The US gross domestic product has tepidly advanced around 2% yearly since the Great Recession, but at least it’s some progress. Or not. Nobel Prize winner Joseph Stiglitz says old ways of measuring GDP are outmoded—and inaccurate.
Why? Because they fail to take income inequality and environmental degradation into account. That 2% growth rate is bogus and masks a grimmer reality, according to the economist, who teaches at Columbia University. He scoffs at politicians who say the economy is expanding at a somewhat slower pace than usual, but there’s nothing to worry about.
Writing recently for the British newspaper, The Guardian, Stiglitz declared that “in spite of the increases in GDP, in spite of the 2008 crisis being well behind us, everything is not fine.” A decade ago, he chaired a panel that came out with other ways to measure GDP, by taking other factors into account besides the output of goods and services.
Stiglitz, who served as chief economist in Bill Clinton’s White House, is a well-known liberal voice. Critiquing President Barack Obama’s bank rescue program, in the wake of the financial crisis, he remarked that its architects are “either in the pocket of the banks or they’re incompetent.”
The inadequacy of the current framework of GDP is clear, he wrote, owing to political discontent moving throughout the world and in the worsening environment, “where fires rage and floods and droughts occur at ever-increasing intervals.”
The current math for GDP is woefully bereft of proper tools to measure how the economy is performing for the entire population, he contended. “So, what if GDP goes up, if most citizens are worse off?” Stiglitz wrote. “In the first three years of the so-called recovery from the financial crisis, about 91% of the gains went to the top 1%.”
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Tags: GDP, Great Recession, income inequality, Joseph Stiglitz