There are many ways to define an economically successful country. In theory, and based upon standard economic presumptions, the United States is one of the most economically successful countries in the world. I’d like to start this piece by running through some statistics that you might see after turning on CNBC or Fox Business that analysts use to define our economic strength, and therefore well-being, per capita. First, gross domestic product (GDP) is most often used to summarize how the people of a country are doing economically. According to the International Monetary Fund (IMF), GDP “measures the monetary value of final goods and services” in the economy. If we look at World Bank data, the United States ranks first in nominal GDP globally at over $20.9 trillion. In second place is China, with over $14.7 trillion. From this perspective, we could see that maximizing our output of domestic goods and services annually would be the best way to improve the condition of people in the United States.
However, I would argue that GDP alone does not allow for the quantification of important conditions, such as the well-being of workers or households, and that we should not define economic progress of simply through indicators measuring the flow of goods and services. Even when looking at employment as an indicator of how people are faring in the economy, equity and well-being is missing in the unemployment rate statistic. So, while the Bureau of Labor Statistics news release for February announced that the U.S. nonfarm unemployment rate was at a very low 3.8 percent, this statistic doesn’t measure those unable to join the job market or dissatisfied with their current wage due to socioeconomic inequality. For reference, the nonfarm employment rate just stands for the people working in nonfarming industries. How can we better connect the well-being of consumers to human well-being? We need to change how we look at economic success.
We are addicted to working. We are required to work. But satisfaction and accomplishment are not inseparable from the profit made off a finished good. Whether you must work in order to pay tuition, help out family members in need or just want additional cash to debit from a checking account, money is indeed tied in with where and when we choose to work. This is undoubtedly a result of a capitalist economy, where we have been told since elementary school that working and earning more money than the people around you is the ultimate goal. You could critique this idea by saying that teachers and parents idealistically tell us to pursue our passions in life, but for many people, it becomes a society-defined balance between the work you love and a livable wage. If the rational decision is not to live in poverty, we frankly don’t have a choice but to become cogs in the machine. Therefore, the distribution of true satisfaction at different levels of the workforce can be varying even if the wage made is livable or better.
If U.S. real and nominal GDP per capita is the highest in the world but the workers who have necessary roles in providing those goods are discriminated against or face flat wage growth, our economic “successes” hide failure in an equitable distribution of care for the workforce. Take the gender pay gap in the United States. If our economy has strong GDP growth in a given year, but women still earn a fraction of what men earn across different industries, we are not actually succeeding. According to the Bureau of Labor Statistics, women’s annual earnings in 2020 were still only 82.3 percent of men’s. For another example, let’s look at the Gini coefficient for the United States, which measures relative equality in income distribution. The United States has the highest Gini coefficient, and therefore highest income inequality, of all G7 countries, which are the seven countries with the most advanced economies in the world. This shows that while unemployment is low and GDP is high, and both our consumption and production is high, we are not succeeding in every area.
For me, redefining the quantitative indexes we use to determine economic success is imperative at a time where inequality is on the rise, especially between developing and developed countries. The United States continues to be a business-focused country that relies on the employer to better people’s lives and create equity where there exists profit. However, we must come to an understanding that poverty and suffering are underrepresented in models that rely on monetary returns to corporations as an indicator of better livelihood for workers. Therefore, I will now recommend a more progressive, philosophical approach to interpreting economic success. If we cannot realistically measure economic success for the individual through traditional quantitative means, we must combine wellness with monetary success.
Economic success should not just be defined by the success of the business owner or the lawyer representing a lobbying firm for exporters and certainly not the absolute gain in monetary wealth that is represented by GDP. I believe we should measure whether we are economically succeeding by the relative wealth of the poorest compared to the richest in society, factoring in the gender discrimination and pollution that come with seeking the highest output at any cost. This alternative is a better option than GDP, as it includes both an integration of absolute output of goods and services and relative measurements of happiness and well-being of citizens at all income levels. As Joseph Zammit-Lucia wrote in an opinion for The Guardian in 2013, “providing returns is not the raison d’etre of the business.”
Sustainable business practices are important, and given a capitalist system, it is vitally important that American companies are relatively successful. This can and does lead to improvements in public projects and even a rise in well-being for the worker. But summarizing how the people of this country are doing economically by measuring output of business ignores too many important measurements of equity. Quite frankly, the numbers hide the truth of the U.S. economy. While we are a rich nation, and our corporations are succeeding, many people are not, and they are ignored by a run-down welfare system. Rather than ignoring them in quantitative interpretations of our economy, let’s finally include them in the model.
Sean Reichbach is a freshman double-majoring in economics and philosophy, politics and law.