With the market up and the recession over for nearly a quarter, it sometimes seems that what we call the economy is impossibly detached from the lives of the people who live and work in that economy. It is.
Not only has the Chicago School Economics that's dominated the last three decades presented a deliberately simplified view of the world that has helped Republicans to love capitalism to death, we've learned to measure our progress by abstract values that have almost no impact on anyone. That's how America can have two decades of "steady growth" during which the average worker's salary lost ground against inflation, health care costs (and worker's share of that cost) skyrocketed, pension benefits went the way of the dinosaur, and the disparity between rich and middle class grew into a ever-broader gulf. On the other hand, Japan "suffered" through a scary, scary "lost decade" in which unemployment, wages, pension benefits, and health care either held steady or improved.
The question becomes, by measuring GDP are we measuring anything of worth? Are we measuring something that accurately reflects the economy? A growing number of economists think we need to change. Instead of measuring consumption as the mark of a strong economy, why not measure the quantity and quality of employment?
The recession has brought output down to 2006 levels in most rich countries. That’s not good, but... Only a culture obsessed with always having more stuff and services could be seriously troubled by so modest a decline. ...
Unemployment is a much greater evil. Human dignity is lost when workers who want jobs cannot find them. Chronic unemployment is also bad for future economic growth, as idle workers lose skills and motivation. In comparison, a few days less holiday or few more months delay before buying a new car look trivial.
The biggest problem facing the United States may be that the people trying to solve the problems are those who have bought deeply into the ideas that brought on the problems. If we don't shake free of our obsession with a kind of market purity, that business is always the right solution, that deregulation is always a net positive, and that increased consumption is always good, we have problems too big to be measured by any statistic.
Obama’s economics team is made up almost entirely of professional insiders. Such choices make it easy for critics to say the administration has borrowed a narrow economic worldview from Wall Street. And the established figures are likely to close the door on the next John Maynard Keynes, who was a professor but pretty much an outsider when he came to prominence in the 1930s.