Household income should be measured alongside GDP

Graham_Devon

Good idea, IMO.

No chance of it happening though. Wouldn't just rock the applecart, would turn it over.

Politicians should track progress in repairing Britain's recession-scarred economy by measuring how the average household is faring instead of focusing on GDP alone, according to a report by a panel of heavyweight economists.


The London School of Economics Growth Commission, in findings published on Thursday, calls for statistics on median household income to be published regularly alongside quarterly GDP figures, and to be used as a measure of whether government policies are working.


The high-level panel – including Nobel prizewinner Chris !!!!arides, ex-BP boss John Browne, the three former Bank of England rate-setters Richard Lambert, Rachel Lomax and Tim Besley, as well as the LSE's John Van Reenen, director of its centre for economic performance – offers a series of prescriptions for tackling the long-term failings of the UK economy.


They argue that tracking median household income in the runup to the financial crisis would have revealed that the benefits of growth were being swallowed up by a small segment of society. "Increasing inequality is not an inevitable byproduct of growth, especially if policies are pursued that make growth more inclusive," the report says.

http://www.guardian.co.uk/business/2013/jan/31/household-income-gdp-growth-lse

GeorgeHowell

Graham_Devon wrote: »

Good idea, IMO.

No chance of it happening though. Wouldn't just rock the applecart, would turn it over.


http://www.guardian.co.uk/business/2013/jan/31/household-income-gdp-growth-lse

Flawed concept. For quality of life improvements we need growth in education, health, transport, infrastructure etc, which would not show up directly in household income measured in that way. Whereas growth in disposable income to be spent for example on iPads, alcohol, gap years, fashion clothing, and fast food would be targeted by this method. Is that the sort of society we want to live in ?

I'm afraid this is characteristic left wing thinking again, where how the cake is sliced up is the paramount consideration, rather than how big a cake it is, and what the ingredients are.

Generali

The bit the Guardian normally misses out is that the main reason for incomes stagnating for the majority is the Government taking a larger slice of the national pie.

In 1997, Gordon Brown and Tony Blair made it very clear that the Government was going to take the proceeds of growth for itself which mostly then did. This is slightly better than in the US where the Bush Governments did the same thing while pretending to support small Government.

GeorgeHowell

Generali wrote: »

The bit the Guardian normally misses out is that the main reason for incomes stagnating for the majority is the Government taking a larger slice of the national pie.

In 1997, Gordon Brown and Tony Blair made it very clear that the Government was going to take the proceeds of growth for itself which mostly then did. This is slightly better than in the US where the Bush Governments did the same thing while pretending to support small Government.

Government taking a bigger slice would be more palatable if we had a plethora of beneficial things to show for it. What we seem to actually have is a bloated anmd inefficient public sector, NHS, and state education system which seem to mostly provide an inferior service to what they used to, failed and dubious grandiose public schemes (eg NHS computerisation, HS2), quangos coming out of our ears, and inflated welfare spending which has not reduced inequality in any sense.

It is no wonder that the population is not of a mind to be taxed more in order to allow increased public spending.

Generali

GeorgeHowell wrote: »

Government taking a bigger slice would be more palatable if we had a plethora of beneficial things to show for it. What we seem to actually have is a bloated anmd inefficient public sector, NHS, and state education system which seem to mostly provide an inferior service to what they used to, failed and dubious grandiose public schemes (eg NHS computerisation, HS2), quangos coming out of our ears, and inflated welfare spending which has not reduced inequality in any sense.

It is no wonder that the population is not of a mind to be taxed more in order to allow increased public spending.

AIUI most of the money went on two things:

- A massive increase in the size of the Welfare State via the tax credits system
- Big increases to the salaries of state employees (who just happen to be overwhelmingly unionized and thus paying for the Labour Party)

Paying people more money isn't investment no matter how many times Gordon Brown told us otherwise. Investment means increasing productive capacity.

Tancred

GeorgeHowell wrote: »

Flawed concept. For quality of life improvements we need growth in education, health, transport, infrastructure etc, which would not show up directly in household income measured in that way. Whereas growth in disposable income to be spent for example on iPads, alcohol, gap years, fashion clothing, and fast food would be targeted by this method. Is that the sort of society we want to live in ?

I'm afraid this is characteristic left wing thinking again, where how the cake is sliced up is the paramount consideration, rather than how big a cake it is, and what the ingredients are.

True to a certain extent, however making more people poor is hardly going to help the country, is it? And your claims about money spent on iPads etc are plainly ridiculous and also insulting; many people just want some basic comforts and be able to live without fear. Not every poor person is a chav - many are simply unlucky or suffer from physical or mental ill health. The mark of a civilised society is the commitment to help the vulnerable and weak.

Tancred

Generali wrote: »

AIUI most of the money went on two things:

- A massive increase in the size of the Welfare State via the tax credits system
- Big increases to the salaries of state employees (who just happen to be overwhelmingly unionized and thus paying for the Labour Party)

Paying people more money isn't investment no matter how many times Gordon Brown told us otherwise. Investment means increasing productive capacity.

The tax credits system should have been reformed but the idea was a good one. Most advanced Western countries have tax credits of one kind or another.

The issue with state employees is not the salaries themselves, which are often lower than ones in the private sector, but the benefits, i.e. pensions etc. This has now been addressed.

wotsthat

Graham_Devon wrote: »

Good idea, IMO.

No chance of it happening though. Wouldn't just rock the applecart, would turn it over.

??

Household income is measured and published by the ONS.

MacMickster

I would prefer to see GDP adjusted to reflect the impact of both government and household borrowing on the figures.

This would have shown that our boom years were actually a debt-fuelled illusion, and also that we are still a very long way fromgetting back down to par.

CLAPTON

It would seem to me that the government service publishes huge amounts of data on incomes, government spending and borrowing, secured and unsecured borrowing etc which are well analysed by numerous economic and business observers.

exactly what data is missing?

MacMickster

CLAPTON wrote: »

It would seem to me that the government service publishes huge amounts of data on incomes, government spending and borrowing, secured and unsecured borrowing etc which are well analysed by numerous economic and business observers.

exactly what data is missing?

The problem is not so much that data is missing, but the over reliance on GDP alone as the key economic indicator.