Marble Falls Here’s something that we see everywhere and all the time, but rarely think much about: the Gross Domestic Product or GDP. If GDP is growing according to the economists, that’s a good thing for a country. Then the question is whether or not it is growing enough to do the job for its people. Wild rates of growth, like what is happening in the countries dominating the world economy around the Indian Ocean are around 6% GDP bumps. Negative GDP growth for two consecutive quarters in the United States usually signifies a recession, the economic fire alarm.
OK, so we’re all on the same page now about the GDP, but does it do all the job we need it to do to gauge what’s really happening to the economy and all of the people who make it work and depend on it? Ken Pentel of the Minnesota-based Ecology Democracy Network talking with me on a recent Wade’s World thinks we need changes. He’s not alone either as it turns out, because Congresswoman Ilhan Omar stepped forward and introduced H.R. 4894: Genuine Progress Indicator Act of 2021 to study changing the GDP to the GPI or Genuine Progress Indicator. And, there are more than the two of them arguing this case, because some economists and advocates have been rooting for the GPI since 1995. In fact, since 2010, states such as: Vermont, Maryland, Hawaii and Washington State have moved to implement the GPI.
So, what is the GPI. According to Pentel, “The GPI is a triple bottom-line measure; measuring social, economic and environmental indicators.” That brief description makes the GPI seem made for modern times and economies. He goes on to make the case with some examples that are compelling in an article in the upcoming Social Policy.
With the GDP someone could take care of home; cooking, cleaning, and caring for children and elderly – for 40 years, and this would not show-up in the GDP because no money has been exchanged. In the GPI, we would add a column in the national spreadsheet that would value household work, because someone who is taking care of a home is essential to family and community stability, and the strength of our economy.
Once we add non-monetized household work into the calculation of our economy, then what was invisible now becomes visible and people and policy-makers would have a more accurate understanding of what and who is contributing to the economy and adjust accordingly.
Another example: The GDP could improve if one person in the US gained all the benefits of productivity because it does not care how money is allocated in the economy. With the GPI a $1,000 that goes to someone who makes $40,000 has a different value than a $1,000 that goes to someone who makes one million dollars a year. So, where the GDP does not care about income inequality the GPI does. And as many of us know, income inequality has soared, leading to a tiny group of people on the planet gaining disproportionate political and economic power. All while the economy – driven by the GDP – grows.
I won’t hold my breath that we’ll see the GPI anytime soon, but it makes a lot of sense.