2008 figures of total nominal GDP (bottom) compared to PPP-adjusted GDP (top)]]

The gross domestic product (GDP) or gross domestic income (GDI) is the amount of goods and services produced in a year, in a country. It is the market value of all final goods and services made within the borders of a country in a year. It is often positively correlated with the standard of living, alternative measures to GDP for that purpose.

Gross domestic product comes under the heading of national accounts, which is a subject in macroeconomics.

Determining GDP

GDP can be determined in three ways, all of which should in principle give the same result. They are the product (or output) approach, the income approach, and the expenditure approach.

The most direct of the three is the product approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers," colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes.

Example: the expenditure method:

: GDP = private consumption + gross investment + government spending + (exports − imports), or

$\backslash mathrm\{GDP\}\; =\; C\; +\; \backslash mathrm\{Inv\}\; +\; G\; +\; \backslash left\; (\; \backslash mathrm\{eX\}\; -\; i\; \backslash right\; )$

Note: "Gross" means that GDP measures production regardless of the various uses to which that production can be put. Production can be used for immediate consumption, for investment in new fixed assets or inventories, or for replacing depreciated fixed assets.

"Domestic" means that GDP measures production that takes place within the country's borders. In the expenditure-method equation given above, the exports-minus-imports term is necessary in order to null out expenditures on things not produced in the country (imports) and add in things produced but not sold in the country (exports).

Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector (or government) spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are:

Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption.

If separated from endogenous private consumption, government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework.

Income Approach

This method measures GDP by adding incomes that firms pay households for the factors of production they hire- wages for labor, interest for capital, rent for land and profits for entrepreneurship.

The US "National Income and Expenditure Accounts" divide incomes into five categories: # Wages, salaries, and supplementary labour income # Corporate profits # Interest and miscellaneous investment income # Farmers’ income # Income from non-farm unincorporated businesses These five income components sum to net domestic income at factor cost.

Two adjustments must be made to get GDP: # Indirect taxes minus subsidies are added to get from factor cost to market prices. # Depreciation (or capital consumption) is added to get from net domestic product to gross domestic product.

Expenditure approach

In economies, most things produced are produced for sale, and sold. Therefore, measuring the total expenditure of money used to buy things is a way of measuring production. This is known as the expenditure method of calculating GDP. Note that if you knit yourself a sweater, it is production but does not get counted as GDP because it is never sold. Sweater-knitting is a small part of the economy, but if one counts some major activities such as child-rearing (generally unpaid) as production, GDP ceases to be an accurate indicator of production. Similarly, if there is a long term shift from non-market provision of services (for example cooking, cleaning, child rearing, do-it yourself repairs) to market provision of services, then this trend toward increased market provision of services may mask a dramatic decrease in actual domestic production, resulting in overly optimistic and inflated reported GDP. This is particularly a problem for economies which have shifted from production economies to service economies.

Components of GDP by expenditure

GDP (Y) is a sum of Consumption (C), Investment (I), Government Spending (G) and Net Exports (X - M). :Y = C + I + G + (X − M)

Here is a description of each GDP component:

C (consumption) is normally the largest GDP component in the economy, consisting of private (household final consumption expenditure) in the economy. These personal expenditures fall under one of the following categories: durable goods, non-durable goods, and services. Examples include food, rent, jewelry, gasoline, and medical expenses but does not include the purchase of new housing.

I (investment) includes business investment in equipments for example and does not include exchanges of existing assets. Examples include construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. Spending by households (not government) on new houses is also included in Investment. In contrast to its colloquial meaning, 'Investment' in GDP does not mean purchases of financial products. Buying financial products is classed as 'saving', as opposed to investment. This avoids double-counting: if one buys shares in a company, and the company uses the money received to buy plant, equipment, etc., the amount will be counted toward GDP when the company spends the money on those things; to also count it when one gives it to the company would be to count two times an amount that only corresponds to one group of products. Buying bonds or stocks is a swapping of deeds, a transfer of claims on future production, not directly an expenditure on products.

G (government spending) is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits.

X (exports) represents gross exports. GDP captures the amount a country produces, including goods and services produced for other nations' consumption, therefore exports are added.

M (imports) represents gross imports. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic.

A fully equivalent definition is that GDP (Y) is the sum of final consumption expenditure (FCE), gross capital formation (GCF), and net exports (X - M). :Y = FCE + GCF+ (X − M) FCE can then be further broken down by three sectors (households, governments and non-profit institutions serving households) and GCF by five sectors (non-financial corporations, financial corporations, households, governments and non-profit institutions serving households). The advantage of this second definition is that expenditure is systematically broken down, firstly, by type of final use (final consumption or capital formation) and, secondly, by sectors making the expenditure, whereas the first definition partly follows a mixed delimitation concept by type of final use and sector.

Note that C, G, and I are expenditures on final goods and services; expenditures on intermediate goods and services do not count. (Intermediate goods and services are those used by businesses to produce other goods and services within the accounting year. )

According to the U.S. Bureau of Economic Analysis, which is responsible for calculating the national accounts in the United States, "In general, the source data for the expenditures components are considered more reliable than those for the income components [see income method, below]."

Examples of GDP component variables

C, I, G, and NX(net exports): If a person spends money to renovate a hotel to increase occupancy rates, the spending represents private investment, but if he buys shares in a consortium to execute the renovation, it is saving. The former is included when measuring GDP (in I), the latter is not. However, when the consortium conducted its own expenditure on renovation, that expenditure would be included in GDP.

If a hotel is a private home, spending for renovation would be measured as consumption, but if a government agency converts the hotel into an office for civil servants, the spending would be included in the public sector spending, or G.

If the renovation involves the purchase of a chandelier from abroad, that spending would be counted as C, G, or I (depending on whether a private individual, the government, or a business is doing the renovation), but then counted again as an import and subtracted from the GDP so that GDP counts only goods produced within the country.

If a domestic producer is paid to make the chandelier for a foreign hotel, the payment would not be counted as C, G, or I, but would be counted as an export.

for 2008]]

Income approach

Another way of measuring GDP is to measure total income. If GDP is calculated this way it is sometimes called Gross Domestic Income (GDI), or GDP(I). GDI should provide the same amount as the expenditure method described above. (By definition, GDI = GDP. In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies.)

Total income can be subdivided according to various schemes, leading to various formulae for GDP measured by the income approach. A common one is:

: GDP = compensation of employees + gross operating surplus + gross mixed income + taxes less subsidies on production and imports : GDP = COE + GOS + GMI + T_{P & M} - S_{P & M}

Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to social security and other such programs.

Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses. Often called profits, although only a subset of total costs are subtracted from gross output to calculate GOS.

Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses.

The sum of COE, GOS and GMI is called total factor income; it is the income of all of the factors of production in society. It measures the value of GDP at factor (basic) prices. The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP at factor cost to GDP(I).

Total factor income is also sometimes expressed as: :Total factor income = Employee compensation + Corporate profits + Proprieter's income + Rental income + Net interest

Yet another formula for GDP by the income method is:

:$GDP\; =\; R\; +\; I\; +\; P\; +\; SA\; +\; W$

where R : rents I : interests P : profits SA : statistical adjustments (corporate income taxes, dividends, undistributed corporate profits) W : wagesNote the mnemonic, "ripsaw".

A "production boundary" that delimits what will be counted as GDP.

"One of the fundamental questions that must be addressed in preparing the national economic accounts is how to define the production boundary–that is, what parts of the myriad human activities are to be included in or excluded from the measure of the economic production."

All output for market is at least in theory included within the boundary. Market output is defined as that which is sold for "economically significant" prices; economically significant prices are "prices which have a significant influence on the amounts producers are willing to supply and purchasers wish to buy." An exception is that illegal goods and services are often excluded even if they are sold at economically significant prices (Australia and the United States exclude them).

This leaves non-market output. It is partly excluded and partly included. First, "natural processes without human involvement or direction" are excluded. Also, there must be a person or institution that owns or is entitled to compensation for the product. An example of what is included and excluded by these criteria is given by the United States' national accounts agency: "the growth of trees in an uncultivated forest is not included in production, but the harvesting of the trees from that forest is included."

Within the limits so far described, the boundary is further constricted by "functional considerations." The Australian Bureau for Statistics explains this: "The national accounts are primarily constructed to assist governments and others to make market-based macroeconomic policy decisions, including analysis of markets and factors affecting market performance, such as inflation and unemployment." Consequently, production that is, according to them, "relatively independent and isolated from markets," or "difficult to value in an economically meaningful way" [i.e., difficult to put a price on] is excluded. Thus excluded are services provided by people to members of their own families free of charge, such as child rearing, meal preparation, cleaning, transportation, entertainment of family members, emotional support, care of the elderly. Most other production for own (or one's family's) use is also excluded, with two notable exceptions which are given in the list later in this section.

Nonmarket outputs that are included within the boundary are listed below. Since, by definition, they do not have a market price, the compilers of GDP must impute a value to them, usually either the cost of the goods and services used to produce them, or the value of a similar item that is sold on the market. Goods and services provided by governments and non-profit organisations free of charge or for economically insignificant prices are included. The value of these goods and services is estimated as equal to their cost of production. This ignores the consumer surplus generated by an efficient and effective government supplied infrastructure. For example, government-provided clean water confers substantial benefits above its cost. Ironically, lack of such infrastructure which would result in higher water prices (and probably higher hospital and medication expenditures) would be reflected as a higher GDP. This may also cause a bias that mistakenly favors inefficient privatizations since some of the consumer surplus from privatized entities' sale of goods and services are indeed reflected in GDP.

Goods and services produced for own-use by businesses are attempted to be included. An example of this kind of production would be a machine constructed by an engineering firm for use in its own plant.

Renovations and upkeep by an individual to a home that she owns and occupies are included. The value of the upkeep is estimated as the rent that she could charge for the home if she did not occupy it herself. This is the largest item of production for own use by an individual (as opposed to a business) that the compilers include in GDP. If the measure uses historical or book prices for real estate, this will grossly underestimate the value of the rent in real estate markets which have experienced significant price increases (or economies with general inflation). Furthermore, depreciation schedules for houses often accelerate the accounted depreciation relative to actual depreciation (a well built house can be lived in for several hundred years - a very long time after it has been fully depreciated). In summary, this is likely to grossly underestimate the value of existing housing stock on consumers' actual consumption or income.

Agricultural production for consumption by oneself or one's household is included.

Services (such as chequeing-account maintenance and services to borrowers) provided by banks and other financial institutions without charge or for a fee that does not reflect their full value have a value imputed to them by the compilers and are included. The financial institutions provide these services by giving the customer a less advantageous interest rate than they would if the services were absent; the value imputed to these services by the compilers is the difference between the interest rate of the account with the services and the interest rate of a similar account that does not have the services. According to the United States Bureau for Economic Analysis, this is one of the largest imputed items in the GDP.

