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A better way of measuring progress in Maryland

As the 99 percent becomes more aware of America's scourge of income inequality and its adverse effects, the nation is awakening to the idea that the status quo favoring the wealthy and corporations isn't in our best interest.

The notion that "a rising tide lifts all boats" — yachts and dinghies alike — enjoyed popular acceptance for many decades. But with joblessness and under-employment stuck at near 16 percent nationally, historic numbers of home foreclosures, and skyrocketing family debt, people are realizing that their dinghies are taking in water. Most of the lucky ones on those giant yachts drinking martinis are, at best, callous to our situation.

U.S. income inequality has grown steadily since the mid-1970s. The rich are far richer than they used to be, and the rest of us are falling further behind. The United States remains the wealthiest nation in the world, at least in terms of total household wealth. But the ever-widening gap between the rich and the rest of us has concentrated that wealth in the wallets of a few. Our gross domestic product continues to grow, even as the poverty rate soars and quality of life for most of us declines.

Maryland exemplifies this trend. It regularly ranks as one of the wealthiest states, according to the Census, which bases this calculation on median household income. But Maryland's income inequality and poverty levels are steadily increasing. Our gross state product (a standard measurement of the state's economic output) grew 5 percent from 2008 to 2010, but our income inequality, as calculated by the Maryland government, increased by 3 percent. That dragged down our well-being by almost 2 percent.

This draws attention to the standard system for measuring well-being and growth. GDP, which gauges the cumulative growth or contraction of all goods and services, is the almost universally accepted economic yardstick. It's often used to assess a country's standard of living. Yet rising poverty, joblessness, income inequality, homelessness and food insecurity illustrate the mismatch between our standard of living and GDP growth.

This is mainly because GDP doesn't measure most of what's necessary for a good life. GDP goes up with any consumption, even the sale of things that are bad for you, like cigarettes, or bad for the planet, like nuclear bombs. And GDP doesn't measure good things, like spending more time with family, breathing clean air or performing valuable volunteer work.

But Maryland has come up with a more meaningful yardstick: the Genuine Progress Indicator (GPI). It takes into account some of the bad things in life, like smoggy days and the Chesapeake Bay's degradation, along with good things, like shorter commuting times and the growth of volunteerism, to better assess our residents' well-being. It targets sustainable economic growth, not just any economic growth.

The GPI illuminates how income inequality pulls down the overall value of personal consumption, thus decreasing Maryland's progress even as the national and state economies expand. To measure our economic progress in a way that explains how GDP can grow while our standard of living deteriorates is the first step in figuring out how to address the widespread problems of income inequality in Maryland and across the nation.

The Occupy movement is bringing attention to the way in which our democracy and quality of life have been eroded by income inequality. It's time to also consider "occupying GDP" by adopting a more realistic way to measure our well-being, as Maryland's Genuine Progress Indicator does.

Karen Dolan, a Prince George's County resident, is a fellow at the Institute for Policy Studies (www.ips-dc.org), where she's studying alternative metrics to the GDP, such as Maryland's Genuine Progress Indicator. Her email is karen@ips-dc.org.

Copyright © 2014, The Baltimore Sun
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