We have always been at war with Eastasia. ---Ministry of Truth, 1984.
Falling GDP is good. It has always been good. And now that GDP has fallen in the first quarter and economic prospects don't look good for the near future, Politico's contributing editor, Zachary Karabell has discovered that falling GDP is good. In fact the title of this directive issued from the Politico Ministry of Truth flat out tells us that GDP’s Going Down? That’s Good!
It’s our national mantra: GDP. Gross Domestic Product. No other figure rules our world more completely. We saw it again this week when the government released its latest revision of the first-quarter GDP numbers that showed the U.S. economy is contracting slightly.
Not to worry. Zachary is about to redefine down as up and a falling GDP as good, good, good!
...And yet GDP is a critically flawed measure—so flawed that, believe it or not, ever-larger portions of the world would be best served not by GDP going up but possibly by it going down. GDP growth these days is nothing less than a relic of the past.
...During the Cold War, Americans turned to GDP as a way to measure whether capitalism was trumping Communism, and meanwhile the Soviets developed their own version of GDP to prove that their system was better. In many ways, the Cold War evolved as a contest of whose economy was bigger and better, better at making stuff and better at enriching people.
...By making GDP growth a normative good, however, we make it nearly impossible to increase affluence by reducing costs. If GDP goes up, however, that does not necessarily mean that living standards improve, and if it goes down, it does not mean that living standards must as well. We have absolutely no simple way of engaging that possibility as long as GDP growth and income maximization remain a fixation.
...Rather than nurturing the GDP fetish, we should instead look to a better accounting of collective needs and the best way to meet those. More output might meets some of those needs, but so might less output.
Karabell pulled the same shtick last January about how falling income is not necessarily a bad thing:
Wages are not and should not be the sole determinant of whether people are doing well. After all, if costs are dropping, then even stagnant wages increase purchasing power. And now, costs of energy are dropping, which will translate into an implicit boost to income, even though it won’t show up in wage and income data.
Tom Blumer attempted to educate him with this observation:
That's not true, Zach. If prices fall and current-dollar wages stay the same, reported real wages will increase. It will show up in the data, because real wages are expressed in terms of "purchasing power." And while we're at it, saying that wages aren't "the sole determinant of whether people are doing well" is pretty weak. For people without much in the way of investments, i.e., a very large minority if not a majority of Americans, it's analogous to saying that the final score isn't the sole determinant of which team won a sports contest.
Meanwhile Karabell's pretense that a falling GDP is good was widely mocked by readers at Politico:
The Orwellian Ministry of Truth in full swing. GDP dropping is good? Really?
I have never heard the theory that being in a recession is a great thing.....
There have been a lot stories designed to hide the reality of just how bad Democrats are performing, but this article has to be in the running for the absolute worst piece of sycophantic fantasy ever trying to deny the reality of an impending new recession despite amassing $9 trillion in debt in 7 years.
Exit question: Is the possibility that Karabell would have written this during a Republican administration somewhere between nil and none?