GDP vs GNP

GDP can be contrasted with gross national product (GNP) or gross national income (GNI). The difference is that GDP defines its scope according to location, while GNP defines its scope according to ownership. In a global context, world GDP and world GNP are therefore equivalent terms.

GDP is product produced within a country's borders; GNP is product produced by enterprises owned by a country's citizens. The two would be the same if all of the productive enterprises in a country were owned by its own citizens, and those citizens did not own productive enterprises in any other countries. In practices, however, foreign ownership makes GDP and GNP non-identical. Production within a country's borders, but by an enterprise owned by somebody outside the country, counts as part of its GDP but not its GNP; on the other hand, production by an enterprise located outside the country, but owned by one of its citizens, counts as part of its GNP but not its GDP.

To take the United States as an example, the U.S.'s GNP is the value of output produced by American-owned firms, regardless of where the firms are located. Similarly, if a country becomes increasingly in debt, and spends large amounts of income servicing this debt this will be reflected in a decreased GNI but not a decreased GDP. Similarly, if a country sells off its resources to entities outside their country this will also be reflected over time in decreased GNI, but not decreased GDP. This would make the use of GDP more attractive for politicians in countries with increasing national debt and decreasing assets.

Gross national income (GNI) equals GDP plus income receipts from the rest of the world minus income payments to the rest of the world.

In 1991, the United States switched from using GNP to using GDP as its primary measure of production. The relationship between United States GDP and GNP is shown in table 1.7.5 of the National Income and Product Accounts.

International standards

The international standard for measuring GDP is contained in the book System of National Accounts (1993), which was prepared by representatives of the International Monetary Fund, European Union, Organization for Economic Co-operation and Development, United Nations and World Bank. The publication is normally referred to as SNA93 to distinguish it from the previous edition published in 1968 (called SNA68) .

SNA93 provides a set of rules and procedures for the measurement of national accounts. The standards are designed to be flexible, to allow for differences in local statistical needs and conditions.

National measurement

Within each country GDP is normally measured by a national government statistical agency, as private sector organizations normally do not have access to the information required (especially information on expenditure and production by governments).

Interest rates

Net interest expense is a transfer payment in all sectors except the financial sector. Net interest expenses in the financial sector are seen as production and value added and are added to GDP.

Adjustments to GDP

When comparing GDP figures from one year to another, it is desirable to compensate for changes in the value of money–inflation or deflation. The raw GDP figure as given by the equations above is called the nominal, or historical, or current, GDP. To make it more meaningful for year-to-year comparisons, it may be multiplied by the ratio between the value of money in the year the GDP was measured and the value of money in some base year. For example, suppose a country's GDP in 1990 was $100 million and its GDP in 2000 was $300 million; but suppose that inflation had halved the value of its currency over that period. To meaningfully compare its 2000 GDP to its 1990 GDP we could multiply the 2000 GDP by one-half, to make it relative to 1990 as a base year. The result would be that the 2000 GDP equals $300 million x one-half = $150 million, in 1990 monetary terms. We would see that the country's GDP had, realistically, increased 1.5 times over that period, not 3 times, as it might appear from the raw GDP data. The GDP adjusted for changes in money-value in this way is called the real, or constant, GDP.

The factor used to convert GDP from current to constant values in this way is called the GDP deflator. Unlike the Consumer price index, which measures inflation (or deflation–rarely!) in the price of household consumer goods, the GDP deflator measures changes in the prices all domestically produced goods and services in an economy–including investment goods and government services, as well as household consumption goods.

Constant-GDP figures allow us to calculate a GDP growth rate, which tells us how much a country's production has increased (or decreased, if the growth rate is negative) compared to the previous year. :Real GDP growth rate for year n = [(Real GDP in year n) - (Real GDP in year n - 1)]/ (Real GDP in year n - 1)

Another thing that it may be desirable to compensate for is population growth. If a country's GDP doubled over some period but its population tripled, the increase in GDP may not be deemed such a great accomplishment: the average person in the country is producing less than they were before. Per-capita GDP is the measure compensated for population growth.

Cross-border comparison

The level of GDP in different countries may be compared by converting their value in national currency according to either the current currency exchange rate, or the purchase power parity exchange rate.

Current currency exchange rate is the exchange rate in the international currency market.

Purchasing power parity exchange rate is the exchange rate based on the purchasing power parity (PPP) of a currency relative to a selected standard (usually the United States dollar). This is a comparative (and theoretical) exchange rate, the only way to directly realize this rate is to sell an entire CPI basket in one country, convert the cash at the currency market rate & then rebuy that same basket of goods in the other country (with the converted cash). Going from country to country, the distribution of prices within the basket will vary; typically, non-tradable purchases will consume a greater proportion of the basket's total cost in the higher GDP country, per the Balassa-Samuelson effect.

The ranking of countries may differ significantly based on which method is used.

The current exchange rate method converts the value of goods and services using global currency exchange rates. The method can offer better indications of a country's international purchasing power and relative economic strength. For instance, if 10% of GDP is being spent on buying hi-tech foreign arms, the number of weapons purchased is entirely governed by current exchange rates, since arms are a traded product bought on the international market. There is no meaningful 'local' price distinct from the international price for high technology goods.

The purchasing power parity method accounts for the relative effective domestic purchasing power of the average producer or consumer within an economy. The method can provide a better indicator of the living standards of less developed countries, because it compensates for the weakness of local currencies in the international markets. For example, India ranks 11th by nominal GDP, but fourth by PPP. The PPP method of GDP conversion is more relevant to non-traded goods and services.

There is a clear pattern of the purchasing power parity method decreasing the disparity in GDP between high and low income (GDP) countries, as compared to the current exchange rate method. This finding is called the Penn effect.

For more information, see Measures of national income and output.

Per unit GDP

GDP is an aggregate figure which does not account for differing sizes of nations. Therefore, GDP can be stated as GDP per capita (per person) in which total GDP is divided by the resident population on a given date, GDP per citizen where total GDP is divided by the numbers of citizens residing in the country on a given date, and less commonly GDP per unit of a resource input, such as GDP per GJ of energy or Gross domestic product per barrel. GDP per citizen in the above case is pretty similar to GDP per capita in most nations, however, in nations with very high proportions of temporary foreign workers like in Persian Gulf nations, the two figures can be vastly different.

Standard of living and GDP

GDP per capita is not a measurement of the standard of living in an economy. However, it is often used as such an indicator, on the rationale that all citizens would benefit from their country's increased economic production. Similarly, GDP per capita is not a measure of personal income. GDP may increase while real incomes for the majority decline. For example, in the US from 1990 to 2006 the earnings (adjusted for inflation) of individual workers, in private industry and services, increased by less than 0.5% per year while GDP (adjusted for inflation) increased about 3.6% per year.

The major advantage of GDP per capita as an indicator of standard of living is that it is measured frequently, widely, and consistently. It is measured frequently in that most countries provide information on GDP on a quarterly basis, allowing trends to be seen quickly. It is measured widely in that some measure of GDP is available for almost every country in the world, allowing inter-country comparisons. It is measured consistently in that the technical definition of GDP is relatively consistent among countries.

The major disadvantage is that it is not a measure of standard of living. GDP is intended to be a measure of total national economic activity— a separate concept.

The argument for using GDP as a standard-of-living proxy is not that it is a good indicator of the level of standard of living, but that living standards tend to move with per-capita GDP, so that changes in living standards are readily detected through changes in GDP.

Limitations of GDP to judge the health of an economy

GDP is widely used by economists to gauge the health of an economy, as its variations are relatively quickly identified. However, its value as an indicator for the standard of living is considered to be limited. Not only that, but if the aim of economic activity is to produce ecologically sustainable increases in the overall human standard of living, GDP is a perverse measurement; it treats loss of ecosystem services as a benefit instead of a cost. Other criticisms of how the GDP is used include:

Wealth distribution–GDP does not take disparity in incomes between the rich and poor into account. See income inequality metrics for discussion of a variety of inequality-based economic measures.

Non-market transactions–GDP excludes activities that are not provided through the market, such as household production and volunteer or unpaid services. As a result, GDP is understated. Unpaid work conducted on Free and Open Source Software (such as Linux) contribute nothing to GDP, but it was estimated that it would have cost more than a billion US dollars for a commercial company to develop. Also, if Free and Open Source Software became identical to its proprietary software counterparts, and the nation producing the propriety software stops buying proprietary software and switches to Free and Open Source Software, then the GDP of this nation would reduce, however there would be no reduction in economic production or standard of living. The work of New Zealand economist Marilyn Waring has highlighted that if a concerted attempt to factor in unpaid work were made, then it would in part undo the injustices of unpaid (and in some cases, slave) labour, and also provide the political transparency and accountability necessary for democracy. Shedding some doubt on this claim, however, is the theory that won economist Douglass North the Nobel Prize in 1993. North argued that the creation and strengthening of the patent system, by encouraging private invention and enterprise, became the fundamental catalyst behind the Industrial Revolution in England.

Underground economy–Official GDP estimates may not take into account the underground economy, in which transactions contributing to production, such as illegal trade and tax-avoiding activities, are unreported, causing GDP to be underestimated.

Non-monetary economy–GDP omits economies where no money comes into play at all, resulting in inaccurate or abnormally low GDP figures. For example, in countries with major business transactions occurring informally, portions of local economy are not easily registered. Bartering may be more prominent than the use of money, even extending to services (I helped you build your house ten years ago, so now you help me).

GDP also ignores subsistence production.

Quality improvements and inclusion of new products–By not adjusting for quality improvements and new products, GDP understates true economic growth. For instance, although computers today are less expensive and more powerful than computers from the past, GDP treats them as the same products by only accounting for the monetary value. The introduction of new products is also difficult to measure accurately and is not reflected in GDP despite the fact that it may increase the standard of living. For example, even the richest person from 1900 could not purchase standard products, such as antibiotics and cell phones, that an average consumer can buy today, since such modern conveniences did not exist back then.

What is being produced–GDP counts work that produces no net change or that results from repairing harm. For example, rebuilding after a natural disaster or war may produce a considerable amount of economic activity and thus boost GDP. The economic value of health care is another classic example—it may raise GDP if many people are sick and they are receiving expensive treatment, but it is not a desirable situation. Alternative economic estimates, such as the standard of living or discretionary income per capita try to measure the human utility of economic activity. See uneconomic growth.

Externalities–GDP ignores externalities or economic bads such as damage to the environment. By counting goods which increase utility but not deducting bads or accounting for the negative effects of higher production, such as more pollution, GDP is overstating economic welfare. The Genuine Progress Indicator is thus proposed by ecological economists and green economists as a substitute for GDP, supposing a consensus on relevant data to measure "progress". In countries highly dependent on resource extraction or with high ecological footprints the disparities between GDP and GPI can be very large, indicating ecological overshoot. Some environmental costs, such as cleaning up oil spills are included in GDP.

