50 percent of American households own zero stocks. 80 percent of stocks owned by American persons are owned by the top 10 percent. I think that is the 10 percent wealthiest, not the 10 percent by highest income, although I imagine relatively few fall into one category but not the other.
Which brings me to my second point: GDP, or income, are also not the economy. Thinking in systems terms, the GDP is a flow, while capital assets, tangible or otherwise, is the Stock that income and spending and depreciation and breakdown expands or contracts. This is a stock in the way a reservoir is a stock of water, not a financial instrument.
Education, housing, savings, durable and consumable goods, health, community bonds, scientific research, and infrastructure are all examples of capital assets. These do not equate to the growth in GDP, since GDP is a measure of money or value flowing into the ‘nation’. A washing machine in your basement is not flowing into or out of the ‘economy’, it is sitting there providing an unmeasured value at the cost of utilities until it exits your capital asset pile by breaking down or being replaced.
The GNP lumps together goods and bads. (If there are more car accidents and medical bills and repair bills, the GNP would go up.) It counts only marketed goods and services. (If all parents hired people to bring up their children, the GNP would go up.) It does not reflect distributional equity. (An expensive second home for a rich family makes the GNP go up more than an inexpensive basic home for a poor family.) It measures effort rather than achievement, gross production and consumption rather than efficiency. New light bulbs that give the same light with one-eighth the electricity and that last ten times as long make the GNP go down.
GNP is a measure of throughput– flows of stuff made and purchased in a year– rather than capital stocks, the houses and cars and computers and stereos that are the source of real wealth and real pleasure. It could be argued that the best society would be one in which capital stocks can be maintained and used with the lowest possible throughput, rather than the highest.
Although there is every reason to want a thriving economy, there is no particular reason to want the GNP to go up. […]
If you define the goal of a society as GNP that society will do its best to produce GNP. It will not produce welfare, equity, justice, or efficiency unless you define a goal and regularly measure and report the state of welfare, equity, justice, and efficiency. […]
Seeking the wrong goal, satisfying the wrong indicator is a system characteristic almost opposite from rule beating. […] In seeking the wrong goal, the system obediently follows the rule and produces its specified result– which is not necessarily what anyone actually wants.
– Thinking in Systems: A Primer, 2008, page 139-140
Donella H. Meadows, edited by Diana Wright, Sustainability Institute