It sometimes feels like there a million economists in the world, all devoted to studying GDP. At the simplest level only two things can make GDP grow:
- Population growth
- Productivity growth
Looking at this very selfishly, I only care about GDP if it means I can get a better job or a raise. More people may mean more buyers of my product but what if they are all poor or just great savers. Does improving productivity help me? If I am more productive then I might a get a raise. If others are more productive then the things they produce might cost less or they might get raises so they can buy more of my stuff. Those are two big ifs.
If GDP grows because some companies like Apple or Walmart sell more stuff. I don’t own enough stock to care. If GDP grows by say 2% instead of 3.5% – why do I care. The difference always struck me as trivial yet millions of economists seem to live or die if the figure diverges that much from their best guess. The stock market may gyrate when GDP news is released – it makes me nod off.
The problem is that if politicians are lured into focussing on this figure then they suddenly care about all this nonsense and they work on policies to affect it. The thing that really matters is not GDP – it’s employment (and wages). That’s the only thing they should care about. Weaker growth with better employment is just fine. High productivity is irrelevant unless it manifests itself in wages.
A good economist will be only thinking about job growth and any policy that inhibits is bad – even if it’s good for GDP growth. Our collective obsession over growth has led to insane debt creation and currency policies so corporate profits have soared – which is great for GDP but useless for jobs. Short term growth in consumer debt will backfire. The obsession undoubtedly began when high GDP growth meant high wage growth. Our global parasite sucks out the juice from any growth spurt making it feel empty. Even job growth no longer correlates with wage growth. Labor no longer gets any respect. Part timers and interns rule. Don’t be a sucker and pay up for new people – only idiots actually provide job training.
What kind of society do you expect to see when workers are irritating burdens? It’s 1900 again but we have no Teddy Roosevelt.