Sustainability of growth–GDP is not a tool of economic projections, which would make it subjective, it is just a measurement of economic activity. That is why it does not measure what is considered the sustainability of growth. A country may achieve a temporarily high GDP by over-exploiting natural resources or by misallocating investment. For example, the large deposits of phosphates gave the people of Nauru one of the highest per capita incomes on earth, but since 1989 their standard of living has declined sharply as the supply has run out. Oil-rich states can sustain high GDPs without industrializing, but this high level would no longer be sustainable if the oil runs out. Economies experiencing an economic bubble, such as a housing bubble or stock bubble, or a low private-saving rate tend to appear to grow faster owing to higher consumption, mortgaging their futures for present growth. Economic growth at the expense of environmental degradation can end up costing dearly to clean up.

One main problem in estimating GDP growth over time is that the purchasing power of money varies in different proportion for different goods, so when the GDP figure is deflated over time, GDP growth can vary greatly depending on the basket of goods used and the relative proportions used to deflate the GDP figure. For example, in the past 80 years the GDP per capita of the United States if measured by purchasing power of potatoes, did not grow significantly. But if it is measured by the purchasing power of eggs, it grew several times. For this reason, economists comparing multiple countries usually use a varied basket of goods.

Cross-border comparisons of GDP can be inaccurate as they do not take into account local differences in the quality of goods, even when adjusted for purchasing power parity. This type of adjustment to an exchange rate is controversial because of the difficulties of finding comparable baskets of goods to compare purchasing power across countries. For instance, people in country A may consume the same number of locally produced apples as in country B, but apples in country A are of a more tasty variety. This difference in material well being will not show up in GDP statistics. This is especially true for goods that are not traded globally, such as housing.

Transfer pricing on cross-border trades between associated companies may distort import and export measures.

As a measure of actual sale prices, GDP does not capture the economic surplus between the price paid and subjective value received, and can therefore underestimate aggregate utility.

Simon Kuznets in his very first report to the US Congress in 1934 said:

...the welfare of a nation can, therefore, scarcely be inferred from a measure of national income...

In 1962, Kuznets stated:

Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what.

Alternatives to GDP

Human development index (HDI) - HDI uses GDP as a part of its calculation and then factors in indicators of life expectancy and education levels.

Genuine progress indicator (GPI) or Index of Sustainable Economic Welfare (ISEW) - The GPI and the ISEW attempt to address many of the above criticisms by taking the same raw information supplied for GDP and then adjust for income distribution, add for the value of household and volunteer work, and subtract for crime and pollution.

Gross national happiness (GNH) - GNH measures quality of life or social progress in more holistic and psychological terms than GDP.

Gini coefficient - The Gini coefficient measures the disparity of income within a nation.

Wealth estimates - The World Bank has developed a system for combining monetary wealth with intangible wealth (institutions and human capital) and environmental capital.

Private Product Remaining - Murray Newton Rothbard and other Austrian economists argue as if government spending is taken from productive sectors and produces goods that consumers do not want, it is a burden on the economy and thus should be deducted. In his book, America's Great Depression, Rothbard argues that even government surpluses from taxation should be deducted to create an estimate of PPR.

Some people have looked beyond standard of living at a broader sense of quality of life or well-being: European Quality of Life Survey - The survey, first published in 2005, assessed quality of life across European countries through a series of questions on overall subjective life satisfaction, satisfaction with different aspects of life, and sets of questions used to calculate deficits of time, loving, being and having.

Gross national happiness - The Centre for Bhutanese Studies in Bhutan is working on a complex set of subjective and objective indicators to measure 'national happiness' in various domains (living standards, health, education, eco-system diversity and resilience, cultural vitality and diversity, time use and balance, good governance, community vitality and psychological well-being). This set of indicators would be used to assess progress towards gross national happiness, which they have already identified as being the nation's priority, above GDP.

Happy Planet Index - The happy planet index (HPI) is an index of human well-being and environmental impact, introduced by the New Economics Foundation (NEF) in 2006. It measures the environmental efficiency with which human well-being is achieved within a given country or group. Human well-being is defined in terms of subjective life satisfaction and life expectancy while environmental impact is defined by the Ecological Footprint.

Lists of countries by their GDP

Lists of countries by GDP

List of countries by GDP (nominal), (per capita)

List of countries by GDP (PPP), (per capita), (per hour)

List of countries by GDP growth

List of countries by GDP (real) growth rate, (per capita)

List of countries by GDP sector composition

List of countries by future GDP estimates (PPP), (per capita), (nominal)

See also

Annual average GDP growth

Chained volume series

Eco-sufficiency

Green gross domestic product

Gross domestic product per barrel

Gross output

Gross regional domestic product

Gross state product

Gross value added

Gross world product

Intermediate consumption

Inventory investment

List of countries by average wage

List of countries by household income

List of economic reports by U.S. government agencies

Misery index (economics)

National average salary

Potential output Natural gross domestic product

Real gross domestic product

Bibliography

Australian Bureau for Statistics, Australian National Accounts: Concepts, Sources and Mathods, 2000. Retrieved November 2009. In depth explanations of how GDP and other national accounts items are determined.

United States Department of Commerce, Bureau of Economic Analysis, . Retrieved November 2009. In depth explanations of how GDP and other national accounts items are determined.

References

External links

Global

World GDP Chart (since 1960)

Australian Bureau of Statistics Manual on GDP measurement

GDP-indexed bonds

GDP scaled maps

Euro area GDP growth rate (since 1996) as compared to the Bank Rate (since 2000)

World Development Indicators (WDI)

Economist Country Briefings

UN Statistical Databases

Is Life Getting Better : What is GDP? Pamphlet describing the basic idea of GDP, from OECD's Measuring Progress project.

Data

Thermal Maps of the World Nominal GDP in US$ purchasing power parity from the EIU 2007-2010

Bureau of Economic Analysis: Official United States GDP data

Graphs of Historical Real U.S. GDP

Historicalstatistics.org: Links to historical statistics on GDP for different countries and regions

Complete listing of countries by GDP: Current Exchange Rate Method Purchasing Power Parity Method

Historical US GDP (yearly data), 1790–present

Historical US GDP (quarterly data), 1947–present

OECD Statistics

Google - public data: GDP and Personal Income of the U.S. (annual): Nominal Gross Domestic Product

Articles and books

What's wrong with the GDP?

Limitations of GDP Statistics by Schenk, Robert.

whether output and CPI inflation are mismeasured, by Nouriel Roubini and David Backus, in Lectures in Macroeconomics

"Measurement of the Aggregate Economy", chapter 22 of Dr. Roger A. McCain's Essential Principles of Economics: A Hypermedia Text

Rodney Edvinsson,

Clifford Cobb, Ted Halstead and Jonathan Rowe. "If the GDP is up, why is America down?" The Atlantic Monthly, vol. 276, no. 4, October 1995, pages 59–78.

Jerorn C.J.M. van den Bergh, "Abolishing GDP"

Category:National accounts

Name	Ron Paul
Image name	Ron Paul, official Congressional photo portrait, 2007.jpg|thumb|Paul's Congressional portrait
Birth date	August 20, 1935
Birth place	Pittsburgh, Pennsylvania
State	Texas
District	14th
Term start	January 3, 1997
Preceded	Greg Laughlin
State2	Texas
District2	22nd
Term start2	January 3, 1979
Term end2	January 3, 1985
Preceded2	Robert Gammage
Succeeded2	Tom DeLay
Term start3	April 3, 1976
Term end3	January 3, 1977
Preceded3	Robert R. Casey
Succeeded3	Robert Gammage
Party	Republican (1976–1988)Libertarian (1988 Presidential Election)Republican (1988–present)
Spouse	Carolyn "Carol" Paul
Children	Ronald "Ronnie" Paul, Jr.Lori Paul PyeattRandal "Rand" PaulRobert PaulJoy Paul-LeBlanc
Alma mater	Gettysburg College (B.S.)Duke University School of Medicine (M.D.)
Profession	Physician, Politician
Residence	Lake Jackson, Texas
Religion	Baptist
Website	U.S. House of Representatives Office of Ron Paul
Signature	Ron Paul signature.svg
Branch	United States Air ForceUnited States Air National Guard
Serviceyears	1962–19651965–1968

Ronald Ernest "Ron" Paul (born August 20, 1935) is an American physician and Republican Congressman for the 14th congressional district of Texas. Paul serves on the House Foreign Affairs Committee, the Joint Economic Committee, and the Committee on Financial Services, where he has been an outspoken critic of American foreign and monetary policy. He has gained prominence for his libertarian positions on many political issues, often clashing with both Republican and Democratic Party leaders. He is the Chairman of the House Financial Services Subcommittee on Domestic Monetary Policy. Paul has run for President of the United States twice, first in 1988 as the nominee of the Libertarian Party and again in 2008 as a candidate for the Republican nomination.

He is the founder of the advocacy group Campaign for Liberty and his ideas have been expressed in numerous published articles and books, including End The Fed (2009), and (2008). According to a 1998 study published in the American Journal of Political Science, Paul has the most conservative voting record of any member of Congress since 1937. His son Rand Paul was sworn in as a Senator for Kentucky in 2011, an event with made the elder Paul the first Representative in history to serve alongside a son or daughter in the Senate.

Personal life

Paul was born in Pittsburgh to Howard and Margaret (née Dumont) Paul. As a junior at Dormont High School, he was the 220-yard dash state champion. After earning an M.D. degree from the Duke University School of Medicine, he was a U.S. Air Force flight surgeon during the 1960s.

Paul has been married to Carol Wells since 1957. They have five children, who were baptized Episcopalian: Ronald, Lori, Rand, Robert, and Joy. Paul's son Rand is senator-elect of the state of Kentucky. They also have eighteen grandchildren and three great-grandchildren. He has four brothers. Two of them, including David Paul, are ministers. Wayne Paul is a Certified Public Accountant.

Early congressional career

While still a medical resident in the 1960s, Paul was influenced by Friedrich Hayek’s The Road to Serfdom, which led him to read many works of Ayn Rand and Ludwig von Mises. He came to know economists Hans Sennholz and Murray Rothbard well, and credits to them his interest in the study of economics. He came to believe that what the Austrian school economists wrote was coming true on August 15, 1971, when President Richard Nixon closed the "gold window" by implementing the U.S. dollar's complete departure from the gold standard. and welfare, Paul became a delegate to the Texas Republican convention and a Republican candidate for the United States Congress. In 1974, incumbent Robert R. Casey defeated him in the 22nd district. When President Gerald Ford appointed Casey to head the Federal Maritime Commission, Paul won an April 1976 special election to fill the empty seat. Paul lost some months later in the general election, to Democrat Robert Gammage, by fewer than 300 votes (0.2%), but defeated Gammage in a 1978 rematch, and was reelected in 1980 and 1982.

