Measuring Economic Growth
In the past we have judged economic success by the relative increase in “real” GPD. The real part means that the number has been adjusted for inflation. This is also the criteria that most other countries value. However, recently a small number of countries have voiced a different opinion which I find has merit.
The concern is that the end game of increasing GDP, combined with population growth is that eventually we run out of resources, most of which have limits.
What has been suggested is that a more reasonable measure would be per capita GDP which is one measure of productivity and it does not reply on population growth as a measure of economic success and in might encourage reducing populations.
Neither economic growth or GDP per capita tells the entire story of benefit to residents. As vs GDP increases how is that economic improvement distributed? What is a fair return of capital (for dividends and reinvestment) compared to a reward to labor for their contribution? Would a 50/50 split be fair? I’m not at all certain.
What we do know is that real GDP in the USA has increased by about 70% in the past 20 years while the real median family income has only increased by less than 15%. Is this 55 to 15 ratio a fair redistribution of wealth?
I find it interesting to look at the per capita GDP by country as a indication of how we are doing:
|rank||Country||GPD per capita|
|7||United Arab Emirates||$74,035|
Per Capita GDP is merely one indication of the how good things are for citizens. There are a couple of other measures worth considering.
The standard of living refers to the level of wealth, comfort, necessities, and material goods available to a particular geographic area. Quality of life is the standard of health, comfort, and happiness experienced by a group.
|Country||Quality of Life Rank||Quality of Life Index||Safety Index||Healthcare Index||Pollution Index||Climate Index|
The other criteria is Quality of Life which is based on eight indices:
- Purchasing Power
- Health Care
- Cost of Living
- Property Price to Income Ratio
- Traffic Commute Time
|Rank||Country||Quality of Life Index||Purchasing Power Index||Safety Index||Health Care Index||Cost of Living Index||Property Price to Income Ratio||Traffic Commute Time Index||Pollution Index||Climate Index|
I suspect that we were near the top of these three measurements in the early 1950s. What happened?