental cleanup, etc. Having many numbers, though, helps to get the real picture. One can never boil down an entire economy into one number. One dimension is never enough to get the real picture. The mean and the median incomes show a very different picture of how people are doing in our economy, as an example.
What is your personal economic barometer?
I have a few things. If I have to be mindful of my money and budget every last scrap (I call it the 'college economy'), then I don't think I'm doing very well. I've been living a very inexpensive and simple life for a long time, so doing anything extra shouldn't be all that hard. I also measure my ability to invest in myself or my home. If I can take a class at a college or can invest in long-term project in my home, then I think I'm doing really well. Lastly, my capacity for emergencies: if someone steals my bike or breaks one of my windows, the length of time for me to be able to respond to that is a metric of how well I'm doing. -
Comments are now closed.