Paul was the first Republican representative from the area; he also led the Texas Reagan delegation at the national Republican convention. His successful campaign against Gammage surprised local Democrats, who had expected to retain the seat easily in the wake of the Watergate scandal. Gammage underestimated Paul's support among local mothers: "I had real difficulty down in Brazoria County, where he practiced, because he'd delivered half the babies in the county. There were only two obstetricians in the county, and the other one was his partner."

House of Representatives

Paul proposed term-limit legislation multiple times, at first in the 1970s in the House where he also declined to attend junkets or register for a Congressional pension while serving four terms. His chief of staff (1978–1982) was Lew Rockwell. In 1980, when a majority of Republicans favored President Jimmy Carter's proposal to reinstate draft registration, Paul argued that their views were inconsistent, stating they were more interested in registering their children than they were their guns. Also in 1976, the foundation began publication of the first monthly newsletter connected with Paul, Dr. Ron Paul's Freedom Report (or Special Report). It also publishes monographs, books, radio spots, and (since 1997) a new series of the monthly newsletter, Ron Paul's Freedom Report, which promote the principles of limited government.

On the House Banking Committee, Paul blamed the Federal Reserve for inflation, it is now available from the Ludwig von Mises Institute, to which Paul is a distinguished counselor.

In 1984, Paul chose to run for the U.S. Senate instead of re-election to the House, but lost the Republican primary to Phil Gramm. He returned to full-time medical practice In his House farewell address, Paul said, "Special interests have replaced the concern that the Founders had for general welfare. Vote trading is seen as good politics. The errand-boy mentality is ordinary, the defender of liberty is seen as bizarre. It's difficult for one who loves true liberty and utterly detests the power of the state to come to Washington for a period of time and not leave a true cynic."

1988 presidential campaign

In the 1988 presidential election, Paul defeated American Indian activist Russell Means to win the Libertarian Party nomination for president. Paul placed third in the popular vote with 432,179 votes (0.5%), Paul was kept off the ballot in Missouri, and received votes there only when written in, due to what the St. Louis Post-Dispatch called a "technicality".

As the "Libertarian standard bearer", Paul gained supporters who agreed with his positions on gun rights, fiscal conservatism, homeschooling, and abortion, and won approval from many who thought the federal government was misdirected. This nationwide support base encouraged and donated to his later campaigns.

According to Paul, his presidential run was about more than reaching office; he sought to spread his libertarian ideas, often to school and university groups regardless of vote eligibility. He said, "We're just as interested in the future generation as this election. These kids will vote eventually, and maybe, just maybe, they'll go home and talk to their parents."

After the election, Paul continued his medical practice until he returned to Congress. He also co-owned a coin dealership, Ron Paul Coins, for twelve years with Burt Blumert, who continued to operate it after Paul returned to office. He spoke multiple times at the American Numismatic Association's 1988 convention. In 1985 Ron Paul & Associates began publishing The Ron Paul Investment Letter and The Ron Paul Survival Report; it added the more controversial Ron Paul Political Report in 1987. Many articles lacked a byline, yet often invoked Paul's name or persona.

After his unsuccessful presidential bid in 1988, Paul returned to private medical practice and continued to allow the newsletters to be published bearing his name. For 1992, RP&A; earned $940,000 and employed Paul's family as well as Lew Rockwell (its vice-president and seven other workers. Murray Rothbard and other libertarians believed Rockwell ghostwrote the newsletters for Paul; Rockwell later acknowledged involvement in writing subscription letters, but attributed the newsletters to "seven or eight freelancers".

Paul considered running for President in 1992, but instead chose to support Pat Buchanan that year, and served as an adviser to his Republican presidential campaign against incumbent President George H. W. Bush.

Later congressional career

Campaigns

1996 campaign

In 1996, Paul was re-elected to Congress after the toughest campaign race he had faced since the 1970s. As Republicans had taken over both houses of Congress in the 1994 election, Paul entered the race hopeful that his Constitutionalist policies of tax cuts, closing federal agencies, and curbing the U.N. would have broader support than in the past. The Republican National Committee focused instead on encouraging Democrats to switch parties, as Paul's primary opponent, incumbent Greg Laughlin, had done in 1995. The party threw its full weight behind Laughlin, including support from House Speaker Newt Gingrich, Texas Governor George W. Bush, and the National Rifle Association. Paul responded by running newspaper ads quoting Gingrich's harsh criticisms of Laughlin's Democratic voting record 14 months earlier. While Paul was able to paint Morris as a tool of trial lawyers and big labor, Morris ran numerous ads about Paul's advocacy of federal drug law repeal.

Morris also accused Paul of authoring questionable statements in past newsletters, Paul's congressional campaign countered the statements were taken out of context. and that voters might not understand the "tongue-in-cheek, academic" quotes out of context. Further, the campaign rejected Morris' demand to release all back issues.

Paul went on to win the election in a close margin. It became the third time Paul had been elected to Congress as a non-incumbent. In both campaigns, the national Democratic Party and major unions continued to spend heavily on targeting Paul. On December 11, 2001, he told the independent movement that he was encouraged by the fact that the petition had spread the message of Constitutionalism, but did not expect a White House win at that time. Further prompting in early 2007 led him to enter the 2008 race.

Unlike many political candidates, Paul receives the overwhelming majority of his campaign contributions from individuals (97 percent in the 2006 cycle), and receives much less from political action committees (PAC's) than others, ranging from two percent (2002) to six percent (1998). The group Clean Up Washington, analyzing from 2000 to mid-2006, listed Paul as seventh-lowest in PAC receipts of all House members; one of the lowest in lobbyist receipts; and fourth-highest in small-donor receipts. He had the lowest PAC receipts percentage of all the 2008 Republican presidential candidates.

Paul was re-elected to his tenth term in Congress in November 2006. In the March 4, 2008, Republican primary for his Congressional seat, he defeated Friendswood city councilman Chris Peden, obtaining over 70 percent of the vote. On the 2008 ballot, Paul won his eleventh term in Congress running unopposed. In the 2010 Republican primary for his Congressional seat, Paul defeated three opponents with 80 percent of the vote.

Relationship with district

, which is larger than Massachusetts.]] After 2003 Texas redistricting, Paul's district is larger than Massachusetts, with of Gulf of Mexico coastline between Houston and Rockport, Texas, covering some 22 counties. Even so, Paul opposes programs like federally funded flood insurance (typically supported by coastal and rural representatives) because it requires those outside flood zones to subsidize those within, but prohibits those within from choosing their own insurers. In an overwhelmingly rural region known for ranching and rice farms, Despite his voting against heavily supported legislation like farm bills, Paul's devotion to reducing government resonates with 14th district voters:

Paul adds his own earmarks, such as for Texas shrimp promotion, but he routinely votes against most spending bills returned by committee. Earmarks permit members of Congress, rather than executive branch civil servants, to designate spending priorities for previously authorized funds directed otherwise. In , Paul states his views on earmarks this way: "The real problem, and one that was unfortunately not addressed in the 2007's earmark dispute, is the size of the federal government and the amount of money we are spending in these appropriations bills. Cutting even a million dollars from an appropriations bill that spends hundreds of billions will make no appreciable difference in the size of government, which is doubtless why politicians and the media are so eager to have us waste our time on [earmarks]."

Paul also spends extra time in the district to compensate for "violat[ing] almost every rule of political survival you can think of,"

In March 2001, Paul introduced a bill to repeal the 1973 War Powers Resolution (WPR) and reinstate the process of formal declaration of war by Congress. Later in 2001, Paul voted to authorize the president, pursuant to WPR, to respond to those responsible for the September 11, 2001, attacks. He also introduced Sunlight Rule legislation, which requires lawmakers to take enough time to read bills before voting on them, after the Patriot Act was passed within 24 hours of its introduction. Paul was one of six Republicans to vote against the Iraq War Resolution, and (with Oregon representative Peter DeFazio) sponsored a resolution to repeal the war authorization in February 2003. Paul's speech, 35 "Questions That Won't Be Asked About Iraq", was translated and published in German, French, Russian, Italian, and Swiss periodicals before the Iraq War began. After a 2005 bill was touted as "slashing" government waste, Paul wrote that it decreased spending by a fraction of one percent and that "Congress couldn't slash spending if the members' lives depended on it." He said that in three years he had voted against more than 700 bills intended to expand government.

Paul has introduced several bills to apply tax credits toward education, including credits for parental spending on public, private, or homeschool students (Family Education Freedom Act); for salaries for all K–12 teachers, librarians, counselors, and other school personnel; and for donations to scholarships or to benefit academics (Education Improvement Tax Cut Act). In accord with his political positions, he has also introduced the Sanctity of Life Act, the We the People Act, and the American Freedom Agenda Act.

List of bills sponsored and cosponsored

The following tables link to the Congressional Record hosted by the Library of Congress. All the specifics and actions taken for each individual bill Ron Paul has either sponsored or cosponsored can be reviewed further there. "Original bills" and "Original amendments" indicate instances where Ron Paul had pledged to support the legislation at the time the bill was initially introduced rather than at some other point during the legislative process of the bill. {| class="wikitable sortable" style="margin:1em auto 1em auto; font-size:90%; border:0; text-align:left; line-height:150%;" |+ Rep. Ron Paul – U.S. House of Representatives – [R-TX-14] |- !Years Covered !All bills sponsored !All amendments sponsored !All bills cosponsored !All amendments cosponsored !Original bills cosponsored !Original amendments cosponsored !Bill support withdrawn !Amendment support withdrawn |- |1997-98 |32 |7 |223 |0 |76 |0 |0 |0 |- |1999-00 |51 |8 |316 |0 |119 |0 |0 |0 |- |2001-02 |64 |4 |323 |0 |104 |0 |1 |0 |- |2003-04 |68 |8 |354 |0 |150 |0 |0 |0 |- |2005-06 |71 |8 |393 |0 |141 |0 |0 |0 |- |2007-08 |70 |0 |443 |0 |160 |0 |0 |0 |- |2009-10 |41 |0 |120 |0 |69 |0 |0 |0 |}

Note: The numbers for the current session of Congress may no longer reflect the actual numbers as they are still actively in session.

Affiliations

Paul serves on the House Foreign Affairs Committee (having been on the Western Hemisphere and the Asia and Pacific subcommittees); the Joint Economic Committee; and the Committee on Financial Services (as Ranking Member of the Domestic and International Monetary Policy, Trade and Technology subcommittee, and Vice-Chair of the Oversight and Investigations subcommittee).

Paul was honorary chair of, and is a current member of, the Republican Liberty Caucus, a political action committee which describes its goal as electing "liberty-minded, limited-government individuals". Paul also hosts a luncheon every Thursday as chair of the Liberty Caucus, composed of 20 members of Congress. Washington DC area radio personality Johnny "Cakes" Auville gave Paul the idea for the Liberty Caucus and is a regular contributing member. He remains on good terms with the Libertarian Party and addressed its 2004 convention. He also was endorsed by the Constitution Party's 2004 presidential candidate, Michael Peroutka.

