By Llewellyn H. Rockwell,
Commerce Department, which costs $3 billion a year, is touting one
of the most brainless economic ideas of our generation. What ought
to be called the Anti-Commerce Department announced the concept
on Earth Day, which appropriately enough is also Lenin's birthday.
cahoots with the environmentalists, the bureaucrats have dreamed
up a new formula to calculate the Gross Domestic Product, resulting
in a Green GDP. The present GDP attempts (and fails) to calculate
economic productivity. The new GDP would make a bad figure worse
by subtracting the alleged "environmental cost" of productivity.
Greens have a zero-sum attitude toward economic growth, and so we
are supposed to deduct "resource depletion" from the productive
employment of capital and time. Such a figure could come in handy
on Sunday morning talk shows.
economy is growing at 3%," an economist might say. "But that drains
our resources by 3%," responds the environmentalist. "And that comes
out to zero," concludes the moderator.
might seem like a useful activity, but not if we reduce productivity
by supposed soil depletion. How is that to be measured? Not by a
mere farmer, whose livelihood depends on preserving the soil, but
by an official in Washington, D.C.
building a new house require the cutting down of some trees? Subtract
them from the GDP. Is that juicy steak delicious? Too bad. Steak
requires cows, which environmentalists hate. Reduce the GDP by that
T-bone too. Enjoy driving? It harms Mother Earth, so take it away
fact, every human activity except dying offends some environmentalist.
It's enough to make you glad to be alive. Artificial lighting, eating,
driving, logging, plowing, building, heating, cooling, showerring,
using paper bags, having children, and even breathing are all objectionable
to the Greens. Taken to their logical end, in fact, environmentalism
requires bringing the economy to a standstill, and then reversing
it. As is clear from their own literature, only the subordination
of man to plants and animals (except cattle, who should be killed
but not eaten) will please them in the long run.
the regulatory state, the Greens have been moving us towards their
totalitarian goal. All over the country, Americans have been forbidden
to use their own land as they see fit. If it's a swamp or bog (i.e.,
a "wetland") or holds an "endangered" species, such as the recently
sanctified Delhi Sand Fly, shut it down. Your name may be on the
deed, and you may pay taxes on it, but the government is the real
owner, since it decides how the land is to be used, if at all.
regulations are why it costs so much to get your air conditioner
repaired, why wood prices are so high, why your car can't pass emissions
inspection even though it's only a few years old, why you are forced
to collect old newspapers so the city can recycle them at tremendous
expense, and charge you for it. That trees are a crop, like asparagus,
that can be grown, used, and grown again, is inadmissible.
no science or logic to the bulk of their claims, whether it's global
warming, holes in the ozone layer, acid rain, or any of the other
Mother Green fairy tales.
just as the American people are catching on, the Greens are trying
to trick us again. They tell us the GDP ought to be reduced not
by the cost of their fanatical controls but by the costs of capitalism
itself. They want us to believe that free markets, not the "Clean
Air" Act and other crippling laws, are the problem.
the Green GDP even the craziest regulation could be made to appear
beneficial. The statistical construct is so perverse, in fact, that
it will increase as our standard of living declines. The poorer
the people, the richer the Earth.
that the present GDP is any great shakes. Constant Commerce Department
revisions we call them mistakes in the private sector are
enough to make the figure a laughing stock. George Bush lost the
1992 election in part because the Commerce Department said we were
in a recession. After the election, the department said, whoops,
we'd been in a recovery.
floods and earthquakes account for a substantial rise in the GDP,
because the figure does not and cannot account for wealth destruction.
Los Angeles can be devastated by failing offices and burning homes,
but once the repairs begin, the government records a building boom.
Hazlitt tells the story of the boy who breaks a store window, as
Keynesians stand around and convince themselves it's a productive
act. But the story was intended to illustrate an economic fallacy,
not provide the intellectual foundation for a Commerce Department
the government started trying to calculate productivity, it should
have taken time to define it. The Austrian economist Herbert Davenport,
in his 1913 book The
Economics of Enterprise, is helpful. He suggests that: "Economic
production is the bringing about of changes appropriate to command
a price." A price suggests scarcity, utility, and profit. "Anything
that meets this test is economic production," he adds. "And nothing
if a good or service seems useful, but it doesn't command a price
in the market? If nobody wants it, it's not economic production.
"Pianos could not be wealth in a society lacking musical tastes,"
says Davenport, "or books wealth to savages."
then asks: "Are thieves producers?" No, for the holdup man does
not "give us anything for our money." He simply takes it by force.
This is not productive behavior.
discussion raises another question: what about the grandest larceny
of all, $1.6 trillion taken from the private sector by the central
government every year? If that property weren't seized, it could
be put to private, productive use. Taxation, like theft, is a net
loss to society, and should be subtracted from the GDP. Government
spending is also a net loss, although it increases the GDP just
like an earthquake.
his book America's
Great Depression, Murray N. Rothbard suggested an alternative
figure: the Private Product Remaining. It subtracts government spending
and taxing from overall productivity. Economist Robert Batemarco
picked up the idea and prepared an alternative set of statistics
that shows declines in living standards where the government wants
us to believe we're richer.
of subtracting the supposed costs of economic liberty from the GDP,
as the Greens propose, we need to take away the costs of government,
including environmental regulations, which interfere with private
property and cost hundreds of billions of dollars a year.
usual, then, the Commerce Department has it backwards. If we are
going to attempt national income accounting, it should be an honest
undertaking. It certainly should not be more dishonest than the
present figure. And by Davenport's and Rothbard's definition, and
Batemarco's calculation, our economy is getting less and less productive.
Big government and its allies are responsible.