The Ludwig von Mises Institute

The Mises Institute monthly, free with membership

October 1997
Volume 15, Number 10

As recently as 50 years ago, economists regarded the vitality of the economy as consonant with its ability to produce things people want (and would pay for). Today, the economy has been redefined into something called the Gross Domestic Product, or GDP. It measures all goods and services brought to market in a given year. But is it really an accurate measure of how well an economy is serving people's needs? Here are some outlandish ways the GDP can be boosted.

Things Kids Can Do. Get sick. Constant medical attention is good for the GDP. Medical costs account for 14 percent of it. Let's stay on the growth curve. Kids can also become juvenile delinquents. If they get arrested for heinous crimes, they go to jail, the expensiveness of which gives the economy a jolt.

Things Adults Can Do. Get a divorce. Legal costs, two houses, and all the things that go with two houses (furniture, kitchen supplies, pictures, etc.) are important components of the GDP. Divorces stimulate consumer demand.

Break something around the house, like a television, a dish, or a window. Replacing these increases the GDP and creates jobs.

Smash up the car. It will have to be fixed or replaced. The auto industry employs, directly and indirectly, one of every seven workers in the U.S., and they need the overtime.

For great results, burn down the house. Don't worry. If you handle it right, insurance will pay for it and the rebuilding will keep a lot of people busy for a while.

Quit your job as a scientist and become a taxi driver. Research and development is not included in the GDP, but money spent on taxicabs is.

Overeat, don't exercise, don't brush your teeth, do drugs, smoke, drink, and make yourself terribly sick. Get family members to do the same. Higher medical expenditures especially help the GDP move up, up, up.

Hire help to take care of the kids, and force your wife to get a job. This gives the economy a double boost. If your wife takes care of kids and cooks, this is not counted in the GDP. Hired help is. If she gets a paycheck too, that counts towards measuring economic growth.

Hire a lawyer and sue somebody. Lawyers' fees are directly added to GDP.

Things You Can Do With Your Neighbor. Riot and burn the neighborhood. The damage won't be subtracted from GDP. But rebuilding puts people to work and benefits the GDP.

Form a gang and commit crimes with a view to getting caught. The more people in jail, especially folks who would not otherwise have jobs, the better off the economy. Today, building and managing jails is one of the hot "growth" industries, to say nothing of the security business.

Things Businesses Can Do. Pollute. A giant oil spill would be great. Superfund sites expand the GDP.

Leverage up and build excess real estate, e.g., see-through buildings. They add to the GDP when they go up, but the waste is not subtracted when they are demolished. Similarly, companies can build excess plant capacity (as IBM did in the mid-to-late 1980s to the tune of $30 billion).

All of this counts toward GDP. Again, when companies are "downsized," nothing is subtracted from the GDP. It's similar in concept to the "roach motel": GDP counts the things going up, but not going down.

For Best Results, Get The Government Involved: Lobby your elected representatives to raise taxes and spend more money. Government spending on goods and services adds to the GDP and "creates" jobs.

Start a war. Preferably one far away where no Americans get killed. B-2 bombers, tanks, bullets,...all count in the GDP. Also, send Stinger missiles to liberation armies around the world. Maybe some of these missiles will be used to knock down airliners. Replacing them helps the economy, and, if lawyers get involved, there's a GDP bonus.

Target savers! People who save actually hurt the economy because they don't spend. If people spend their savings, then those purchases are added to the GDP. When they don't spend, the economy suffers. What can be done to discourage saving? First, tax the return on savings: a higher capital gains tax would be very helpful. Second, and best, debase the currency. By printing up more and more money, we can dilute the value of people's savings (especially their long-term savings such as their pension funds) surreptitiously stealing their savings for politicians to spend and thereby increase GDP.

Get Mother Nature On Your Side. Pray for a natural disaster: a hurricane, an earthquake, a big fire, a flood. Disasters give the GDP a tremendous life because of all the rebuilding that must take place.

If we do all these things, we'll have enough statistical growth to replace decades of economic stagnation. We may achieve double-digit rates. As for whether the economy is actually vibrant, we'll have to ask an economist who exercises more critical judgment than those who swear by GDP data.

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Larry Parks is president of FAME.

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