Paul was on a bipartisan coalition of 17 members of Congress that sued President Bill Clinton in 1999 over his conduct of the Kosovo war. They accused Clinton of failing to inform Congress of the action's status within 48 hours as required by the War Powers Resolution, and of failing to obtain Congressional declaration of war. Congress had voted 427–2 against a declaration of war with Yugoslavia, and had voted to deny support for the air campaign in Kosovo. A federal judge dismissed the lawsuit, ruling that since Congress had voted for funding after Clinton had actively engaged troops in the war with Kosovo, legislators had sent a confusing message about whether they approved of the war. Paul said that the judge's decision attempted to circumvent the Constitution and to authorize the president to conduct a war without approval from Congress.

Committee assignments

Rep. Paul serves on the following committee and subcommittees.

Committee on Financial Services

*Subcommittee on Domestic Monetary Policy and Technology

*Subcommittee on International Monetary Policy and Trade

*Subcommittee on Oversight and Investigations

Committee on Foreign Affairs

*Subcommittee on International Organizations, Human Rights, and Oversight

*Subcommittee on the Western Hemisphere

Joint Economic Committee

2008 presidential campaign

Liberty Forum.]] in Manchester.]]

Republican primary campaign

Paul formally declared his candidacy for the 2008 Republican nomination on March 12, 2007, on C-SPAN. His campaign had intense grassroots support—his supporters were said to "always show up"—and he had dozens of wins in GOP straw polls.

Paul's campaign showed "surprisingly strong" fundraising with several record-breaking events. He had the highest rate of military contribution for 2008, and donations coming from individuals, aided significantly by an online presence and very active campaigning by supporters, who organized moneybomb fundraisers netting millions over several months. Such fundraising earned Paul the status of having raised more than any other Republican candidate in 2007's fourth-quarter. Paul's name was a number-one web search term as ranked by Technorati, beginning around May 2007. He has led other candidates in YouTube subscriptions since May 20, 2007.

Paul was largely ignored by traditional media, including at least one incident where FOX News did not invite him to a GOP debate featuring all other presidential candidates at the time. One exception was Glenn Beck's program on Headline News, where Beck interviewed Paul for the full hour of his show.

Though projections of 2008 Republican delegate counts varied widely, Paul's count was consistently third among the three candidates remaining after Super Tuesday. According to CNN and the New York Times, by Super Tuesday Paul had received five delegates in North Dakota, and was projected to receive two in Iowa, four in Nevada, and five in Alaska based on caucus results, totaling 16 delegates. However, Paul's campaign projected 42 delegates based on the same results, including delegates from Colorado, Maine, and Minnesota.

In the January Louisiana caucus, Paul placed second behind John McCain, but uncommitted delegates outnumbered both candidates' pledged delegates, since a registration deadline had been extended to January 12. Paul said he had the greatest number of pledged Louisiana delegates who had registered by the original January 10 deadline, and formally challenged the deadline extension and the Louisiana GOP's exclusion of voters due to an outdated list; he projected three Louisiana delegates. The Super Tuesday West Virginia caucus was won by Mike Huckabee, whose state campaign coordinators reportedly arranged to give three Huckabee delegates to Paul in exchange for votes from Paul's supporters. Huckabee has not confirmed this delegate pledge.

Paul's preference votes in primaries and caucuses began at 10 percent in Iowa (winning Jefferson County) and eight percent in New Hampshire, where he had the support of state sovereignty champion, State Representative Dan Itse; on Super Tuesday they ranged from 25 percent in Montana and 21 percent in North Dakota caucuses, where he won several counties, to three percent in several state primaries, averaging under 10 percent in primaries overall. After sweeping four states on March 4, McCain was widely projected to have a majority of delegates pledged to vote for him in the September party convention. Paul obliquely acknowledged McCain on March 6: "Though victory in the political sense [is] not available, many victories have been achieved due to hard work and enthusiasm." He continued to contest the remaining primaries, having added, "McCain has the nominal number ... but if you're in a campaign for only gaining power, that is one thing; if you're in a campaign to influence ideas and the future of the country, it's never over." Paul's recent book, , became a New York Times and Amazon.com bestseller immediately upon release. His newest book, End the Fed, has been released.

On June 12, 2008, Paul withdrew his bid for the Republican nomination, citing his resources could be better spent on improving America. Some of the $4 million remaining campaign contributions was invested into the new political action and advocacy group called Ron Paul's Campaign for Liberty. Paul told the newsmagazine NOW on PBS the goal of the Campaign for Liberty is to "spread the message of the Constitution and limited government, while at the same time organizing at the grassroots level and teaching pro-liberty activists how to run effective campaigns and win elections at every level of government."

Newsletter controversy

Controversial claims made in Ron Paul's newsletters, written in the first person, included statements such as "Boy, it sure burns me to have a national holiday for that pro-communist philanderer Martin Luther King. I voted against this outrage time and time again as a Congressman. What an infamy that Ronald Reagan approved it! We can thank him for our annual Hate Whitey Day." Along with "even in my little town of Lake Jackson, Texas, I've urged everyone in my family to know how to use a gun in self defense. For the animals are coming." Another notable statement that garnered controversy was "opinion polls consistently show only about 5% of blacks have sensible political opinions, if you have ever been robbed by a black teen-aged male, you know how unbelievably fleet-footed they can be" An issue from 1992 refers to carjacking as the "hip-hop thing to do among the urban youth who play unsuspecting whites like pianos." In an article title "The Pink House" the newsletter wrote that " "Homosexuals, not to speak of the rest of society, were far better off when social pressure forced them to hide their activities."

Shortly afterwards, The New Republic released many previously unpublicized quotations attributed to Paul in James Kirchick's "Angry White Man" article. Kirchick accused Paul of having made racist, sexist, and derogatory comments geared towards African Americans, women, and the LGBT community. Kircheck also accused Paul of possessing "an obsession with conspiracies, sympathy for the right-wing militia movement, and deeply held bigotry." CNN anchor Wolf Blitzer that the writing "Didn't sound like the Ron Paul I've come to know." Later, Nelson Linder, president of the Austin chapter of the NAACP, also defended Paul.

Reason republished Paul's 1996 defense of the newsletters, and later reported evidence from "a half-dozen longtime libertarian activists" that Lew Rockwell had been the chief ghostwriter.

Paul had given his own account of the newsletters in March 2001, stating the documents were authored by ghostwriters, and that while he did not author the challenged passages, he bore "some moral responsibility" for their publication.

Support for third party candidates

On September 5, 2008, the Constitution Party of Montana removed Chuck Baldwin from their presidential ticket, replacing him with Ron Paul for president and Michael Peroutka for vice president. Paul made an announcement stating that he "was aware that the party planned to do this, and has said that as long as he can remain passive and silent about the development, and as long as he need not sign any declaration of candidacy, that he does not object." stating that that he did not "seek nor consent" to the Montana Constitution Party's nomination. stating that the request was sent to them too late. On September 4, 2008, a list of electors in Louisiana using the label "Louisiana Taxpayers Party" filed papers and paid $500 with the Secretary of State's Office. The congressman had reportedly invited presidential candidates Chuck Baldwin, Bob Barr, Cynthia McKinney, and Ralph Nader to the press conference, leading some to speculate that they would endorse Paul running for president on the ticket of either the Constitution, Libertarian or other third party.

On September 10, 2008, Paul confirmed his "open endorsement" (CNN) for the four candidates at a press conference in Washington D.C. He also revealed that he had rejected a request for an endorsement of John McCain. He later appeared on CNN's The Situation Room with Wolf Blitzer with Nader where they presented and briefly laid out the four principles that all the independent candidates had agreed on as the most important key issues of the presidential race. On September 22, 2008, in response to a written statement by Bob Barr, Paul abandoned his former neutral stance and announced his support of Chuck Baldwin in the 2008 presidential election.

In the 2008 general election, Paul still received 41,905 votes despite not actively running for the seat. He was listed on the ballot in Montana on the Constitution Party label, and in Louisiana on the "Louisiana Taxpayers Party" ticket, and received write-in votes in California (17,006), Pennsylvania (3,527), New Hampshire (1,092), and other states. (Not all U.S. jurisdictions require the counting or reporting of write-in votes.)

Post presidential campaign activities

On February 26, 2009, Ron Paul was a key speaker at the Conservative Political Action Conference in Washington, D.C., speaking for 20 minutes on topics including monetary theory and policy in the United States, in addition to the War in Iraq, and international foreign policy. Paul's Campaign for Liberty sent 140 volunteers to CPAC 2009 to distribute materials, and significantly increased that number the following year.

In the 2009 CPAC Presidential Preference straw poll for the 2012 election, Paul tied 2008 GOP Vice-Presidential candidate Sarah Palin for third place with 13% of the vote, behind fellow former candidate Mitt Romney and Louisiana Governor Bobby Jindal. However, in the 2010 CPAC straw poll, he came out on top, decisively winning with 31%, followed distantly by Mitt Romney, Sarah Palin, and Tim Pawlenty of Minnesota, among others. In the 2010 Southern Republican Leadership Conference straw poll, Paul finished second place with 24% of the vote (438 votes), behind only Mitt Romney (with 439 votes). An April 2010 Rasmussen poll found that Ron Paul and President Obama were nearly tied for the 2012 presidential election among likely voters, although later polls showed him trailing significantly. He also trails in polls for the Republican presidential nomination, typically behind Mitt Romney, Sarah Palin, Mike Huckabee, and Newt Gingrich.

Speculated 2012 presidential run

There is speculation among pundits and journalists regarding the prospect of Paul running for president again in 2012. When Paul's wife, Carol, was asked if he would run in 2012 her response was "If you would ask him now he would probably say 'no', but he did say...things are happening so quickly and fast in our country, if we're at a crisis period and they need someone...with the knowledge he has...then he would do it."

Jesse Benton, Senior VP of Campaign for Liberty, has said of the prospective run: "If the decision had to be made today, it would be 'no', but he is considering it very strongly and there is a decent likelihood that he will. A lot of it depends on things going on in his personal life and also what's going on in the country."

As part of an effort to encourage Ron Paul to run for president in 2012, a Tea Party moneybomb has been set up with the aim of repeating the 2007 Ron Paul Tea Party moneybomb, which gave Paul's 2008 presidential campaign over $6 million in one day. The goal of The Ron Paul Tea Party is to have 100,000 people donate $100 each on December 16, 2010 to kick off Paul's 2012 presidential run, should he decide to run.

Political positions

Convention in Kansas City, Missouri, June 15, 2007.]]

