Beyond the New Normal - Part 3:Measuring Economic Growth
PRI Study Proposes New Look at Impact of Government Policy on Nation’s Long-Term Economic Problems
The Pacific Research Institute today released the latest installment of its Beyond the New Normal series, proposing a reorganization of current economic data to better illustrate the impact of government policy on the private sector and the nation’s economy.
“The current way that we measure economic growth does not really provide an accurate view of how government policy affects the nation’s economic health,” said Dr. Wayne Winegarden, PRI Senior Fellow in Business and Economics, and co-author of Beyond the New Normal. “That’s why we are proposing to reorganize how we measure the economy so we can truly see how tax policy, mandates and regulations have played a central role in our current, ongoing economic slowdown.”
In Part 3 of Beyond the New Normal, Wayne Winegarden and co-author Niles Chura propose reorganizing the Bureau of Economic Analysis National Income and Product data to link economic incentives and economic production to economic outcomes.
Their reorganization emphasizes net investment over gross investment, treating depreciation as consumption; accounts for differences in prices paid for expenditures relative to prices received by workers and owners; and measures the economy based on the income of the private sector only.
Among their key points in Part 3:
- Developing measures that link economic incentives and economic production provide a more comprehensive view of the economy, particularly the supply-side, and enables a broader understanding of the impact of government policies on the private sector.
- When economic policies adversely impact incentives or distort prices, these policies undermine long-term economic growth.
- Total government expenditures represent money that is diverted away from an income earner and lessens the potential after-tax windfall from working and investing.
- The burden of government spending relative to gross income earned by capital and labor in the private sector has been growing over time. This means that a growing percentage of private income is being diverted toward the government.
Beyond the New Normal is a multi-part study by Dr. Wayne Winegarden and Niles Chura, which makes the case that future U.S. economic growth can meet –or exceed – past growth trends if the right economic policies are adopted.
Click here to read Part 1 of Beyond the New Normal. Click here to read Part 2.
Dr. Wayne Winegarden is a Senior Fellow in Business and Economics at Pacific Research Institute. He is also the Principal of Capitol Economic Advisors and a Contributing Editor for EconoSTATS. Niles Chura is the founder of Ouray Capital.