This article is from 1995 but still applies.
If the GDP Is Up, Why Is America Down?
Why we need new measures of progress, why we do not have them, and how they would change the social and political landscape
Throughout the tumult of the elections last year political commentators were perplexed by a stubborn fact. The economy was performing splendidly, at least according to the standard measurements. Productivity and employment were up; inflation was under control. The World Economic Forum, in Switzerland, declared that the United States had regained its position as the most competitive economy on earth, after years of Japanese dominance.
The Clinton Administration waited expectantly, but the applause never came. Voters didn't feel better, even though economists said they should. The economy as economists define it was booming, but the individuals who compose i—or a great many of them, at least—were not. President Bill Clinton actually sent his economic advisers on the road to persuade Americans that their experience was wrong and the indicators were right.
This strange gap between what economists choose to measure and what Americans experience became the official conundrum of the campaign season. “PARADOX OF '94: GLOOMY VOTERS IN GOOD TIMES,” The New York Times proclaimed on its front page. “BOOM FOR WHOM?” read the cover of Time magazine. Yet reporters never quite got to the basic question—namely, whether the official indicators are simply wrong, and are leading the nation in the wrong direction.
The problem goes much deeper than the “two-tiered” economy—prosperity at the top, decline in the middle and at the bottom—that received so much attention. It concerns the very definition of prosperity itself. In the apt language of the nineteenth-century writer John Ruskin, an economy produces “illth” as well as wealth; yet the conventional measures of well being lump the two together. Could it be that even the upper tier was—and still is—rising on the deck of a ship that is sinking slowly into a sea of illth, and that the nation's indicators of economic progress provide barely a clue to that fact?
Ample attention was paid to the symptoms: People were working longer hours for less pay. The middle class was slipping while the rich were forging ahead. Commutes were more harried. Crime, congestion, and media violence were increasing. More families were falling apart. A Business Week/Harris poll in March imparted the not surprising news that more than 70 percent of the public was gloomy about the future.
Sounding much like the guidance department of a progressive New York grammar school, the Clinton Administration said that Americans were simply suffering the anxieties of adjustment to a wondrous new economy. Speaking in similar terms, Alan Greenspan, the chairman of the Federal Reserve Board, told a business gathering in San Francisco this past February that “there seemingly inexplicably remains an extraordinarily deep-rooted foreboding about the [economic] outlook” among the populace.
Those silly people. But could it be that the nation's economic experts live in a statistical Potemkin village that hides the economy Americans are actually experiencing?
Cont'd
http://www.theatlantic.com/magazine/archive/1995/10/if-the-gdp-is-up-why-is-america-down/415605/
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