Two suitcases, the GDP, and the Immeasurable
The mainstream media stresses how we are in recession because consumer spending is stagnant, but there must be a different way I can help stimulate the economy besides consuming goods or services. How do is the type of work that I do measured in the GDP?
I came to the U.S. from Malaysia with two suitcases when I was 21. About a decade and a half later I moved from Boston to Portland also with just two suitcases. I tidied my closet this summer and discovered that I have tripled my possessions. Clothing items by far took up the most space. Surely I do not need five hoodies? I decided to set out a personal challenge to not buy any clothing item for six months.
Whenever this comes up in conversations the common half-joking response is: "Why aren’t you helping to stimulate the economy?" The mainstream media does stress how we are in recession because consumer spending is stagnant, but there must be a different way I can help stimulate the economy besides consuming goods or services. It got me thinking, "Can I stimulate the economy by giving away the money I would have spent on a pair of socks or a shirt?”
Here is what I found out: The most common measurement of a country's economy is its gross domestic product (GDP). The GDP is the market value of goods and services produced by a country during a given period. In the U.S., the nonprofit sector accounted for $779 billion or 5.4% of the GDP in 2010. This is an arbitrary number without some context, so here are a couple of examples for comparison:
• The U.S. utilities (1.8% of GDP) and the construction (3.5%) industries combined contribute less than the nonprofit sector.
• In 2010, the GDP of the Netherlands was $779.310 billion - about the same as the U.S. nonprofit sector.
Huge as this may be, it still does not encompass all that the nonprofit sector contributes to our society.
Let's follow the money and how we measure its economic impact. The $25 donation I give to a food bank provides a meal for a family. The market value of a meal ($25) is measurable. Hunger compromises individuals’ ability to work. But how do we measure the impact of a meal which allows the adults of a family to be more productive in the work force and the children to be able to function at school in the GDP?
I pay a $9 admission to a cultural institution such as the Chinese Garden to enjoy its beauty and serenity. $9 is measurable. This institution preserves culture. The serenity and beauty reduces my stress and helps me to expand my mind and be more creative which leads to increased productivity. How do we quantify the preservation of culture and measure stress reduction and creativity?
When it comes to my type of work what is economically measurable becomes even harder in our society that values things that can be quantified by the dollar. Since nonprofit "goods and services" are often provided without charge or for very little money, economists use wages paid to employees and rental value of assets owned and used by nonprofits to measure the value of our work.
My work - training and building leadership of organizers and helping community-based organizations to be more effective – leads to changing hearts and minds, and better policy that narrows disparities and addresses discrimination. All of these things increase the number of people being able to function more fully in our society. In our current GDP calculation, the enormity of this work is diminished down to wages and rental. Quite limiting don't you think?
Using the GDP as a way to measure the economic impact of my type of work is insufficient to say the least—absurd is what I really want to say. The popular media's pontification of consumer spending as the best way an individual can stimulate the economy is limiting yet unsurprising given how the "free market capitalism" mentality dominates this country.
December is typically a month when people think about generosity and it also marks the third month of my challenge to buy less and give more. I know that every gift or donation I make is going to stimulate more than just the economy. It also gives me peace of mind, renews my connections to people and the earth, and brings me joy. As ancient philosopher, Lao Tzu said, "kindness in giving creates love." And no economists will ever succeed trying to measure love via the GDP.
* Western States Center is one of the organizations I'll be redirect my clothing budget this year-end. Click here to join me.
And to learn more about my work watch this short two-minute video.