Paul has been described as conservative, Constitutionalist, and libertarian. reflects both his medical degree and his insistence that he will "never vote for legislation unless the proposed measure is expressly authorized by the Constitution." One scoring method published in the American Journal of Political Science found Paul the most conservative of all 3,320 members of Congress from 1937 to 2002. Paul's foreign policy of nonintervention made him the only 2008 Republican presidential candidate to have voted against the Iraq War Resolution in 2002. He advocates withdrawal from the United Nations, and from the North Atlantic Treaty Organization, for reasons of maintaining strong national sovereignty. He supports free trade, rejecting membership in the North American Free Trade Agreement (NAFTA) and the World Trade Organization as "managed trade". He supports tighter border security and opposes welfare for illegal aliens, birthright citizenship and amnesty; he voted for the Secure Fence Act of 2006. He voted for the Authorization for Use of Military Force Against Terrorists in response to the September 11, 2001, attacks, but suggested war alternatives such as authorizing the president to grant Letters of Marque and Reprisal targeting specific terrorists.

Paul adheres deeply to Austrian school economics; he has authored six books on the subject, and displays pictures of Austrian school economists Friedrich Hayek, Murray Rothbard, and Ludwig von Mises (as well as of Grover Cleveland) he cast two thirds of all the lone negative votes in the House during a 1995–1997 period. and states he has never voted to approve a budget deficit. Paul believes that the country could abolish the individual income tax by scaling back federal spending to its fiscal year 2000 levels; financing government operations would primarily come through the corporate income tax, excise taxes and tariffs. He supports eliminating most federal government agencies, calling them unnecessary bureaucracies. Paul also believes the longterm erosion of the U.S. dollar's purchasing power through inflation is attributable to its lack of any commodity backing. However, Paul does not support a complete return to a gold standard, instead preferring to legitimize gold and silver as legal tender and to remove the sales tax on them. He also advocates gradual elimination of the Federal Reserve System.

Paul supports constitutional rights, such as the right to keep and bear arms, and habeas corpus for political detainees. He opposes the Patriot Act, federal use of torture, presidential autonomy, a national ID card, domestic surveillance, and the draft. Citing the Ninth and Tenth Amendments, Paul advocates states' rights to decide how to regulate social matters not directly found in the Constitution. Paul calls himself "strongly pro-life", "an unshakable foe of abortion", and believes regulation or ban on medical decisions about maternal or fetal health is "best handled at the state level". He says his years as an obstetrician led him to believe life begins at conception; his abortion-related legislation, like the Sanctity of Life Act, is intended to negate Roe v. Wade and to get "the federal government completely out of the business of regulating state matters." Paul also believes that the notion of the separation of church and state is currently misused by the court system: "In case after case, the Supreme Court has used the infamous 'separation of church and state' metaphor to uphold court decisions that allow the federal government to intrude upon and deprive citizens of their religious liberty."

He opposes federal regulation of the death penalty, of education, and of marriage, and supports revising the military's "don't ask, don't tell" policy to focus on disruptive sexual behavior (whether heterosexual or homosexual). As a free-market environmentalist, he asserts private property rights in relation to environmental protection and pollution prevention. He also opposes the federal War on Drugs, and thinks the states should decide whether to regulate or deregulate drugs such as medical marijuana. Paul pushes to eliminate federal involvement in and management of health care, which he argues would allow prices to drop due to the fundamental dynamics of a free market. He is an outspoken proponent for increased ballot access for 3rd party candidates and numerous election law reforms which he believes would allow more voter control. Ron Paul has also stated that “The government shouldn't be in the medical business." He is also opposed to government flu inoculation programs.

Paul takes a critical view of the Civil Rights Act of 1964, arguing that it was unconstitutional and did not improve race relations.

Books authored

Other contributions

References

External links

Ron Paul's Personal Website, books, articles, links to political sites connected with Ron Paul

RonPaul.com speeches, essays, interviews, photos and videos

Ron Paul Library articles and speeches by Ron Paul

Ron Paul Forums

;Congress

U.S. House of Representatives Office of Ron Paul

Congressional campaign website

;Organizations Founded

Ron Paul's Campaign for Liberty

Ron Paul's Liberty PAC

Ron Paul's F.R.E.E. Foundation – The Foundation for Rational Economics and Education

;Presidential campaign

NOW on PBS "Ron Paul and Internet Politics". Also, a September 2008 NOW on PBS interview with Ron Paul

PBS NewsHour with Jim Lehrer — Vote 2008: Ron Paul

Category:1935 births Category:Living people Category:American anti-Iraq War activists Category:American foreign policy writers Category:American libertarians Category:American physicians Category:American political writers Category:American writers of German descent Category:Baptists from the United States Category:Classical liberals Category:Conservatism in the United States Category:Drug policy reform activists Category:Duke University alumni Category:Gettysburg College alumni Category:Internet memes Category:Libertarian Party (United States) presidential nominees Category:Libertarian theorists Category:Members of the United States House of Representatives from Texas Category:Military physicians Category:People from Allegheny County, Pennsylvania Category:People from Brazoria County, Texas Category:Physicians from Texas Category:Politicians from Pittsburgh, Pennsylvania Category:Texas Republicans Category:Texas Libertarians Category:United States Air Force officers Category:United States presidential candidates, 1988 Category:United States presidential candidates, 2008 Category:University of Pittsburgh people

Honorific-prefix	The Honorable
Name	Joseph Stiglitz
Honorific-suffix	ForMemRS FBA
Order	17th Chair of the Council of Economic Advisors
Term start	1995
Term end	1997
President	Bill Clinton
Predecessor	Laura Tyson
Successor	Janet Yellen
Office2	World Bank Chief Economist
Term start2	1997
Term end2	2000
Preceded2	Michael Bruno
Succeeded2	Nicholas Stern
Birth date	February 09, 1943
Birth place	Gary, Indiana
Party	Democratic
Spouse	Anya Schiffrin
Alma mater	Amherst CollegeMassachusetts Institute of Technology
Profession	Economist
Religion	Judaism

Joseph Eugene Stiglitz, ForMemRS, FBA, (born February 9, 1943) is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom he calls "free market fundamentalists") and some international institutions like the International Monetary Fund and the World Bank.

In 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. Since 2001, he has been a member of the Columbia faculty, and has held the rank of University Professor since 2003. He also chairs the University of Manchester's Brooks World Poverty Institute and is a member of the Pontifical Academy of Social Sciences. Professor Stiglitz is also an honorary professor at Tsinghua University School of Public Policy and Management. Stiglitz is one of the most frequently cited economists in the world.

Biography

Stiglitz was born in Gary, Indiana, to Jewish parents, Charlotte and Nathaniel Stiglitz. From 1960 to 1963, he studied at Amherst College, where he was a highly active member of the debate team and President of the Student Government. He went to the Massachusetts Institute of Technology (MIT) for his fourth year as an undergraduate, where he later pursued graduate work. His undergraduate degree was awarded from Amherst College. From 1965 to 1966, he moved to the University of Chicago to do research under Hirofumi Uzawa who had received an NSF grant. He studied for his PhD from MIT from 1966 to 1967, during which time he also held an MIT assistant professorship. The particular style of MIT economics suited him well - simple and concrete models, directed at answering important and relevant questions. He was a research fellow at the University of Cambridge from 1966 to 1970. In subsequent years, he held academic positions at Yale (1970–1974), Stanford (1974–1976, 1988–2001), Oxford (1976–1979), and Princeton (1979–1988). Stiglitz is now a Professor at Columbia University, with appointments at the Business School, the Department of Economics and the School of International and Public Affairs (SIPA), and is editor of The Economists' Voice journal with J. Bradford DeLong and Aaron Edlin. He also gives classes for a double-degree program between Sciences Po Paris and Ecole Polytechnique in 'Economics and Public Policy'. As of 2005 he chairs The Brooks World Poverty Institute at the University of Manchester. Stiglitz is a New-Keynesian economist.

In addition to making numerous influential contributions to microeconomics, Stiglitz has played a number of policy roles. He served in the Clinton Administration as the chair of the President's Council of Economic Advisors (1995 – 1997). At the World Bank, he served as Senior Vice President and Chief Economist (1997 – 2000), in the time when unprecedented protest against international economic organizations started, most prominently with the Seattle WTO meeting of 1999. He was fired by the World Bank for expressing dissent with its policies. He was a lead author for the Intergovernmental Panel on Climate Change.

He is a member of Collegium International, an organization of leaders with political, scientific, and ethical expertise whose goal is to provide new approaches in overcoming the obstacles in the way of a peaceful, socially just and an economically sustainable world.

Stiglitz has advised American President Barack Obama, but has also been sharply critical of the Obama Administration's financial-industry rescue plan. Stiglitz said that whoever designed the Obama administration's bank rescue plan is "either in the pocket of the banks or they’re incompetent."

Contributions to economics

Information asymmetry

Stiglitz's most famous research was on screening, a technique used by one economic agent to extract otherwise private information from another. It was for this contribution to the theory of information asymmetry that he shared the Nobel Memorial Prize in Economics in 2001 "for laying the foundations for the theory of markets with asymmetric information" with George A. Akerlof and A. Michael Spence.

Before the advent of models of imperfect and asymmetric information, the traditional neoclassical economics literature had assumed that markets are efficient except for some limited and well defined market failures. More recent work by Stiglitz and others reversed that presumption, to assert that it is only under exceptional circumstances that markets are efficient. Stiglitz has shown (together with Bruce Greenwald) that "whenever markets are incomplete and/or information is imperfect (which are true in virtually all economies), even competitive market allocation is not constrained Pareto efficient". In other words, they addressed "the problem of determining when tax interventions are Pareto-improving. The approach indicates that such tax interventions almost always exist and that equilibria in situations of imperfect information are rarely constrained Pareto optima." Although these conclusions and the pervasiveness of market failures do not necessarily warrant the state intervening broadly in the economy, it makes clear that the "optimal" range of government recommendable interventions is definitely much larger than the traditional "market failure" school recognizes. For Stiglitz there is no such thing as an "invisible hand". According to Stiglitz:

In the opening remarks for his prize acceptance "Aula Magna", Stiglitz said:

In an interview in 2007, Stiglitz explained further:

Efficiency wages: the Shapiro-Stiglitz model

Stiglitz also did some research on efficiency wages, and helped create what became known as the "Shapiro-Stiglitz model" to explain why there is unemployment, why wages are not bid down sufficiently by job seekers (in the absence of minimum wages) so that everyone who wants a job finds one, and to question whether the neoclassical paradigm could explain involuntary unemployment. Two basic observations undergird their analysis:

# Unlike other forms of capital, humans can choose their level of effort. # It is costly for firms to determine how much effort workers are exerting.

