Obamacare-Induced Spending Shows How the GDP Measure Means Nothing

Megan McArdle wasn’t writing about how the Gross Domestic Product is a scam that measures almost nothing and is just used for propaganda purposes with no science behind it. I assume she would disagree with that assessment. She’s mastered the gobbledygook discipline of modern economics more than I ever will, so I guess she will speak with authority.

But what she says about Obamacare expenditures is really amazing:

The good news about health-care expenditures is that they’re propping up gross domestic product: Without soaring expenditure on health care, yesterday’s lackluster GDP estimates would have been negative, instead of a paltry 0.1 percent.

The bad news about health-care expenditures is that they’re, well, soaring…

So if the Affordable Care Act hadn’t come to the rescue at just the right moment, the talking heads would be talking about the real possibility that we might sink into “another” recession (like in any real sense the first one ever ended! Puh-leeze!).  But because Obamacare is giving us “soaring” health-care expenditures, we can rest assured that the economy continues to “grow.”

Growth is defined as all spending no matter why we spend or what we spend on.

Spending grew 9.9 percent in the first quarter, the highest rate in decades. That follows a 5.6 percent increase at the end of last year.

The big increase was driven by the Affordable Care Act’s coverage expansion. Expect to see robust growth again next quarter, as the March surge in enrollment translates into an April-through-June surge in health-care consumption.

Stop listening to GDP numbers. If the government forced us all to hire chauffeurs to drive us then, according to Gross Domestic Product numbers, all that extra expense would count as “growth” in the economy. The politicians and media would joyfully shout about how GDP was increasing. Now perhaps that spending would cause enough people to cut spending in other areas to register a decline in GDP, but would that really “measure the economy”? The bottom line is that, when people are forced to spend money against their will, they are being impoverished; they are not prospering.

GDP pretends that all spending is the same. If you want a better measure of the economy, then instead of adding Obamacare spending or government spending to the total, subtract it. Spending by the government or by government-coerced programs does not add to economic growth, but takes away from it.