FIVE CULTURES LATER
NATIONAL DEBT IS NO BIG DEAL, OR IS IT?
We try to measure well-being in terms of economics and encounter some conflicting social issues not measured by GDP. Clifford Cobb, Ted Halstead and Jonathan Rowe point out that teenagers spend 5-10 minutes a day talking to dad and watch television three hours a day. Talking to their parents adds nothing to the GDP, but watching MTV turns them into ardent GDP enhancing consumers. They write:
Growth can be social decline by another name. Divorce, for example, adds a small fortune in lawyers’ bills, the need for second households, transportation and counseling for kids, and so on. Divorce lawyers alone take in probably several billion dollars a year, and possibly a good deal more. Divorce also provides a major boost for the real-estate industry. “Unfortunately, divorce is a big part of our business. It means one [home] to sell and sometimes two to buy,” a realtor in suburban Chicago told the Chicago Tribune.
By the curious standard of the GDP, “the nation’s economic hero” is a terminal cancer patient who is going through a costly divorce. The happiest event is an earthquake or a hurricane. The most desirable habitat is a multibillion-dollar Superfund site. All these add to the GDP, because they cause money to change hands. It is as if a business keeps a balance sheet by merely adding up all “transactions,” without distinguishing between income and expenses, or between assets and liabilities.So far I put GDP in perspective. Khan Academy to the rescue: let's go to the economic side of GDP (the "Y") to understand its components.
Give your answers and I will discuss those next week