A full description of this model can be found at the links provided. Some key implications of this model are:

# Wages do not fall enough during recessions to prevent unemployment from rising. If the demand for labour falls, this lowers wages. But because wages have fallen, the probability of 'shirking' (workers not exerting effort) has risen. If employment levels are to be maintained, through a sufficient lowering of wages, workers will be less productive than before through the shirking effect. As a consequence, in the model wages do not fall enough to maintain employment levels at the previous state, because firms want to avoid excessive shirking by their workers. So, unemployment must rise during recessions, because wages are kept 'too high'. # Possible corollary: Wage sluggishness. Moving from one private cost of hiring to another private cost of hiring will require each firm to repeatedly re-optimize wages in response to shifting unemployment rate. Firms cannot cut wages until unemployment rises sufficiently (a coordination problem).

The outcome is never Pareto efficient.

# Each firm employs too few workers because it faces private cost of hiring rather than the social cost — which is equal to and in all cases. This means that firms do not "internalize" the "external" cost of unemployment - they do not factor how large-scale unemployment harms society when assessing their own costs. This leads to a negative externality as marginal social cost exceeds the firm's marginal cost (MSC = Firm's Private Marginal Cost + Marginal External Cost of increased social unemployment) # There are also negative externalities. Each firm increases the asset value of unemployment for all other firms by hiring. But the first problem clearly dominates since the 'natural rate of unemployment' is always too high.

Some possible practical implications of Stiglitz theorems

While the mathematical validity of Stiglitz et al. theorems are not in question, their practical implications in political economy and their application in real life economic policies have been subject to considerable disagreement and debate. Stiglitz himself seems to be continuously adapting his own political-economic discourse, as we can see from the evolution in his positions as initially stated in Whither Socialism? (1994) to his own new positions held on his most recent publications.

::Once incomplete and imperfect information are introduced, Chicago-school defenders of the market system cannot sustain descriptive claims of the Pareto efficiency of the real world. Thus, Stiglitz's use of rational-expectations equilibrium assumptions to achieve a more realistic understanding of capitalism than is usual among rational-expectations theorists leads, paradoxically, to the conclusion that capitalism deviates from the model in a way that justifies state action—socialism—as a remedy. (Stiglitz 1994, 179).

The objections to the wide adoption of these positions suggested by Stiglitz's discoveries do not come from economics itself but mostly from political scientists and are in the fields of sociology. As David L. Prychitko discusses in his "critique" to Whither Socialism? (see below), although Stiglitz's main economic insight seems generally correct, it still leaves open great constitutional questions such as how the coercive institutions of the government should be constrained and what the relation is between the government and civil society.

Politics

Clinton administration, 1993 - 1997

Stiglitz joined the Clinton Administration in 1993, serving first as a member during 1993-1995, and then as Chairman of the Council of Economic Advisers during 1995-1997, in which capacity he also served as a member of the cabinet. He became deeply involved in environmental issues, which included serving on the Intergovernmental Panel on Climate Change, and helping draft a new law for toxic wastes (which was never passed).

Stiglitz's most important contribution in this period was helping define a new economic philosophy, a "third way", which postulated the important, but limited, role of government, that unfettered markets often did not work well, but that government was not always able to correct the limitations of markets. The academic research that he had been conducting over the preceding 25 years provided the intellectual foundations for this "third way".

When President Bill Clinton was re-elected, he asked Stiglitz to continue to serve as Chairman of the Council of Economic Advisers for another term. But he had already been approached by the World Bank, to be its senior vice president for development policy and its chief economist.

As the World Bank began its ten-year review of the transition of the former Communist countries to the market economy it unveiled failures of the countries that had followed the International Monetary Fund (IMF) shock therapy policies - both in terms of the declines in GDP and increases in poverty - that were even worse than the worst that most of its critics had envisioned at the onset of the transition. Clear links existed between the dismal performances and the policies that the IMF had advocated, such as the voucher privatization schemes and excessive monetary stringency. Meanwhile, the success of a few countries that had followed quite different strategies suggested that there were alternatives that could have been followed. The U.S. Treasury had put enormous pressure on the World Bank to silence his criticisms of the policies which they and the IMF had pursued.

Stiglitz always had a poor relationship with Treasury Secretary Lawrence Summers. In 2000, Summers successfully petitioned for Stiglitz's removal, supposedly in exchange for World Bank President James Wolfensohn's re-appointment – an exchange that Wolfensohn denies took place. Whether Summers ever made such a blunt demand is questionable – Wolfensohn claims he would "have told him to fuck himself".

Stiglitz resigned from the World Bank in January 2000, a month before his term expired. The Bank's president, James Wolfensohn, announced Stiglitz's resignation in November 1999 and also announced that Stiglitz would stay on as "special advisor to the president", and would chair the search committee for a successor.

:"Joseph E. Stiglitz said today [Nov. 24, 1999] that he would resign as the World Bank's chief economist after using the position for nearly three years to raise pointed questions about the effectiveness of conventional approaches to helping poor countries."

In this role, he continued criticism of the IMF, and, by implication, the US Treasury Department. In April 2000, in an article for The New Republic, he wrote:

:"They’ll say the IMF is arrogant. They’ll say the IMF doesn’t really listen to the developing countries it is supposed to help. They’ll say the IMF is secretive and insulated from democratic accountability. They’ll say the IMF’s economic ‘remedies’ often make things worse – turning slowdowns into recessions and recessions into depressions. And they’ll have a point. I was chief economist at the World Bank from 1996 until last November, during the gravest global economic crisis in a half-century. I saw how the IMF, in tandem with the U.S. Treasury Department, responded. And I was appalled."

The article was published a week before the annual meetings of the World Bank and IMF and provoked a strong response. It proved too strong for Summers and, yet more lethally, Stiglitz's protector-of-sorts at the World Bank, Wolfensohn. Wolfensohn had privately empathised with Stiglitz's views, but this time was worried for his second term, which Summers had threatened to veto. Stanley Fisher, deputy managing director of the IMF, called a special staff meeting and informed at that gathering that Wolfensohn had agreed to fire Stiglitz. Meanwhile, the Bank's External Affairs department told the press that Stiglitz had not been fired, his post had merely been abolished.

In a September 19, 2008 radio interview with Aimee Allison and Philip Maldari on Pacifica Radio's KPFA 94.1 FM in Berkeley, California, Stiglitz implied that President Clinton and his economic advisors would not have backed the North American Free Trade Agreement (NAFTA) had they been aware of stealth provisions, inserted by lobbyists, that they overlooked.

Initiative for Policy Dialogue

In July 2000 Stiglitz founded the Initiative for Policy Dialogue (IPD), with support of the Ford, Rockefeller, McArthur, and Mott Foundations and the Canadian and Swedish governments, to enhance democratic processes for decision-making in developing countries and to ensure that a broader range of alternatives are on the table and more stakeholders are at the table.

Commission of Experts on Reforms of the International Monetary and Financial System

In 2009, Stiglitz chaired the Commission of Experts on Reforms of the International Monetary and Financial System, informally known as the Stiglitz Commission, which was convened by the President of the United Nations General Assembly "to review the workings of the global financial system, including major bodies such as the World Bank and the IMF, and to suggest steps to be taken by Member States to secure a more sustainable and just global economic order".

Books

Along with his technical economic publications (he has published over 300 technical articles), Stiglitz is the author of books on issues from patent law to abuses in international trade.

Stability with Growth: Macroeconomics, Liberalization and Development

In Stability with Growth: Macroeconomics, Liberalization and Development (2006), Stiglitz, José Antonio Ocampo (United Nations Under-Secretary-General for Economic and Social Affairs, until 2007), Shari Spiegel (Managing Director, Initiative for Policy Dialogue - IPD), Ricardo Ffrench-Davis (Main Adviser, Economic Commission for Latin America and the Caribbean - ECLAC) and Deepak Nayyar (Vice Chancellor, University of Delhi) discuss the current debates on macroeconomics, capital market liberalization and development, and develop a new framework within which one can assess alternative policies. They explain their belief that the Washington Consensus has advocated narrow goals for development (with a focus on price stability) and prescribed too few policy instruments (emphasizing monetary and fiscal policies), and places unwarranted faith in the role of markets. The new framework focuses on real stability and long-term sustainable and equitable growth, offers a variety of non-standard ways to stabilize the economy and promote growth, and accepts that market imperfections necessitate government interventions. Policy-makers have pursued stabilization goals with little concern for growth consequences, while trying to increase growth through structural reforms focused on improving economic efficiency. Moreover, structural policies, such as capital market liberalization, have had major consequences for economic stability. This book challenges these policies by arguing that stabilization policy has important consequences for long-term growth and has often been implemented with adverse consequences. The first part of the book introduces the key questions and looks at the objectives of economic policy from different perspectives.The third part presents a similar analysis for capital market liberalization.

Making Globalization Work

Making Globalization Work (2006) surveys the inequities of the global economy, and the mechanisms by which developed countries exert an excessive influence over developing nations. Dr. Stiglitz argues that through tariffs, subsidies, an over-complex patent system and pollution, the world is being both economically and politically destabilised. Stiglitz argues that strong, transparent institutions are needed to address these problems. He shows how an examination of incomplete markets can make corrective government policies desirable.

Stiglitz is an exception to the general pro-globalization view of professional economists, according to economist Martin Wolf. Stiglitz argues that economic opportunities are not widely enough available, that financial crises are too costly and too frequent, and that the rich countries have done too little to address these problems. Making Globalization Work had sold more than two million copies.

The Roaring Nineties

In 2003, Stiglitz published The Roaring Nineties, his analysis of the boom and bust of the 1990s. In 2004 he published New Paradigm for Monetary Economics (Cambridge University Press) and in 2005, Oxford University Press published his book Fair Trade for All.

The Roaring Nineties: A New History of the World's Most Prosperous Decade

"The Roaring Nineties: A New History of the World's Most Prosperous Decade" (2003) continues his argument on how misplaced faith in free-market ideology led to the global economic issues of today, with a perceptive focus on US policies.

Globalization and Its Discontents

In Globalization and Its Discontents (2002), Stiglitz argues that what are often called "developing economies" are, in fact, not developing at all, and puts much of the blame on the IMF.

Stiglitz bases his argument on the themes that his decades of theoretical work have emphasized: namely, what happens when people lack the key information that bears on the decisions they have to make, or when markets for important kinds of transactions are inadequate or don't exist, or when other institutions that standard economic thinking takes for granted are absent or flawed. Stiglitz stresses the point: "Recent advances in economic theory" (in part referring to his own work) "have shown that whenever information is imperfect and markets incomplete, which is to say always, and especially in developing countries, then the invisible hand works most imperfectly." As a result, Stiglitz continues, governments can improve the outcome by well-chosen interventions. Stiglitz argues that when families and firms seek to buy too little compared to what the economy can produce, governments can fight recessions and depressions by using expansionary monetary and fiscal policies to spur the demand for goods and services. At the microeconomic level, governments can regulate banks and other financial institutions to keep them sound. They can also use tax policy to steer investment into more productive industries and trade policies to allow new industries to mature to the point at which they can survive foreign competition. And governments can use a variety of devices, ranging from job creation to manpower training to welfare assistance, to put unemployed labor back to work and cushion human hardship.

