In the better-late-than-never category, there's now a more subtle debate among economists about whether it's debt that tamps down economic growth or whether it's the slow growth that pushes up the debt. That's an important question, but it actually hides what may be an even more crucial one. Is growth in GDP really the best way to judge how the economy is doing? What does GDP actually tell us, and what does it leave out? Can an economy be growing and still be on its way off the rails?
For politicians, pundits and many economists, GDP and jobs are often coupled together like love and marriage (which go together like a horse and carriage, according to the old Frank Sinatra song). But in Gross Domestic Problem: The Politics Behind the World's Most Powerful Number, political scientist Lorenzo Fioramonti asks why we have latched onto economic growth as the number one indicator of whether a country's economy is healthy and probes its limitations. The progressive think tank Demos has a study out juxtaposing U.S. economic growth with other measures of progress and human well-being.
But isn't growth the only way to create jobs and a rising standard of living? A shrinking economy is certainly no good to anyone; it's the definition of a recession. But using growth as the sole measure of how we're doing can also hide other problems.