Economics is Bullshit -- cont.

It's true - I just can't leave this subject alone. But it's important -- really important. The bogus worldview of economists is embedded so deeply in our political culture that most people don't even perceive it. Journalists, politicians, and most thoughtful, well-educated people think it's reality, not ideology. Economics professors fill the heads of college freshmen with pure garbage and nobody tries to stop them. Most offensive of all, to me, are the economists I keep hearing on NPR and reading in the NYT claiming that there's is the only really scientific social science, a claim based as far as I can tell on their extensive use of mathematics, whereas the precise opposite is true. Garbage in, garbage out. (And by the way, sociologists use math almost as much. Just sayin'.)

Anyway, I've taken on some of the absurd propositions of market theory previously. Today I want to talk about what is generally put forth as the basic measure of prosperity, the Gross Domestic Product. When the GDP is growing rapidly, the economy is said to be "healthy," and we're all supposed to be happy. If it's stagnant or shrinking, we're all supposed to be suffering. I first heard the GDP deconstructed by Hazel Henderson in 1979. She was right then, and she's still right today. Jonathan Rowe is notably carrying the torch today, but his insights are not at all new.

GDP is an attempt to measure the amount of money that changes hands for goods and services, legally. When it goes up, that's supposed to be good. One key reason why that presumption is false goes back to one of the critical - and utterly false -- assumptions of economic theory, which is that transactions have no externalities, that all of the costs and benefits to humanity are captured in the transaction between the seller and the buyer. Another reason why it is false is the related false assumption of economic theory, which is that the economy is a closed system, when in fact it exists in both a social and a natural context.

GDP grows when more people gamble away their life's savings and their homes in Atlantic City and Las Vegas, or drink themselves to death. Every dollar they put in the slot machine or lay on the bar is a plus. GDP grows when the pollution from power plants and automobile exhaust and factory smokestacks cause cancer and heart disease and the people have to get surgery and chemotherapy, the cost of which is counted as a positive value in GDP. Every barrel of oil that's pumped out of the ground and sold for $135 is that much more GDP. That the oil is gone forever results in no subtraction. When the hurricane destroyed New Orleans, every penny spent on demolishing houses and stashing people in trailers was added to GDP. The destruction was not subtracted.

In short, the GDP classifies costs and harms as benefits. And it classifies every expenditure as equal in social value, whether it's for a billionaire's private jet or a basic diet for 10,000 children. If 90% of the people are impoverished, it can go up just as easily as if everyone's needs are met. If we are destroying our heritage, be it of topsoil or drinking water or timber or the very atmosphere of the planet, everything we destroy is counted as profit. If we are destroying our social order, and people are suffering from addiction, and mental illness, everything we spend to try to fix them, or more likely to arrest and incarcerate them, is counted as a benefit. So are the bombs and missiles and bullets we use to kill people in Iraq and Afghanistan, and the secret dungeons we maintain around the world. It's all good. It's all part of economic growth.

Just ask an economist.