July 31, 2013 ~ As of August 1st, 2013, the US Bureau of Economic Analysis (BEA) finally enters the 21st century. GDP will now include much of the intangible production and services which make up some 70% of mature 21st century economies: software, R&D, entertainment, trademarks, copyrights, design and other creative innovation. In today’s report from the BEA, US GDP rose 1.7% (with the revised accounting method adding .41% of the total) in the second quarter of 2013 while the revision added 0.93% of the 1.1% increase reported for the first quarter. So far, the shifts of these intangibles from “costs” to “investments” is slight and will be revised again on August 29, 2013. Still not included is the most important investment all societies make in their future: education, still categorized as an “expense”!
For decades, critics like Hazel Henderson have urged modernizing GDP from the early materialistic Industrial Era accounting method obsessed with goods you could drop on your foot and confusing the “goods” with “bads” (pollution and other social costs of production) and totaling all as valuable output. Meanwhile, for fifty years, services and less tangible forms of wealth have been quietly overtaking the total output of maturing economies. The new revisions to GDP will boost US growth totals, and when the BEA starts counting R&D and artistic creation as “investments,” this could add another 2.7%. If the BEA were to backcast R&D revisions from 1959 to 2007, reported annual growth rates would increase by .07%.
For more information, read “GDP: Gauging Dematerialized Progress!” by Hazel Henderson, forthcoming from IPS Columnist Service, syndicated distribution to Asia, Europe, Latin America and Africa.
Beyond GDP, Ethical Markets Media, LLC © 2013