Enough with the GDP — it’s time to measure genuine progress – “Unlike GDP, the Genuine Progress Indicator is designed to measure economic performance from the perspective of ordinary American households, not corporations or Wall Street investors.”[1,2]
Use of the GPI in federal decision-making processes would correct many of the shortcomings of relying on GDP by differentiating between government and consumer expenditures that are welfare-enhancing (e.g., homes for the houseless and modern infrastructure) vs. those that go toward paying for market failures (e.g., climate disasters and overpriced prescriptions).
The GPI also captures the vast economic contributions from the non-market sector which GDP ignores, such as the value of volunteering, unpaid care work, modern infrastructure and protected natural areas. Unlike GDP, it factors in inequality by counting gains for those least well off more than gains for billionaires, based on well-established economic principles of declining marginal benefits of income, wealth and consumption.
The GPI also factors in costs which are otherwise treated as “externalities” and ignored by GDP and other analysis: namely the damaging economic consequences of unsustainable production and consumption patterns, including the costs of climate change, deforestation, pollution, homelessness, crime and family breakdown, to name a few. Economic textbooks have discussed and quantified such externalities for generations. It’s high time to incorporate them into official economic calculations.
also btw…
- @mileskimball: “Dan Benjamin, Ori Heffetz, Kristen Cooper and I are leading a team for a national well-being index that can stand as a coequal to GDP.”
- Racial inequities cost U.S. economy trillions, researchers find – “Daly and her co-authors calculated what the gains to GDP would be if those and other race-based gaps were erased: if Black and Hispanic men and women held jobs at the same rates as whites, if they completed college at the same rates as whites, and if they earned the same as whites.” (The economic gains from equity; PDF)
- The Tragedy of America’s Rural Schools [ungated] – “Outdated textbooks, not enough teachers, no ventilation — for millions of kids like Harvey Ellington, the public-education system has failed them their whole lives.” (One million Nigerian children to miss school due to mass kidnappings, UNICEF says)
- China’s industrial planning evolves, stirring US concerns [ungated] – “After taking power in 2012, President Xi Jinping promoted a worldview of industrial and technological dominance as a political and security imperative. Couched in terminology suggesting self-sufficiency goals, Chinese planning took aim at globalized sectors like car making by putting government money and regulation behind new concepts, like electrification.” (China to consolidate overcrowded electric vehicle industry – minister)
- Expecting Inflation: The Case of the 1950s – “Ultimately, the experience of the 1950s teaches us that transitory inflation associated with new capacity recedes without necessitating policies that kill jobs as a show of ‘credibility’ to keeping inflation expectations anchored. The 1950s show that it’s possible to do everything the model considers a ‘policy mistake’ while achieving low inflation and low unemployment.”
- Two quick thoughts about Amazon – “I don’t think people appreciate the extent to which Amazon puts a wage floor in a community. It’s the first thing employers think about when a new Amazon facility arrives in town.”[3]
- The housing theory of everything – “Western housing shortages do not just prevent many from ever affording their own home. They also drive inequality, climate change, low productivity growth, obesity, and even falling fertility rates.”[4,5,6]
- Why Family Allowances? – “What entitles the grandmother, the kids, and the wife caring for a newborn to income is not that their household is destitute, which it may not even be. Instead, what entitles them to it is that they exist and cannot receive income from the market and thus need non-market income for egalitarian purposes.”[7]
- ‘S.Korea’s Bernie Sanders’ tops presidential polls with talk of universal basic income – “As governor, Lee advocated for universal basic income and instituted cash payments to all 24-year-old people for a year. When the COVID-19 pandemic hit, all province residents also received regular payments… with many South Koreans disillusioned by runaway housing prices, a poor employment outlook for young people and a string of corruption scandals, that populist message has driven him to the head of the pack as he looks to blunt conservatives’ efforts to capitalise on voter discontent.”
