THE PROBLEMS OF USING PRODUCTIVITY COMPARISONS

There are many reasons why measuring GDP alone is an untrustworthy yardstick in determining a nation's well-being.

First, GDP does not reflect work done without pay, like housework, bartering or self-sufficiency work. In times of recession, these forms of work may actually increase to make up the difference. Housework in particular is a tremendous omission. Harvard economist Juliet Schor calculates that nearly half of all labor done in the United States is housework; in 1987, the average person worked 1,157 hours at home and 1,316 on the job.¹

Second, GDP includes market waste and inefficiency. For example, if you grow a tomato and eat it yourself, you have contributed nothing to the GDP. But if you sell it to your neighbor for 10 cents, who sells it for 20 cents, who sells it for 30 cents, then the GDP grows with each additional distributor.

Third, GDP includes productive waste and inefficiency. An incompetent manufacturer who produces shirts at $5 a pop contributes more to the GDP than a smart manufacturer who produces them at $2.

Fourth, GDP contains contradictory goods and services. For example, it includes the production of cancer-causing cigarettes as well as cancer-curing medicines.

Fifth, GDP does not indicate how wisely the goods and services are used. Americans produced $17 billion worth of tobacco in 1991, a product that kills 400,000 Americans a year.² This not only drags down our productivity, but also claims another share of it for the treatment of smokers. A much better use of the money would be to computerize our nation's schools, increase AIDS research, or vaccinate children. The wisdom (or the lack thereof) in using our productivity becomes especially apparent when you consider health care. The U.S. spends over 14 percent of its GDP on health care, but this is spent mostly on emergency, after-the-fact treatment. Nary a drop of this is invested in preventative health care, unlike many nations who have reduced their health care expenses by doing so.

So we must consider a great many more statistics than just productivity to judge how well a nation is doing. As the following statistics will show, the rest of the industrialized world has used their productivity much more wisely than the U.S.

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¹ Juliet Schor, The Overworked American (New York: HarperCollins, 1991), p. 36.
² Tobacco productivity: U.S. Bureau of Economic Analysis, Survey of Current Business, May and November, 1993. Tobacco mortality: Michael Evans Begay et al., "The Tobacco Industry, State Politics, and Tobacco Education in California," American Journal of Public Health, Vol. 83, No. 9, Sept. 1993, p. 1214.