What is wealth? According to the Merriam-Webster Online Dictionary, wealth is defined as “all property that has a money value or an exchangeable value.” Starting with this definition, or one very close to it, we have formulated a wide number of methods for assessing wealth. While helpful to economists, many of these assessments do little to help citizens and policy makers understand the state of our national prosperity. Essentially, our most oft expounded means for determining the health of our nation do little more than cloud our judgment.
Gross Domestic Product, or GDP, is one such example of a fairly unhelpful measure of prosperity. GDP is the sum cost of everything that a nation produces over the course of a single year. This system of measurement works very well when dealing with physical production: pounds of coal, feet of steel, gallons of milk. Unfortunately, it is less effective when you start working with less tangible products such as human services and intellectual property.
The biggest problem posed by these products is that their costs are difficult to pin down. Determining the value of a ton of coal is easy: find the running cost of a pound of coal and multiply it by two thousand. Finding the value of something like an education from St. Mary’s is far more difficult. Sure, there are tangible costs such as tuition, housing, text books. But, there are other products that cannot be tabulated: the value of all the academic papers, research, and artwork that the students and faculty produce, for example.
Furthermore, GDP does not distinguish good costs from bad costs. Producing $2 million worth of medicine grows the GDP just as much as producing $2 million worth of land mines. Terrorist attacks, natural disasters, and medical emergencies all give significant boosts to GDP as the costs of repairing their damage flow right back into the GDP calculation. By one estimate from Business Insider, the response to Hurricane Sandy alone could boost the US GDP by up to $240 billion between 2012 and 2013. In The Brave Little Toaster Goes to Mars, Tinselina tells the story of a company which built appliances and then immediately destroyed them. While wasteful, that company was growing its nation’s GDP.
There are many other measurements that simply do not indicate the actual prosperity of the nation. Right now, the unemployment rate is supposedly hovering around 7.9 percent. But that value does not account for people who are underemployed. Discouraged workers, those who stop looking for work for more than four weeks are also excluded from the count. An adult man whose only employment is working eight hours a week as a crossing guard counts as employed even though there is no conceivable way for that job to provide him any standard of living beyond abject poverty without outside assistance. Estimates vary but there are many economists who argue that, if underemployed and discouraged workers were included, the unemployment rate would be closer to 15 percent.
Per capita income is another nearly meaningless wealth assessment. This term refers to the average annual income of a group of people. Maryland actually has the highest per capita income of any state in the union. This might be surprising considering the extraordinary poverty that thousands of people endure in parts of Baltimore and the Eastern Shore. It becomes less surprising when you realize that the per capita income of 99 people living at the poverty line and one person who earns one million dollars per year is around $20,000 a year; nearly double the poverty rate. In this way, a handful of wealthy people at the top can skew assessments so that a region seems far more prosperous than it is.
My point is that wealth and employment does not translate into prosperity. The figures I have discussed are of enormous value to economists and financial institutions but should not play such a large role in the development of policy. My problem with our obsession over these numbers, like the unemployment rate, is that they fail to illustrate anything tangible about the nation’s health. There was nearly no unemployment during the Second World War, that does not mean that the country was prosperous. I would argue, quite the contrary, most people were employed in factories, on farms, or as soldiers. Important goods and services were being rationed. Worker safety and employment rights were weak, thus allowing the poverty rate to stay high in spite of job growth. On top of all of that, hundreds of men were being killed in battle every day. And yet, we still see our leaders referring to that time period as something to aspire to because the unemployment rate was low and the GDP growth rate was high.
Many people, including politicians and media personalities, act as though economic and job growth is the key to producing American prosperity. This is a muddling of the truth. The real way to improve our nation is to physically do so. How many people have access to stable housing, food, medicine, education – and what quality of each? Equally as important, how much free time are they left with once they’ve obtained these things? Those are the numbers we should focus on improving. Let me stop to say that I am not specifically advocating welfare or social programs here. Most any solutions, whether they stem from capitalism, socialism, communism, or any other ideology are totally acceptable to me so long as they work.
There is also the issue of utility. Many politicians are resistant to cut defense projects because doing so would kill jobs. They are correct, but only if you cut spending stupidly. There are two types of defense spending. The first and smaller portion pays for the salaries of current personnel and the maintenance of existing equipment. For my part, I think that portion should be left alone or maybe even increased. The larger portion goes to the defense industry to pay for research programs and production contracts.
Here is the issue: designing and building military hardware, a tank for example, produces nothing. This is because a tank serves no economic purpose. Supporters of such programs are quick to argue two points. First, the money that goes into producing the tank is paid to workers , engineers and their companies who then pay the money back into the economy. Second, the research that goes into these programs often produces new technologies that can be applied to consumer products and spark new industries. Both statements are true. However, I would argue in response: why build a tank? Why not spend the same amount of money on the same people but have them design and build new industrial or construction vehicles. Even the people who design ammunition could be reallocated to working on mining and landscaping explosives. Economically, everything turns out the same or better. The contractors are still employed, the research still occurs and is even more likely to produce results for consumers, and the physical product is a useful tool instead of an implement of wasteful destruction.
I’m not trying to be naïve or overly simplistic. I realize that the modern global economy is bafflingly complicated and that tiny changes in seemingly small numbers can have huge ramifications. All I ask is that we, as individual citizens, resist being misled by statistics. The next time a politician says that they plan to reduce the unemployment rate or promote economic growth, don’t just ask how, ask why. What will that do for you, personally? Be a little selfish about this. Where will these jobs be available? More importantly, what kind of jobs will they be? Creating 100,000 jobs by building a pipeline in the Midwest may lower the unemployment rate but it certainly won’t help people in other states. In addition, most of those jobs are neither high-paying nor permanent and will provide slim and short-lived benefits to the people who work them. We have to start paying more attention to the realities of life and let go of this obsession with aggregate statistics.
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