is a good economy good for you?

WHAT'S GOOD FOR THE ECONOMY? WHO CARES?

Because most people get their information solely from the various Media and from politicians, most people think that "stimulating the economy is good."
Yet most mainstream economists will tell you that stimulating the economy is stimulating the economy; it is neither good nor bad. For example, tornados and toxic waste cleanup stimulates the economy. "Stimulating the economy", only means stimulating an increase in gross economic activity, nothing more. For the same reasons, increasing GDP or GNP is only increasing the GDP or GNP, and economists now admit that is not good nor bad per se.

(We do believe that increasing per capita wealth is good, but our point is; that is another topic.)

It is true that a great many people (including most politicians, and the sacred Wall Street Journal and the rest of the news Media) have highly vested interests in stimulating gross consumption. That is a major form of "stimulating the economy" known logically enough as; "consumerism". If most of our information comes from those with highly vested interests in it, it's no wonder that most people have assumed it is good.

The following was extracted off the web, and explores these points and a few others.... ==============

originally from: name="Jay Hanson"
email="jhanson%ILHAWAII.NET@vm1.spcs.umn.edu" inreplyto="Fatherlessness and Crime" -->

At 03:27 PM 10/19/95 -0400, John Knight wrote:

> SEVENTEENTH IN GDP PER WORKER IN THE WORLD!!

John, I wrote a short letter-to-the-editor a couple of years ago about the GDP. It is kind of silly, but I think it makes the point.

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WHAT'S GOOD FOR THE ECONOMY? WHO CARES?

Instead of asking "what is good for the economy," ask "what is good for the people." These are two fundamentally different questions.

To illustrate my point: suppose that everyone in a small farm town was unemployed -- but the people were growing their own food and doing OK. However, the local bank had no deposits and the government had no tax receipts. Then one day an economist from the bank showed how the town could "get its economy going."

People who listen to economists have a terrible habit of hearing one thing and inferring something else -- this particular case was no exception. The economist explained to the residents that if they simply washed each other's clothes, they could earn money and the town's economy would grow about a million percent. Residents fell into the trap: the economist was telling them what was good for the economy; they thought that meant his plan would be good for the people of the town.

Well, everyone started washing everyone else's clothes, earning money and paying taxes. One can immediately sense some sort of technical problem here. Where does one get the money to pay the taxes?

The economy was about a million percent better off, but the people were obviously worse off. The economist did not lie -- he had said nothing about people.

If you think this example is some sort of trick, consider that the American working-class was economically devastated during the Reagan years -- the longest peacetime economic expansion in American history. It seems that while the economy was booming, most Americans actually became poorer.

Clearly, "what is good for the economy" is a fundamentally different question than "what is good for the people." How bad will things get before we start asking the right questions?

Jay