The answer lies in the fact that GDP—or any alternative aggregate measure—aims to encapsulate the constant innovation and betterment of life driven by competition in market economies. No single number will do it perfectly. Indeed, a new critique of GDP recently has joined the old ones—namely that it fails to capture the role of new technology in our increasingly digital economies. The concept of GDP, an aggregate measure of output at market prices, does not account for all the value of innovations. Yet over time an increase in GDP is the result of innovation, and so to argue against growth is to argue for an end to innovation. Those who think growth is “delusional” need to explain what they think should be taken away from people when a new product or service they want comes along, to prevent GDP from growing.
My GMU Econ colleague Alex Tabarrok reports on an interesting new paper that finds (1) that female Uber drivers are, on average, paid less than male Uber drivers, and (2) this pay gap is not the result of gender discrimination.
Despite what President Trump and his trade team may say, the rising trade deficit is not a problem, nor is it a negative reflection on current U.S. trade policy. In fact, an expanding trade deficit is consistent with all the other good economic news the president has been touting lately.
Rising consumer confidence and expanding business production have both stoked demand for imports. More foreign investment and “reshoring” of US companies? That has only swelled the investment surplus, which is by definition the mirror image of the trade deficit.