Saturday, March 15, 2008

GDP per capita

You often hear it said that Britain’s economic success in recent years is mostly illusory, that growth has been mainly due to floods of immigrants coming over here: it’s hardly surprising that the economy’s grown when the population has too.

A piece in the Economist this week is relevant here, noting that GDP per capita is a better indicator of how rich a country is than overall GDP.

While, for instance, the total US economy has grown far faster than Japan’s in recent years, the US population is strongly growing, while Japan’s has lately started to fall. In per capita terms, Japan has been outpacing the US. People there, on average, have been getting richer faster.

And Britain? As you’d expect, our GDP growth is pretty good by G7 standards, a close second to the US since 2003. But what about our GDP per capita growth? Well, here I have to admit we’re not second:


The Economist also suggests the standard definition of recessions is flawed:

For example, zero GDP growth in Japan, where the population is declining, would still leave the average citizen better off. But in America, the average person would be worse off. A better definition of recession, surely, is a fall in average income per person. On this basis, America has been in recession since the fourth quarter of last year...

4 comments:

hughes views said...

I also liked this comment from the article (and also on their podcast which is ideal for those, like me, who are too idle to read their stuff!) "Mankind has never had it so good".

But try telling that to today's 24/7 "we're all doomed, the sky's falling in" commentators...

snowflake5 said...

Yes, good points. But like Hughes says, the commentators like to spread doom (I was tempted to say it sells newspapers, but haven't newspaper sales been falling? - perhaps if they reported things as they really are sales would go up!).

Tom Freeman said...

There was a Mitchell and Webb sketch the other week spoofing a TV news programme. The theme of each story was 'everything's fine'.

'Everything is just fine following a major explosion today. Seventeen people were killed in the blast, but they've all finished dying now and so everything is once again just fine.'

'I have to interrupt you there: we've just heard that an 18th person has died, but he is no longer dying any more and so fineness has been resumed.'

m said...

Hmm.

The Independent…I don’t know whether to laugh, cry, confess, digress, or get a bit tipsy and be truly scathing. My mother would be disappointed, so I suppose I should behave…

Until then I’ll silently giggle at Ann Godbehere and try to educate myself about the S&L crisis. While trying to maintain compassion for those that have to put down their designer purse and take off their Tiffany bracelet before queuing for the food bank, while complaining that being in a 200k house doesn't qualify them for food stamps (they ended up in 600k in debt, thanks to borrowing against the house). I was lucky enough to be raised by a selfless parent, so I really don’t understand holding onto such goods, rather than selling them to feed your family and changing your lifestyle...

Luckily, I doubt I'll ever be ready for a revealing post, but I still claim these people are quite lost as to what true poverty is (no heat, sometimes lacking water, no refrigeration- I realize this isn’t the American view of poverty, where people have cable, washing machines, own their home, etc. ).