MEDIAN INCOME….This is probably true:
My problem with economists is that even many of the smart ones tend to instinctively equate the social welfare of a country with its per capita GDP. This is absurd, and it isn’t as if they don’t actually know this, but nonetheless it tends to be how people operate.
This happens because of two basic reasons. First, there’s no actual way to define social welfare scientifically. One can define social welfare functions which meet certain kinds of pleasing properties, but ultimately judgment calls have to be made. You know, is overall social welfare enhanced more if you give an extra dollar to me instead of Bill Gates? Consequently per capita GDP as a measure of society’s welfare is seen as a kind of value-neutral measure.
But there is a simple figure that has roughly the same relationship to “social welfare” as GDP does to “economic growth”: median hourly income. It misses a lot of stuff, as any simple measure will, but it tells you as much as a simple GDP figure does. If the mainstream press paid as much attention to quarterly reports of median wage growth as they do to quarterly reports of GDP growth, they might even start to understand why “popular” views of the health of the economy so often seem to be at odds with the “official” view.
Added note: one of the reasons I like MHI as a primary economic statistic is my belief that sustained MHI growth is actually the single best measure of the strength of an economy. It’s almost impossible for an overall economy to be in bad shape as long as real MHI is growing strongly. It’s one of the reasons that Democratic administrations tend to produce better economic results than Republican administrations: though it’s usually cloaked in more sophisticated language, Democrats tend to focus on MHI. Republicans don’t.