- Biden’s child tax credit pays big in Republican states, popular with voters – “The current expanded tax credit has proven popular, a Reuters/Ipsos poll found, supported by 59% of U.S. adults including 75% of people who identified themselves as Democrats and 41% of people who identified as Republicans. The poll was conducted online Sept. 9-10, based on responses from 1,003 adults and with a credibility interval of 4 percentage points. The policy’s support among Republicans far outstripped their 11% backing for Biden’s overall job performance in a separate Reuters/Ipsos poll.”
From labor alone, they figured, the gains would add up to $22.9 trillion over the thirty years from 1990 to 2019, with bigger gains in more recent years as the share of non-white populations has increased while the gaps have remained fairly steady. The larger $51.2 trillion estimate factors in the increase in capital investments that a more productive labor pool could be expected to trigger, Daly said, and includes $2.57 trillion in 2019 alone.
There is another way. Increasing the supply of housing and commercial space, while ensuring that it benefits existing residents, could turn this zero-sum situation into one where everyone can be better off. This might be done, for example, by allowing them to vote on increased density, and benefit from it directly. The new demand could be accommodated and the financial rewards to development could be shared with existing residents without displacing them. The aggregate, countrywide effect of housing being so limited in supply has been that economic growth in most Western countries has accrued more and more to landowners and less to everyone else. Economist Thomas Piketty famously demonstrated an increase in the share of national income that flows to owners of capital, rather than to labour. But what was less widely acknowledged was that, at least in the US, it was really an increase in the share of income going to landowners, driven by increases in the cost of housing, and that this effect was particularly strong in states that have highly restrictive rules against building more homes. The rising inequality Piketty demonstrated appears to have been largely driven by housing shortages turning, in one economist’s words, ‘houses into gold’. And this is the case across the Western world: housing inequality, not income inequality, primarily determines how much wealth inequality there is in most Western countries… Many young people have had to delay forming families and often take poorly paid, insecure jobs that can barely cover rent and living costs as the price for living in culturally attractive cities. They see opportunity as limited and growth as barely perceptible. Meanwhile, older generations sit on housing property worth many times what they paid and, stuck in a zero-sum mindset, often prioritise the protection of their own neighbourhoods over the need to build more homes. Can you blame young people who resent older people, and the West’s economic system itself, when this is what it offers them? If all this has a solution, then we suggest it is unlikely to be won through a zero-sum political ‘tug of war’. Western countries could become trillions of dollars better off by addressing their housing shortages. A well-designed solution can spread those gains widely enough that everyone is made better off, including people who currently oppose existing efforts to build more that would make them worse off. We have suggested one possibility elsewhere: radically localized democracy that allows individual streets to opt in to greater density by voting for it. No construction would happen anywhere that a majority did not opt for it, but streets that voted for more density would become extremely valuable, so there would be a big incentive for homeowners in high-demand areas to vote for greater density. But whether this or another approach is the best solution is not the key question. What matters is that housing shortages may be the biggest problem facing our era, and solving it needs to become everyone’s highest priority. And as important as it is, we should be wary of letting it become politically tribalised: the disastrous politicisation of Covid vaccines in the United States highlights the danger of that. Some kind of creative, below-the-radar solution that turns this zero-sum game into a positive-sum one is likely to have a better chance. In a tug of war, its often surprising how far you can go if you tug the rope sideways. If we’re right about this, it means that fixing this one problem could make everyone’s lives much better than almost anyone realises – not just by making houses cheaper, but giving people better jobs, a better quality of life, more cohesive communities, bigger families and healthier lives. It could even give renewed reasons to be optimistic about the future of the West.
A longtime advocate of universal basic income, Lee vowed to provide 1 million won ($850) to all citizens and another 1 million to people aged 19-29 every year if he takes office. He also pledged to boost housing supply by building more than 2.5 million homes, including 1 million to be distributed under a “basic home” scheme, aimed at allowing non-homeowners to live in high-quality public housing at low prices for up to 30 years. To bankroll the programmes, Lee proposed a carbon tax and a national land tax scheme to increase taxes for all property holders and cut transaction costs. “I will adopt universal basic income as a national policy to pave the way for a grand transition from a low burden, low welfare state to a medium burden, medium welfare state, while minimising tax resistance,” he told a news conference in late July.