How to Fix the Economy: Going Beyond GDP and Politics as Usual

Co-authored with Natalie Cox, Coordinator of the Center's Caring Economy Campaign

Pundits tell us that Republicans just took over Congress because of popular discontent with our economy. Exit polls showed that 45% of voters said "the economy" was their most important issue, and Republicans promised to "fix the economy."

But how can we really fix the economy? A brand new set of economic measures called Social Wealth Economic Indicators (SWEIs) point the way to solutions that go far beyond what most politicians tell us we need.

Republicans advocate austerity - even though it's clear austerity has impeded Europe's economic recovery. Democrats talk about restoring manufacturing jobs - even though these are shrinking as fast as Alice did in Wonderland after she drank from the wrong bottle. According to the U.S. Bureau of Labor Statistics, job growth in the next decade will be centered in the knowledge-service industries such as health care and social assistance, education, and financial services. By 2022, the number of jobs in manufacturing is projected to plummet, largely due to automation and robotics.

We're living in a new reality where economic success requires a much different fuel: one that comes in a very different bottle.

When manufacturing jobs fueled the economy, GDP as the barometer made some sense. Tracking the production of goods and consumer spending did keep our finger on the pulse of the economy.

But today's economy is driven by precisely those things GDP does not count. Economists tell us that developing and maintaining high-quality human capital is essential for success in this new technological era. And this is just what Social Wealth Economic Indicators or SWEIs measure.

The Caring Economy Campaign developed SWEIs based on research by economists and other experts working with us to determine what is needed for government and business to adopt more effective policies and investment allocations. SWEIs compare where the U.S. stands in two basic measures: 1) Human Capacity Indicators, measuring a nation's present human capital, and 2) Care Investment Indicators, measuring public and private investment in building and maintaining that human capital.

SWEIs show our nation is doing a terrible job in both these critical measures.

We have the lowest enrollment in early childhood education. We're the only country with no paid parental leave to enable employees to care for their newborns. Our child poverty rate is double that of most developed nations. And we invest less than half what other OECD nations do in our future workforce through family benefits and early childhood education.

We are not preparing our nation for our new knowledge/service economy -- even though we know from neuroscience that caring for and educating people starting in early childhood is essential for human capacity development. Just as GDP accounts for investment in new machinery, we need Social Wealth Economic indicators that account for investment in what fuels the knowledge/service economy: caring for people, especially children.

SWEIs show the huge economic value of care work in both the market (where it paid inadequate wages) and in homes (where our nation fails to support it). Support for this work will help end cycles of poverty, particularly among many women and communities of color, and help policy makers adopt legislation for paid parental and sick leave, flex-time, caregiver tax credits, and other caring policies essential for our present and future economic health.

This is not a matter of coddling "dependent" people; it is a matter of making all of us more capable in this convulsive economy -- a goal that must transcend partisan bickering.

Social Wealth Economic Indicators demonstrate that the notion of a conflict between policies that invest in health, education, and other social supports and policies that lead to economic success is not only inaccurate, but potentially disastrous.

When SWEIs are launched this week by the Center for Partnership Studies' Caring Economy Campaign (a coalition of over 100 organizations), a panel of leaders from business and civil society will make the economic case for caring for people, starting in early childhood and throughout the lifespan. Co-sponsors of the SWEI launch range from major women's organizations to socially responsible businesses, as well as major foundations supporting a more equitable and sustainable economy and society.

This is the time for forward-looking measures. We cannot fix the economy based on measures such as GDP that look at our world through a rearview mirror.