Read Online I'm a Stranger Here Myself by Bill Bryson - Free Book Online
Authors: Bill Bryson
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GDP was a concept that was originated in the 1930s by the economist Simon Kuznets. It is very good at measuring physical things—tons of steel, board feet of lumber, potatoes, tires, and so on. That was all very well in a traditional industrial economy. But now the greater part of output for nearly all developed nations is in services and ideas—things like computer software, telecommunications, financial services—which produce wealth but don’t necessarily, or even generally, result in a product that you can load on a pallet and ship out to the marketplace.
Because such activities are so difficult to measure and quantify, no one really knows what they amount to. Many economists now believe that America may have been underestimating its rate of GDP growth by as much as two to three percentage points a year for several years. That may not seem a great deal, but if it is correct then the American economy— which obviously is already staggeringly enormous—may be one-third larger than anyone had thought. In other words, there may be hundreds of billions of dollars floating around in the economy that no one suspected were there. Incredible.
Here’s another even more arresting thought. None of this really matters because GDP is in any case a perfectly useless measurement. All that it is, literally, is a crude measure of national income—“the dollar value of finished goods and services,” as the textbooks put it—over a given period.
Any kind of economic activity adds to the gross domestic product. It doesn’t matter whether it’s a good activity or a bad one. It has been estimated, for instance, that the O. J. Simpson trial added $200 million to America’s GDP through lawyers’ fees, court costs, hotel bills for the press, and so on, but I don’t think many people would argue that the whole costly spectacle made America a noticeably greater, nobler place.
In fact, bad activities often generate more GDP than good activities. I was recently in Pennsylvania at the site of a zinc factory whose airborne wastes were formerly so laden with pollutants that they denuded an entire mountainside. From the factory fence to the top of the mountain there was not a single scrap of growing vegetation to be seen. From a GDP perspective, however, this was wonderful. First, there was the gain to the economy from all the zinc the factory had manufactured and sold over the years. Then there was the gain from the tens of millions of dollars the government must spend to clean up the site and restore the mountain. Finally, there will be a continuing gain from medical treatments for workers and townspeople made chronically ill by living amid all those contaminants.
In terms of conventional economic measurement, all of this is gain, not loss. So too is overfishing of lakes and seas. So too is deforestation. In short, the more recklessly we use up natural resources, the more the GDP grows.
As the economist Herman Daly once put it: “The current national accounting system treats the earth as a business in liquidation.” Or as three other leading economists dryly observed in an article in the
Atlantic Monthly
last year: “By the curious standard of the GDP, the nation’s economic hero is a terminal cancer patient who is going through a costly divorce.”
So why do we persist with this preposterous gauge of economic performance? Because it’s the best thing that economists have come up with yet. Now you know why they call it the dismal science.
I decided to clean out the refrigerator the other day. We don’t usually clean out our fridge—we just box it up every four or five years and send it off to the Centers for Disease Control in Atlanta with a note to help themselves to anything that looks scientifically promising—but we hadn’t seen one of the cats for a few days and I had a vague recollection of having glimpsed something furry on the bottom shelf, toward the back. (Turned out to be a large piece of gorgonzola.)
So there
Because such activities are so difficult to measure and quantify, no one really knows what they amount to. Many economists now believe that America may have been underestimating its rate of GDP growth by as much as two to three percentage points a year for several years. That may not seem a great deal, but if it is correct then the American economy— which obviously is already staggeringly enormous—may be one-third larger than anyone had thought. In other words, there may be hundreds of billions of dollars floating around in the economy that no one suspected were there. Incredible.
Here’s another even more arresting thought. None of this really matters because GDP is in any case a perfectly useless measurement. All that it is, literally, is a crude measure of national income—“the dollar value of finished goods and services,” as the textbooks put it—over a given period.
Any kind of economic activity adds to the gross domestic product. It doesn’t matter whether it’s a good activity or a bad one. It has been estimated, for instance, that the O. J. Simpson trial added $200 million to America’s GDP through lawyers’ fees, court costs, hotel bills for the press, and so on, but I don’t think many people would argue that the whole costly spectacle made America a noticeably greater, nobler place.
In fact, bad activities often generate more GDP than good activities. I was recently in Pennsylvania at the site of a zinc factory whose airborne wastes were formerly so laden with pollutants that they denuded an entire mountainside. From the factory fence to the top of the mountain there was not a single scrap of growing vegetation to be seen. From a GDP perspective, however, this was wonderful. First, there was the gain to the economy from all the zinc the factory had manufactured and sold over the years. Then there was the gain from the tens of millions of dollars the government must spend to clean up the site and restore the mountain. Finally, there will be a continuing gain from medical treatments for workers and townspeople made chronically ill by living amid all those contaminants.
In terms of conventional economic measurement, all of this is gain, not loss. So too is overfishing of lakes and seas. So too is deforestation. In short, the more recklessly we use up natural resources, the more the GDP grows.
As the economist Herman Daly once put it: “The current national accounting system treats the earth as a business in liquidation.” Or as three other leading economists dryly observed in an article in the
Atlantic Monthly
last year: “By the curious standard of the GDP, the nation’s economic hero is a terminal cancer patient who is going through a costly divorce.”
So why do we persist with this preposterous gauge of economic performance? Because it’s the best thing that economists have come up with yet. Now you know why they call it the dismal science.
I decided to clean out the refrigerator the other day. We don’t usually clean out our fridge—we just box it up every four or five years and send it off to the Centers for Disease Control in Atlanta with a note to help themselves to anything that looks scientifically promising—but we hadn’t seen one of the cats for a few days and I had a vague recollection of having glimpsed something furry on the bottom shelf, toward the back. (Turned out to be a large piece of gorgonzola.)
So there
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