Another Perspective
“Behold, The Economy”
by George Cheney and Sally Planalp
Feb 01, 2018 | 297 views | 0 0 comments | 36 36 recommendations | email to a friend | print
Every day multiple reports from a variety of sources report how the economy is doing. It’s up, it’s down, it’s booming, it’s on an even keel, it’s about to crash, etc. But how often do we stop to think about what the economy really is and how all the pieces of it fit together?

Certainly, many people think about what a strong or weak economy might mean for themselves, their jobs, their families, and their households, but most of us really don’t understand it. News reports rarely make connections between different components of the economy and what they mean. Take, for example, the stock market, the Gross Domestic Product, the unemployment rate, the inflation rate, the dollar’s value, proportions of debt, the trade balance/imbalance, rate of wage increase, new construction starts, consumer confidence level, etc. Just listing these and other elements boggles the mind.

The economy is so complicated that predictions made by economists often can only be tentative. We do know some basics, though, and these play out in our everyday lives. For example, we can see when a town might be saturated with particular types of businesses and there is room for new ones that are a bit different. We can feel the erosion or stagnation of wages and salaries in certain occupations. We can see housing prices and rents go up or down. We know when we have a margin of comfort with savings and when we’re barely making ends meet.

Let’s consider underlying assumptions about the economy. For example, do we think carefully about how certain classes of people are contributing to the economy? Do we really know what various immigrant groups do? Perhaps some are taking jobs from other factory workers, or perhaps some are providing services that no one else wants to do. How do we figure in unpaid but critically important volunteer work?

Hint: you won’t find it in the employment rates.

Do we really want more workers to be contributing to the economy via emergency service and health care because there is more disease and disaster? How does it “count” that certain products and services require much more energy and resources than others? These are just a few of the important questions we might raise about ways of assessing the overall health of the economy.

Despite the rave reviews it gets when its bullish, like right now, the stock market is not a sound indicator of the performance of the economy as a whole — only the financial well-being of those with stakes in the stock market and the prices for publicly traded corporations. This is true for several reasons. First, the stock market’s ups and downs are not entirely a function of general wealth because a great deal of stock value relates to speculation and other factors than aren’t really tied to productivity. Second, the richest 10 percent of Americans today own 90 percent of stocks; further, only about half of all Americans have anything at all invested in the market. Third, for the past 30-plus years, the stock market has been less tethered to things like full- or near-full employment. For example, today when a large corporation puts many employees on layoff, their stock prices are likely to go up rather than down as they once did. Fourth, as many observers have noted recently, and as history shows so well, what goes up will come down. It’s a question of when and by how much.

Meanwhile, the U.S. is slipping according to some other indicators: for example, the infant mortality rate, widening of the wealth gap, life expectancy in some geographical areas, and happiness or overall life satisfaction. A better measure of overall national well-being, economic and otherwise, could be something like the Himalayan Kingdom of Bhutan’s “Gross National Happiness,” which is just one example of what are called “genuine progress indicators” (or GPIs — check those out in Wikipedia). These alternatives to the GDP often take into account many things that the GDP does not: such as education levels, health care access, levels of drug addiction, threat of crime, levels of waste (as a kind of inefficiency) and pollution of air and water. In other words, GPIs aim to account for gains and losses in lots of categories, and they can be applied at the levels of towns, cities, regions, states and nations.

As the late Robert F. Kennedy said in a speech about the economy at the University of Kansas in March 1968, “The GDP measures everything except that which is worthwhile.” While RFK’s powerful statement may have been a bit overstated, it made the point that we ought to be more attuned to all the features of the economy that matter in people’s lives. After all, the economy is about what we value and about how wealth gets defined, created, distributed and used.

Perhaps we have forgotten that the country’s well-being includes things like connections versus social isolation, fairness as well as success, security in several different senses, and hopes, as well as good old happiness. This is why happiness is now an important part of studies in economics, psychology, sociology and other fields.

George Cheney and Sally Planalp are residents of Moab and part-time professors of communication at the University of Colorado at Colorado Springs.


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