A Youth Perspective on Economic Indicators
Global greenhouse gas emissions are at an all-time high. American inequality has swelled higher and higher, and simultaneously mental health issues skyrocket. Seeing these trends as a seventeen-year-old kid, I picture long-term, expanding consequences as their consecutive, constant growth makes them exponential in nature.
Veiling this failure of society, American GDP has grown by an average annual rate of over 2% since 2010 according to the Bureau of Economic Analysis (ignoring the current economic crisis); however, we treat this statistic like an economic religion. Why do we prioritize this number while failing where it matters? It is time to rethink our economic indicators if we want future generations to succeed.
A clear understanding of GDP is necessary for this argument. You hear politicians, economists, journalists, and tv hosts alike mention this term, but what exactly is it?
According to Oxford Languages, Gross Domestic Product, or GDP, “is the standard measure of the value added created through the production of goods and services in a country during a certain period.” Taken into its calculations are categories including private and public consumption, investments, construction costs, and foreign trade. Excluded from this process are used goods and transfer payments. Notably, used good transactions would be a strong indicator of trends in the lower-income demographics. Their removal from this powerful statistic plays at its exact purpose: GDP is an indicator for the uber-wealthy, not the average citizen.
It shows the pockets of our wealthiest, not the workers who make it work. In fact, it is possible to force every citizen into hard labor and still achieve GDP growth. And while outcomes this severe are hardly seen, their diluted versions are. Low wages, poor healthcare, and increasing homelessness reflect that mentality in addition to negligence in external issues.
When I survey my peers about their biggest fear within the next fifty years, the answer is overwhelmingly climate change. This crisis weighs heavily on our minds, and its underlying effects take their toll. Many of my friends hope to travel the world’s natural sights while they can, procrastinating their eventual careers. Others, including myself, hope to make climate change’s solution a motivator in their professional decisions. This boils down to flight or fight — an unnecessary, existential crisis forced onto the youngest of minds.
By championing GDP as our one success barometer, we ignore these true problems that economics can help solve. Where does GDP communicate impending humanitarian and environmental crises? Where does it portray the growth of inequality? And, where does it address negative mental health trends? These issues are too significant to be wrapped into a single indicator that acts as a trophy utilized to trivialize any problems within this country.
“If the GDP is increasing, so must innovation and thus standards of living.” While this is a strong counterargument, it lacks a comprehensive understanding of the indicator. An easy rebuttal is that in recent years GDP often undercuts our population growth rate, meaning that increases could be a result of a larger workforce. Additionally, if any innovation were to take place it would likely be in profit-making innovation, distinct from true innovation. This includes actions such as monopolizing medicine and charging higher prices or using legal loopholes to sell internet-user data. No one would categorize these decisions as innovative, yet they are true innovation when it comes to increasing revenue.
Conclusively, GDP sucks. It is too simple to communicate all economic and social aspects of a country, yet it is promoted as the main indicator of economic prosperity. So what’s the solution? Well, it’s necessarily complicated to match the nature of a true economy: a holistic approach utilizing environmental, health, political, social, and economic indicators, or Doughnut Economics. Despite the silly name, its philosophy is ingenious.
The brain-child of economist Kate Raworth, Doughnut Economics is a model for an economy that stays within the means of its environment while simultaneously ensuring political, social, and environmental justice. You want to be in the “Doughnut”, a fittingly sweet spot where everyone’s needs are met and the planet remains healthy.
By combining multiple, numerical indicators, a broader sense of a true economy and its far-reaching consequences can be seen. Utilizing Doughnut Economics, world leaders can know where to pull the reigns of sectors that are damaging natural resources or hurting the public good in order to promote long-term prosperity.
Doughnut Economics is the complex economic indicator that is needed to help fight the world’s most pressing problems. It is necessary to switch our mentalities from prioritizing the economy to prioritizing the economy’s impacts.