There’s more to our future than just the GDP
by Josiah Thomas, Campus Life Editor
The United States is wealthier now than it has ever been, but it isn’t happier. The economy has seen extraordinary growth over the last forty years with a threefold increase in the GDP. Moreover, Americans’ socioeconomic strata, material living standards, access to technology and consumer variety have all improved.
Oren Cass, senior fellow at the Manhattan Institute and former domestic policy director of Mitt Romney’s Presidential campaign in 2012, addresses this one-sided dedication to the nation’s GDP in his new book, “The Once and Future Worker.”
“If we pursue growth in ways that erode the labor market’s health and then redistribute income from winners to losers, we can produce impressive-looking economic statistics—for a while. But we will not generate the genuine and sustainable prosperity we want. The growth that consumes its own prerequisites leads inevitably to stagnation,” said Cass.
We’re falling apart because we’ve accepted the idea of “economic pie,” an archetype of the consumerist economy. Here, success is measured by the amount of gross domestic product (GDP) available to each and every American for consumption, so the size of each depends on the size of the dish and the share allotted for each slice. Each person’s consumption depends on the size of the overall economy and the share he or she receives. Fighting over economic shares goes nowhere, but if we concentrate on making a pie that only gets bigger, everyone’s slice grows accordingly. But if some slices seem too small, the smaller pieces can be redistributed among the smaller plates.
Turns out, those pieces are too meager to live off of. If our ability to produce is more important than how much we can consume, we’re burning the candle at both ends because a loss in the ability to produce leaves the economy with less to go around. Economic losses can’t be overcome by greater gains because the losses absorbed by middle and working classes are more consequential to them than any gains made by those already on top. According to The Harvard Business Review “Since the early 1970s, the hourly inflation-adjusted wages received by the typical worker has barely risen, growing only 0.2% per year. In other words, though the economy has been growing, the primary way most people benefit from that growth has almost completely stalled”, all the while deteriorating health in the individual, family and community remains unsolved. This year’s narrative of robust overall growth and “decent” wages doesn’t solve social collapse, reverse workforce abandonment, or government dependence. In fact, this demonstrates the disconnect between standard economic measures and the quality of life that this “prosperity” is supposed to provide.
Thankfully, there’s a better way: a labor market where workers can support strong families, with communities as the central determinant of long-term prosperity. This should be the central focus of public policy because the economy needs to work for the ones who make it work.
Tax relief and investment in small businesses is needed so that domestic work isn’t as costly or risky as employers. That way, investment is made in industries where their employees can work most productively.
Also, converting the needed share of safety net spending into a wage subsidy would improve its effectiveness by encouraging and rewarding work. According to Oren Cass, “Such a subsidy would have two major effects: first, a substantial raise for low-wage workers, making each hour worked more valuable and yielding more take-home pay; second, encouragement for less-skilled workers to take that initial step into the workforce and for employers to offer such jobs.”
Consumer preferences and industry economics dictate most of the answers at the margins: the rules that government puts in place can alter this balance. Employers have the responsibility of training workers to meet their needs and improve their productivity over time.
This all would be expensive, but why should the social value of such investment be seen as an excess cost?