Robert Fogel won his Nobel Prize about 15 years ago for applying economics to history. His paper “Catching Up with the Economy” shares a lot of content with his book The Escape from Hunger and Premature Death … that I put on reserve in the library.
His main assertion is that we are far better off than our GDP statistics are capable of measuring, mostly because we:
- Count input costs instead of output benefits for big chunks of the economy, and
- We don’t value leisure at all in GDP, even though it is already the major component of what we “consume”, and growing faster than other components.
The first part is mainly a measurement problem: it is a lot easier to count the budget of SUU than the value to Utah of SUU graduates. The bigger problem is that education, health care, government and leisure services all have this problem, and they’ve gone from a fraction of the economy 150 years ago to the vast majority of it today.
The second part is because GDP was developed at a time when just about everyone toiled almost constantly. A lot of the world is still like this, but the U.S. and other developed countries aren’t any more. Many countries are currently like the U.S. of 100 years ago. The U.S. of today is not: we work between a third and half less than we did the in exchange for better goods and services and 4 times as much lifetime leisure.
This means that we miss a huge amount of what makes us rich. This isn’t stuff – goods and services – but rather what Fogel calls spiritual assets. This isn’t spiritual in a religious sense (although it can be), but rather spiritual in the sense of virtues that make our spirits rich:
- A vision of opportunity
- A work ethic
- Family solidarity
- Sense of discipline
- Impulse control
- Sense of community
- Thirst for knowledge
The fundamental problem in developed society is not a maldistribution of goods and services that might be rectified through government transfer programs, but the rather the uneven investment of leisure time in the nurturing of spiritual assets.
It isn’t possible for the government to tax a sense of community from, say, Utahns, and transfer it to south central LA, but we also shouldn’t be under any illusions that this is the sort of thing we should be worrying about instead of the usual class warfare nonsense that comes out of D.C.