Stiglitz complains bitterly that the IMF has done great damage through the economic policies it has prescribed that countries must follow in order to qualify for IMF loans, or for loans from banks and other private-sector lenders that look to the IMF to indicate whether a borrower is creditworthy. The organization and its officials, he argues, have ignored the implications of incomplete information, inadequate markets, and unworkable institutions—all of which are especially characteristic of newly developing countries. As a result, Stiglitz argues, the IMF has often called for policies that conform to textbook economics but do not make sense for the countries to which the IMF is recommending them. Stiglitz seeks to show that these policies have been disastrous for the countries that have followed them.

Whither Socialism?

Whither Socialism? is based on Stiglitz's Wicksell Lectures, presented at the Stockholm School of Economics in 1990 and presents a summary of information economics and the theory of markets with imperfect information and imperfect competition, as well as being a critique of both free market and market socialist approaches (see Roemer critique, op. cit.). Stiglitz explains how the neoclassical, or Walrasian model ("Walrasian economics" refers to the result of the process which has given birth to a formal representation of Adam Smith's notion of the "invisible hand", along the lines put forward by Leon Walras and encapsulated in the general equilibrium model of Arrow-Debreu), may have wrongly encouraged the belief that market socialism could work. Stiglitz proposes an alternative model, based on the information economics established by the Greenwald-Stiglitz theorems.

One of the reasons Stiglitz sees for the critical failing in the standard neoclassical model, on which market socialism was built, is its failure to consider the problems that arise from lack of perfect information and from the costs of acquiring information. He also identifies problems arising from its assumptions concerning completeness.

Critique

Whither Socialism? has been subject to various critiques such as those of the Yale professor John E. Roemer, Peter Boettke, the Deputy Director of the James M. Buchanan Center for Political Economy (1996), as well as David L. Prychitko, a professor of economics at Northern Michigan University. According to Prychitko:

"Finally, if Stiglitz's main insight is generally correct– that the state cannot be ruled out or that it should be ruled in– but leaves open the grand constitutional questions: How will the coercive institutions of the state be constrained? What is the relation between the state and civil society? His book fails on these political aspects because it has not addressed the broader constitutional concerns that James M. Buchanan (1975) and other economists have raised."

The Three Trillion Dollar War

The Three Trillion Dollar War examines the full cost of the Iraq War, including many hidden costs. The book also discusses the extent to which these costs will be imposed for many years to come, paying special attention to the enormous expenditures that will be required to care for very large numbers of wounded veterans. Stiglitz was openly critical of George W. Bush at the time the book was released.

Freefall: America, Free Markets, and the Sinking of the World Economy

In (2010), Stiglitz discusses the causes of the 2008 recession/depression and goes on to propose reforms needed to avoid a repetition of a similar crisis, advocating government intervention and regulation in a number of areas. Among the policy-makers he criticises are George W. Bush, Larry Summers, and Barack Obama.

This book does not require an economics background in order to be of value to the reader. Rather it explains Mr. Stiglitz's views on the recent economic crisis in terms which make it relevant to the average homeowner, retirement investor, and voter in the United States. He explains how without fundamental changes in economic policy and regulation the position of the US in the world political and economic arena may deteriorate significantly.

Papers and conferences

Stiglitz wrote a series of papers and held a series of conferences explaining how such information uncertainties may have influence on everything from unemployment to lending shortages. As the chairman of the Council of Economic Advisers during the Clinton Administration and former chief economist at the World Bank, Stiglitz was able to put some of his views into action. For example, he was an outspoken critic of quickly opening up financial markets in developing countries. These markets rely on access to good financial data and sound bankruptcy laws, but he argued that many of these countries didn't have the regulatory institutions needed to ensure that the markets would operate soundly.

Private life

Stiglitz married for the third time on October 28, 2004, to Anya Schiffrin, who works at the School of International and Public Affairs at Columbia University.

Publications

; Books:

2010, Freefall: America, Free Markets, and the Sinking of the World Economy ISBN 978-0393075960, W. W. Norton.

2008, The Three Trillion Dollar War ISBN 978-0-39-306701-9; by Joseph Stiglitz and Linda Bilmes, W. W. Norton.

2006, Making Globalization Work ISBN 0-393-06122-1, Penguin Books, August 2006.

2006, Stability with Growth: Macroeconomics, Liberalization, and Development ISBN 0-19-928814-3 (Initiative for Policy Dialogue Series C); by Joseph E. Stiglitz, Jose Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar; Oxford University Press 2006

1996, Whither Socialism ? Stiglitz, Joseph E., (Wicksell Lectures), MIT Press, January 1996.

2000, Frontiers of Development Economics: The Future in Perspective, edited with Gerald M. Meier, World Bank, May 2000.

2001, Rethinking the East Asian Miracle, edited with Shahid Yusuf, World Bank and Oxford University Press.

2002, Principles of Macroeconomics, third edition, with Carl E. Walsh, W.W. Norton & Company, March 2002.

2002, Economics, Third Edition, with Carl E. Walsh, W.W. Norton & Company, April 2002.

2002, Peasants Versus City-Dwellers: Taxation and the Burden of Economic Development, with Raaj K. Sah, Oxford University Press, April 2002.

2002, Globalization and Its Discontents, W.W. Norton & Company, June 2002.

2003,Towards a New Paradigm in Monetary Economics, with Bruce Greenwald, Cambridge University Press. Cambridge. Description and chapter-preview links.

2003, The Roaring Nineties, W.W. Norton & Company, forthcoming in October 2003.

Fair Trade for All: How Trade Can Promote Development (Initiative for Policy Dialogue Series C)– by Joseph E. Stiglitz, Andrew Charlton; Hardcover

2000, 3rd ed. Economics of the Public Sector.

2002, The Rebel Within: Joseph Stiglitz and the World Bank by Joseph E. Stiglitz (Editor), Ha-Joon Chang (Editor), ISBN 1-898855-91-9, Anthem Press, Wimbledon Publishing Company (Paperback - February 25, 2002)

2005, The Development Round Of Trade Negotiations In The Aftermath Of Cancun by Joseph E. Stiglitz, Andrew Charlton (Paperback - January 30, 2005)

2005, A Chance For The World Bank by Joseph P Stiglitz (Foreword), Jozef Ritzen, ISBN 1-84331-162-3, Anthem Press, Wimbledon Publishing Company (Paperback - May 30, 2005)

1986, 'Economics of the Public Sector' by J.E.Stiglitz ISBN 0-393-96651-8, W.W.Norton, New York. (Re-printed 1988, 2000)

1981, 'Theory of Commodity Price Stabilization' by David M.G. Newbery and Joseph E. Stiglitz ISBN 0198284179 ISBN 978-0198284178, Oxford University Press [Hardcover: 512 pages]

Readings in the Modern Theory of Economic Growth by Joseph E. Stiglitz (Editor), Hirofumi Uzawa (Editor)

; Book chapters:

2009. "Regulation and Failure," in David Moss and John Cisternino (eds.), New Perspectives on Regulation, ch. 1, pp. 11-23. Cambridge: The Tobin Project.

2001, New Ideas About Old Age Security: Toward Sustainable Pension Systems in the 21st Century , edited with Robert Holzmann, World Bank, January 2001.

; Selected scholarly articles

1998, Distinguished lecture on economics in government: The private uses of public interests: Incentives and institutions. Journal of Economic Perspectives, 12, 3–22.

1998, Redefining the Role of the State - What should it do ? How should it do it ? And how should these decisions be made? Paper presented at the Tenth Anniversary of MITI Research Institute, Tokyo, March 1998.

1996, The World Bank Research Observer: No 2: August 1996 by Joseph Stiglitz

1993, “Post Walrasian and post Marxian economics,” Journal of Economic Perspectives, vol. 7, pp. 109–14

1993, “Market socialism and neoclassical economics,” in Bardhan, P. K. and Roemer, J. E. (eds.), Market Socialism. The Current Debate, New York: Oxford University Press

1989, “Principal and agent,” in J. Eatwell, M. Milgate and P. Newman (eds.), The New Palgrave. Allocation, Information and Markets. New York: W. W. Norton

1987, “The causes and consequences of the dependence of quality on prices”, Journal of Economic Literature, vol. 25, pp. 1–48

1981 (with A. Weiss), "Credit Rationing in Markets with Imperfect Information", American Economic Review, vol. 71, pp. 393–410

1977 (with A.K. Dixit), “Monopolistic Competition and Optimum Product Diversity”, American Economic Review, vol. 67, pp. 297–308

1976 (with M. Rothschild), “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information”, Quarterly Journal of Economics, vol. 90, pp.  629–650.

1974, “Incentives and Risk Sharing in Sharecropping”, Review of Economic Studies, Vol. 41, No. 2, 219-255.

1974, “Alternative Theories of Wage Determination and Unemployment in LDCs: The Labour Turnover Model”, Quarterly Journal of Economics, vol. 81, pp. 194–227

1971 (with M. Rothschild), “Increasing Risk: II. Its Economic Consequences”, Journal of Economic Theory, Vol. 3, pp. 66–84

1970 (with M. Rothschild), “Increasing Risk: I. A Definition”, Journal of Economic Theory, Vol. 2, pp. 225–243

; Articles in popular press:

2009, "Wall Street’s Toxic Message", Vanity Fair, July 2009

2009, "America's socialism for the rich", The Guardian, June 2009

2009, "Capitalist Fools", Vanity Fair, January 2009

2007, "The Economic Consequences of Mr. Bush", Vanity Fair, December 2007 Issue

2007, Where is the World Going To, Mr. Stiglitz? directed by Jacques Sarasin, First Run Features.

2002, "Implications of the New Fannie Mae and Freddie Mac Risk-based Capital Standard", for FannieMae Volume I, Issue 2 March 2002

"I Dissent: Uncommon Economic Wisdom", A monthly column for Project Syndicate.

; Video and online sources:

2010, Freefall: Joseph Stiglitz at the Commonwealth Club

2008, The Three Trillion Dollar War a panel discussion with Joseph Stiglitz and Linda Bilmes regarding their new book, `The Three Trillion Dollar War: The True Cost of the Iraq Conflict.` Feb 28, 2008 at Columbia University.

2007, Where is the World Going To, Mr. Stiglitz? directed by Jacques Sarasin, First Run Features.

World Bank Video presentation

Online access to Stiglitz published papers, at his own website

See also

List of economists

List of Jewish Nobel laureates

References

External links

Joseph Stiglitz's homepage

Joseph Stiglitz's faculty profile Committee on Global Thought at Columbia University]

"I Dissent: Unconventional Economic Wisdom", Joseph Stiglitz's monthly column for Project Syndicate.

STIGLITZ, Joseph E. Prize Lecture: Information and the Change in the Paradigm in Economics. Stiglitz's Nobel Prize Lecture given December 8, 2001

Autobiographical essay written for the Nobel Prize committee

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