Distributional Economic Health
I am pushing an unusual way of considering economic health. I call it “distributional thinking.” It requires that you not aggregate everything into one statistic, but rather take a few samples from different parts of the distribution and consider things from those different perspectives.
So instead of saying “things are great because the economy has expanded at a rate of 4%” I’d like us to think about more individual definitions of “great.”
For example, it’s a good time to be rich right now. Really good. The stock market keeps hitting all-time highs, the jobs market is great in tech, and it’s still absolutely possible to hide wealth in off-shore tax havens.
It’s not so good to be middle class. Wages are stagnant and have been forever, and jobs are drying up due to automation and a lack of even maintenance-level infrastructure work. Colleges are super expensive, and the best the government can do is fiddle around the edges with interest rates.
It’s a really bad time to be poor in this country. Jobs are hard to find and conditions are horrible. There are more and more arrests for petty crimes as the violent crime rate goes down. Those petty crime arrests lead to big fees and sometimes jail time if you can’t pay the fee. Look at Ferguson as an example of what this kind of frustration this can lead to.
Once you are caught in the court system, private probation companies act as abusive debt collectors, and nobody controls their fees, which can be outrageous. To be clear, we let this happen in the name of saving money: private for-profit companies like this guarantee that they won’t cost anything to the local government because they make the people on probation pay for services.
And even though that’s an outrageous and predatory system, it’s not likely to go away. Once they are officially branded as criminals, the poor often lose their voting rights, which means they have little political recourse to protect themselves. On the flip side, they are largely silent about their struggles for the same reason.
Once you think about our economic health this way, you realize how comparatively meaningless the GDP is. It is no longer a good proxy to true economic health, where all classes would be more or less better off as it went up.
And until we get on the same page, where we all go up and down together, it is a mathematical fact that no one statistic could possibly capture the progress we are or are not making. Instead, we need to think distributionally.