Evidence of Economic Contraction

Economic growth is conventionally measured as an increase in economic activity. The aggregate number for this activity is the GDP, closely watched by investors and politicians alike. However, the GDP is a terrible measure. All it tells us is how busy people are. When it goes up, there is more activity. When it goes down, there is less activity. But when did activity in itself equate to wealth?

What about people who value leisure? Such people will feel wealthier when their economic activity goes down. I feel personally much richer today than I did ten years ago. I have retired. My contribution to the GDP has gone down.

Very few people love their work so much that they prefer work to leisure. Most people dream of an early retirement. Yet, the age at which we can retire keeps creeping up. We are in other words becoming less wealthy. All the while, the GDP is going up.

Things have gotten so bad that most families no longer can afford to have only one bread winner. Children are locked away in schools while both parents work. The children of today are clearly less wealthy than they were a few decades back. Women who would prefer to be at home rather than work long hours at the office are also less well off today.

The only people who are better off are the few who love to work long hours and the politicians and their cronies who are able to extract more taxes through the higher GDP rate.

Politicians are paid through the taxation of their fellow men. The more their fellow men interact in the economy, the more opportunity there is for taxation. This is why politicians are so obsessed with GDP numbers. Their pay checks depend on a high level of economic activity.

Propaganda is constantly pushed onto people to ensure GDP growth. Consumption is promoted. The increased participation of women in the labour force is seen as somehow liberating for those who are forced out of their homes and away from their children in order to make ends meet.

However, the truth is finally starting to dawn on people. No longer able to make ends meet, people are coming out in the streets to protest. They don't seem to know what they want as an alternative. But they know one thing for sure. The political class has screwed them good and hard for decades. Life isn't as good as it used to be. The economy hasn't grown. It has contracted.

The social contract