The Hardin tribune-herald. [volume] (Hardin, Mont.) 1925-1973, 1952-08-14
Economy Director Says U.s.. Commerce
Department Figures Are Misleading


One of the factors. used to
measure the upward progress
of American living standards is
the growth in the nations
gross national production from
year to year. StatiSticians call
the yardStick Gross National
Product and designate it with
the alphabetical symbol GIMP.
The citizen who looks at the
GIMP figures put out by the U.
s.. Department of Commerce
could easily leap to the con-
clusion, says d.. George Cline
Smith, director of the govern
ment economy program OF the
Chamber of Commerce of the
United States, that Americans
are now 262 per cent more
prosperous than they were in
1899.
But, not at all. Careful analy-
sis, says DR.. Smith, diScloSeS
that the government figures are
just about 628 per cent wrong.
Why?
Because" DR.. Smith ex-
PLAINS, "the improvement in
l living standards actually meas
ures out to about SO per cent
for the average individual dur
ing the past IL years. That is
a simple average of 8 per cent
a year - about the rate we
have come to expect through
most of our history.
"The governments figures
indicate GIMP has jumped from
SOL billion in 1889 to 1929 bill
lion today. Apparently, that in
dictates a tremendous growth in
the output of the national
economy and a corresponding
increase in the standard of liv-
ing of the people.
But several facts conspire
to make the GIMP figures mis-
leading. First of all, the GIMP
consists primarily of two large
items. They are personal con-
sumption expenditures and gov
eminent purchases of goods
and services. The catch is in
the government figure, which
wasn't much of a problem when
government was small, but
which now has reached large
proportions as federal, state
and local spending has grown
in recent years. Government
OUTLAWS accounted for only
about one-Seventh of the GIMP
in 1889, but equalled almost
one-fifth in 1851.
Government spending : and
consumer spending are two
vastly different things, even
though they are added togeth-
er for GIMP. Government spend
ing on military goods, for ex-
ample, no matter how neceS-
Sary, does not represent a dir
ect contribution to economic
standards of living for the con-
sumner. To carry the Illustration
to an extreme, it would be pos
sible to have a huge GIMP made
up almost entirely of govern
ment spending on equipment
and services, while the people
starved because no food was
being produced.
"a better measure of econom-
ic well-being is the personal
consumption spending figure,
representing goods and services
of all kinds which consumers
actually buy. That figure was
increased since 1899, but not as
rapidly as GIMP.
"But even the personal con-
sumption expenditures are mis-
leading, for two further reasons
(Which affect the accuracy OF
the GIMP as well). First, these
expenditures are measured in
dollars which aren't worth as
much today as they were in
1889, and second, the popula-
ton of the nation has grown
by almost "a million persons
since 1889.
cit is possible to correct these
two defects, first by expressing
personal consumption expendi-
lures in 1889 dollar values, and
then figuring out the per cap
tia expenditures.
"On that basis, we find that
personal consumption eXpend-
itures amounted to CTS billion
1899 dollars in 1899 and to
1884 billion 1899 dollars in 1851
This comes to $515 per capital
in 1889 and STOP per capita In
1851 = an increase of 36 pei
cent in 10 years.
Another interesting point is
that most of the increase came
during the period 1939-1945
when per capita personal con-
sumption expenditures went ur
20 per cent, or 3.3 per cent a
year. In the six years following
the war the increase was only
1876 per cent, or 2.3 per cent q
year, considerably less than
might have been expected"
Water in the Dismal Swamp
of North Carolina and Virginia
is stained to the color of dark
cider by submerged peat ano
! twisted roots and stumps. l.