[OPE-L] GDP growth and rising poverty: let them eat cake...

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Thu Mar 01 2007 - 17:48:30 EST

Jerry, you asked:

What statistical measure is a better indicator of economic growth than GDP?

I do not have a quick answer to that, since I think the term "economic
growth" refers not just to a quantitative increase in one variable, but to a
process whereby the reinvestment of income leads to increased output, labour
utilisation, assets and additional income. You cannot capture the process
with just one indicator, you need a range of indicators referring to a set
of relationships, just as human bodies do not simply grow upwards (in which
case you could measure height) but also sideways and internally and so on.

Output can be defined as physical output, or as a monetary output value
calculated from sales and costs. But output of what? Around half of
intermediate consumption in the US gross output consists of all kinds of

A lot of these services supply straightforward commodity products, not
personal services, even so, if the output of services increases, economic
growth seems to increase.

A commodity is a tradeable, alienable object, but not necessarily a net
addition to material wealth (e.g. intellectual property). Credit economy
creates the capacity to buy, use and consume what you haven't produced.

In a historical materialist sense, we would focus on the net additions made
to the stock of tangible physical assets in the domestic economy, either in
physical quantities or in monetary values. If that stock increases, you have
true economic growth. This is difficult to measure already.

In the USA, if Budget reports are to be believed, that physical stock
roughly doubled since 1980 in constant dollar terms, so that's real growth.
But part of that growth is attributable simply to net imports of products
and materials, not local production, though the two are intertwined. So then
really you'd need to deduct the net imports from the additions to the
domestic physical stock, to get a real understanding of the domestic rate of
growth in an historical materialist sense.

However such an approach is likely to be contested too, since we are
supposed to be living in an "information society" or "knowledge economy" in
which "human capital" and R&D expenditures are just as important. We know
lots of things, so we are supposed to be rich. So, much depends on what you
understand "wealth" to be.

Bringing up the issue of poverty despite growth is not a joke - poverty for
instance correlates strongly with lousy health, which correlates strongly
with suicide. Of course, suicide bombers are currently in the news, but
today (i.e. 1 March 2007) I read about a Dutch sample survey of adults aged
18-64 years, the results were just released under the auspices of the
Trimbos Institute. The fatal suicide attempts in the Netherlands number
about 1,600 per year, but annually 94,000 Dutch adults attempt suicide,
and... wait for it, an estimated 410,000 people here at any time feel so
down that they think of committing suicide (suicidal ideation). The total is
504,000, or 5% of the Dutch adult population, one in twenty Dutch adults
have this problem. I have had that problem in the past. We have modest GDP
growth now, we are a wealthy society, but just think of what would happen
when you get sustained negative growth, shudder the thought.

On Monday, August 18, 2003, the Japan Times reported the number of suicides
in Japan in 2002 exceeded 30,000 for the fifth consecutive year, more than
three times the number of deaths from traffic accidents. The high incidence
of suicide was attributed mainly to the prolonged economic slump, where
people no longer saw any way out. The annual number of suicides in Japan
used to average about 20,000. Now suicide ranks as the sixth leading cause
of death among all Japanese people. For people in their 20s and 30s, it is
the leading cause of death. In addition to those who commit suicide, there
are about 10 times more people who attempt suicide, that's about 330,000
people all told, and I'm not even talking about the total who engage in
suicidal ideation, it could be 1.4 million if Dutch figures are anything to
go by.

The United States averages about 32,000 suicides a year ( about 1.3 percent
or so of all U.S. deaths), but there are over half a million emergency
department visits a year for self-inflicted injury; an estimated 17% of US
students (one in six) in grade 9-12 suffer suicidal ideation and about 2.3%
of those attempt suicide. Suicide is the eighth leading cause of death for
all U.S. men and the third leading cause of death among young people ages 15
to 24.

Why do we feel so bad, when we've never had it so good? That is the schizoid
part of postmodernity. Nowadays I'm classified too as some kind of schizoid,
yet I feel very in tune with reality anyhow. The challenge is to live
healthily and enjoy life, even although you can observe human rot all
round... growing in a balanced way in a very unbalanced world, helping
others to do so if you can.


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