Blogging has been light (okay, non-existent) for the past week while the whole family have been fighting an unpleasant cold. I admit that a good chunk of the reason I blog is for pleasure of being contrary, but when you have a sick one year old and a sick three year old, you get all the contrariness you want. But to Guardian idiocy. They dug up one Kate Sheppard from the American Prospect, for a rambling mess of a piece about the inadequacy of gross domestic product. Although GDP has its failings, Sheppard knows too little about GDP to have a clue how to make any sense of the issue.
Starting off with an old Robert Kennedy speech, she then writes:
In the 40 years since Kennedy made that speech, our GDP has ballooned from $800bn to nearly $14 trillion. But can we say that the majority of Americans are as exponentially better off as those figures would have us believe?
We can't say much of anything with tripe numbers. First, 1968 US GDP was $910 billion, not $800 billion. Secondly, Sheppard has not bothered to adjust for inflation. Using the GDP deflator, US GDP has only slightly more than tripled from 1968 to 2007, so that if there had been inflation (as measured by the GDP deflator), 2007 US GDP would have been only about $2.9 trillion, not "nearly $14 trillion". I know the internet is really, really hard to use, but she could have found all those numbers here.
She quotes approvingly:
Karen Davis, president of the health policy advocacy foundation the Commonwealth Fund, noted that in the current breakdown, a heart attack is accounted as a net gain for GDP, since all the health and service expenses related to it would put money into the system.
Not exactly. It is true that GDP accounting treats poor health as a given, but a heart attack does not push up a component of GDP; curing it does. Moreover, the heart attack victim's productivity falls, which lowers GDP. Sheppard does not explain why all those pastrami and Swiss on rye sandwiches that led to the heart attack are a bad thing, or why GDP is miscounting.
She is of course worked up that GDP does not capture inequality. True enough, although she does not say why it matters. The UN's latest Human Development Report lists Gini indices for various countries. The US ties for 70th place. So, sixty nine countries with more income equality than America. Sheppard would I suppose have us believe that Americans are happily fleeing to places with more income equality like Kyrgyzstan, Pakistan, Belarus, and Bangladesh, and certainly those places rather than Ireland, because Ireland has less income equality too. I am not so much trying to make fun of Sheppard's absorption with income equality (okay, so I am) as pointing out there is precious little evidence that many other people share her passion. Romania has less income inequality than Ireland, but it is poor Romanians trying to get into wealthier Ireland.
But the best is saved for last.
The United Nations' Human Development Index represents perhaps the most comprehensive attempt to synthesise economic and non-economic measures into a single national success metric currently available. It includes life expectancy, literacy and purchasing power, along with traditional GDP. In last year's ranking, the United States was 12th, and none of the top five nations in total GDP made it into the top five.
Countries can have really big GDPs not because they are wealthy, but because they are big, like China and India. The top five countries in the Human Development Index are, in order, Iceland, Norway, Australia, Canada, and Ireland. None of them have huge GDPs because they are are all small countries. On the other hand, their per capita GDP ranks are 5th, 3rd, 16th, 10th, and 4th. I would be tempted to suggest that Sheppard is trying a cheat here, except that she frankly seems too much of a flake.Posted by sjostrom on March 31, 2008 04:47 AM
Comments:
She obviously didn't pay attention in arithmetic classes. But then one of the reasons I do not read the Guardian anymore is because none of it's correspondents seem able to do arithmetic at any time. Sigh.
Posted by: KevanB on April 1, 2008 06:40 AM [Permalink]
