Richard Walrath: GDP And Me
GDP And Me
By Richard Walrath
At some point, all these numbers have to translate into something that can be either verified or denounced as false. For almost four years now, we have heard almost every month how the economy is picking up steam, how productivity is up, GDP is growing by leaps and bounds, and corporations are making tons of money.
That last bit about corporations making tons of money is true--business profits are the highest they have been since 1929, according to Paul Krugman, an economist who writes for the NYT, and he should know.
But what was the GDP in the year 2000? What was it in the year 2003, and how much is it going to be in the year 2004? And, more to the point, how did it get divided up? If you didn't get any, or very little of it, what difference does it make to you what the GDP was?
Just for a quick thumb-nail sketch of what the GDP means to you, Robert Reich, Clinton's Secretary of Labor, has done the arithmetic and comes up with the figure of $30,000 for every man, woman and child in this country IF GDP were to be divided equally.
GDP--Gross Domestic Product-- is the sum of all goods and services produced in an economy in one year.
Now we all know that that's not how we divide things up in this country. There are the rich, the poor, and those of us who are sandwiched in between. The rich get theirs off the top, the poor scrape theirs off the bottom, and those left in the middle continue to get smaller and smaller.
But let's take a typical family of five - mother, father, and three children. GDP, divided equally, would mean a household income of $150,000! How many families do you know of with three children in a household with an income of $150,000?
The chances are very good that your answer is--none. The median household income is now not much above $40,000, and has dropped in the last three years, rather than increase.
Median, you will remember, means the mid-point--half of the households are above the median, and half are below.
What's the point of all this? A very simple one -- it makes no difference to you how much productivity is up, how much GDP is up, or how much business profits are up, if you are not getting any of the benefit.
The next time you read or hear those glowing numbers about the economy, just ask yourself these questions--
How is this benefiting my family?
What am I getting out of all this?
What are these increases in GDP doing for me?
© 2004 Richard Walrath
Richard Walrath is a freelance writer and CAO of Articles and Answers. Visit us online at http://www.articlesandanswers.com