Home is where the heart is. Most homemakers would also agree that home is where the work is. Traditionally the role of homemaker has been performed by women and is unpaid work. According to the Australian Bureau of Statistics the difference between paid and unpaid work is that the former is defined as activity that uses labour and other factors of production to produce goods and services for sale in the market, while the latter receives no payment as the majority of the services are not produced for the market.
In 2009, staring down the barrel of the GFC, Stiglitz, Sen, and Fitoussi published their report exploring the shortcomings of GDP and its measurement of wellbeing. In 2020, as we stare down the barrel of a crisis of a different kind, Tingnan Li revisits the report to see if there is any wisdom which may be gleaned.
It is now 5 years into the US recovery after the severe recession of 2008-9, unemployment has fallen to 6.7% and quarterly GDP growth remains between 1-2%. At first glance the recovery finally appears to be picking up momentum, with stronger then expected growth in the last half of 2013.
Looking at the longer term trends however, any optimism is quickly expunged as it appears the US is performing far below its potential. The IMF outlook for 2013 shows actual GDP to be more than 4% below potential GDP.
Recently China’s president Xi Jinping was quoted in saying that China’s GDP growth will be subdued in the foreseeable future, relative to the rapid growth in the past decade. China’s official newspaper Xinhua has put the internal target at 7.5% p.a. for 2013 from a 7.8% p.a. actual figure achieved in 2012, and many are undoubtedly aware that this is a 13-year record low. Exactly how much has the world’s second largest economy grown by and how has China done it?
If we remember back to the days of the global financial crisis, one of the earliest and hardest hit countries in the European area was Iceland. Iceland was also the only country which made the fateful decision to not bailout the three largest banks in their country. This was not because they simply said ‘no’ like they did afterwards to the demands of the creditors of these banks in the UK and the Netherlands, but they simply could not afford to bailout these banks which held 10 times GDP worth of assets. By choosing not to bailout the banks it didn’t mean the domestic financial payments system collapsed as well, and without good reason detailed further in the article.