America needs broader measures of success beyond GDP
The COVID-19 outbreak is a reminder that money is not everything, and perhaps we should judge success not solely through an economic lens.
For the last 40 years, American politicians have focused on employment levels, economic growth and wealth creation. We are obsessed with unemployment rates, gross domestic product growth and rising financial markets.
On this basis, the United States can claim success. The unemployment rate is below what economists once thought possible; GDP, a broad measure of economic output, has risen from $2.1 trillion to $19.8 trillion; and $10,000 invested in the S&P 500 in 1980 would be worth $209,000 today.
Yet so many Americans are unhappy, even angry with the current conditions.
Economists know these aggregate numbers do not tell the whole story. Not every job is good, economic growth is uneven and only some benefit from financial markets.
The World Economic Forum, the folks who organize the billionaires’ convention in Davos, has developed 12 measures for a healthy society called the Inclusive Development Index. The United States does not score well.
GDP growth and employment are the first two measures: Last year, GDP grew 2.3 percent, which is about average for a mature economy. The percentage of Americans between the ages of 25 and 54 who are working is approaching record levels, according to the St. Louis Federal Reserve Bank.
Labor productivity: All those workers are not getting more productive, according to the
Bureau of Labor Statistics. When workers fail to produce more per hour, wages stagnate. There are many theories, but the likely culprits are institutions spending less on education, research and health.
Life expectancy: Americans were consistently living longer until 2017, when life expectancy dropped for several years. Experts blame drug overdoses and suicide, socalled diseases of despair. There is no greater warning sign that a society is unhealthy.
Median household income: The American middle class is shrinking. About 60 percent of Americans born in the 1940s made more money than their parents. That number drops to 40 percent for those born in the 1970s, according to a University of Pennsylvania study.
Poverty rate: The percentage of Americans lacking enough goods or income to live a healthy life was going down until 1980. President Ronald Reagan cut welfare programs, the number jumped, and we developed a permanent underclass.
Gini index: A Gini index measures income inequality, with a hypothetically equal society equaling zero. Income inequality in the United States has risen from 35 in 1978 to 48.5 in 2018, the highest level in 50 years, the St. Louis Fed reports.
Wealth inequality: Upper-income families are the only Americans growing their share of national wealth, according to Pew Research. They have gone from owning 60 percent to 79 percent since 2000. The middle-class share has dropped from 32 percent to 17 percent.
Adjusted net savings: This number is calculated by adding national savings and education spending and then subtracting energy, mineral and forest usage, as well as the damage caused by carbon dioxide and particulate emissions. The U.S. peaked at 10 percent in 1998 and now registers at 6.1 percent, according to the World Bank.
Public debt as share of GDP: Federal debt as a share of GDP has skyrocketed from 30 percent in 1981 to 105 percent this year, according to the St. Louis Fed. Presidents since Reagan have run up huge debts to cope with recessions and win re-election, and it’s getting worse.
Dependency ratio: This is the number of people under 14 and over 65, divided by the total population. In the United States, 43.3 percent of the population works to support 52.7 percent, an imbalance that stresses families.
Carbon intensity of GDP: Nations that consume a lot of fossil fuels to generate economic growth are less economically and environmentally efficient. U.S. carbon intensity has steadily dropped but remains high compared to other wealthy nations, the World Bank reports.
The World Economic Forum’s last report for 2018 ranked the United States 23rd in the world. For a country that promises equal opportunity, we are one of the most unequal societies when it comes to health, wealth and income.
This inequality reveals itself when driving from Houston’s Fifth Ward to River Oaks, or from San Antonio’s Alamo Heights to the West Side. Or when visiting an emergency room or bus stop. The anger that inequality generates is reflected in the popularity of politicians who promise to blow the whole system up.
To a virus, all humans are equal targets, and we defeat them only by creating united communities. Our society would be healthier if we broadened our definition of collective success and demanded less inequality.