a healthy gdp does not mean a healthy nation

After four consecutive quarters of decline, positive GDP growth is an encouraging sign that the U.S. economy is moving in the right direction.

- White House Council of Economic Advisers, Nov. 24, 2009

One of the most insulting approaches current American politicians can take in addressing the ongoing Great Recession is to express great joy about the fact that Wall Street seems to be recovering, and the GDP seems to be reversing its downward trend. It is insulting because it essentially is telling Americans that the economy is actually much better than the one that they are living with every day. As the pre-Recession bubble showed us, a healthy total GDP doesn't mean that everyone in the country is benefiting equally. This has been especially far from the truth in recent years, as economic growth largely benefited the wealthy. The top 1% of income earners in the U.S. take home 23.5% of Americans' income, the largest share to be concentrated in the top percentile since 1928, during the pre-Great Depression "Gilded Age." According to the United Nations Development Program, the United States is ranked 3rd in the world for largest gap between rich and poor.

There are better ways to measure countries' success in bettering their lives than simply looking at GDP rates. One standout is the idea of a Human Development Index, as Paul Rosenberg discussed over the summer. The UN Development Program bases the index on actual outcomes in the areas of health and education, rather than just how much money the country is making overall:



Similarly, the Social Science Research Council's American Human Development Project (cool site to play around with if you have some time) looks at standard of living in addition to health and education indicators. This allows them to (literally) draw a vivid picture of the well-being of various parts of the country:



Policymakers who genuinely care about the well-being of their constituents need to abandon the GDP rhetoric when talking about economic trends. Perhaps more fundamentally, though, efforts to change the way that American leaders understand and value economic progress requires not just better government policies, but better ways of measuring the success or failures of such policy.