The Economy Has Fundamentally Changed—And Not for The Better
The comments below are an edited and abridged synopsis of an article by Charles Hugh Smith
GDP and other metrics of economic activity don’t measure broad-based prosperity or well-being. Elites skimming profits while spending more on their lifestyles boosts GDP, while the security and well-being of the general public plummets.
Life has gotten harder. The key is not to look only at wages or inflation, but at aspects of daily life that cannot be captured by conventional economic/financial attempts at quantifying the economy.
How to quantify the cost of the financial anxiety provoked by insurance deductibles or healthcare bills? Or the cost of foregoing healthcare, except in emergencies, in the US? Then there is real estate, retirement savings, and the stock market.
Making everything into a tradable market has dominated the 21st century economy. The concept is appealing: By making everything into a competitive market, prices will drop as efficiencies and innovations take hold, and financial markets will benefit as everything that’s being commoditized can be sold globally.
But that is not what happened. The new markets were quickly dominated by monopolies and cartels, and previously safe assets were financialized and securitized, stripping the unwary of their income and assets.
Liberal financialization and Fed goosing of risk assets are why America’s wealth is increasingly concentrated in the hands of financial elites. The gains made by the top 10% were concentrated in the top 1%, and the gains of the top 1% have been concentrated in the top .01%.
The precarious nature of employment and rising workloads are reducing well-being across the board. The tools to accurately quantify the internal states of security and well-being are not the equivalent of measuring GDP. Much of the data comes from self-reporting, which is skewed by Americans’ belief that everybody should be upbeat and positive.
The result is an economy that’s supposedly expanding while Americans’ well-being and financial security are collapsing. We optimize what we measure, and if we measure what doesn’t really matter, we’re optimizing the wrong things.