What Is the Economy For?
The Speech That Made Economists Uncomfortable for 50 Years
Three months before he was assassinated, Robert Kennedy stood in a university gymnasium and told America that its most important number was measuring almost everything wrong.
The Idea
GDP — Gross Domestic Product — is the closest thing economics has to a sacred text. It is the single figure by which governments are judged, policies are set, and elections are won or lost. But it was never designed to measure what we actually care about. It measures activity, not wellbeing. It counts an oil spill as a positive, because cleaning it up generates spending. It counts a prison boom as growth. It counts a divorce, because lawyers charge fees. What it does not count: the care a parent gives a child, the stability of a community, the health of a river, or whether people feel any dignity in their working lives. This wasn't a secret hidden from economists. Simon Kuznets, one of the architects of national income accounting in the 1930s, explicitly warned that 'the welfare of a nation can scarcely be inferred from a measurement of national income.' His warning was politely noted and then ignored, because GDP was useful — it was simple, it was comparable across countries, and it gave politicians a number to point to. What Kennedy grasped, and articulated with unusual bluntness, was the political consequence of mistaking the measure for the thing. When a society organises itself around maximising a number, it tends to produce more of whatever that number counts — regardless of whether any of it makes life better. The problem isn't that GDP is wrong. It's that we promoted a useful tool into a statement of purpose.
In the World
On 18 March 1968, Kennedy spoke at the University of Kansas to a crowd of around 20,000 people. The Vietnam War was escalating. Cities were burning. And here was a presidential candidate delivering what amounted to a philosophy lecture on the limits of economic measurement. He ran through the list with mounting frustration. GDP, he said, counts 'air pollution and cigarette advertising, and ambulances to clear our highways of carnage.' It counts 'special locks for our doors and the jails for the people who break them.' It counts 'the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.' And then the turn: 'It does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.' He concluded: 'It measures everything, in short, except that which makes life worthwhile.' The speech was not particularly radical in its economics — academics had been making similar points for decades. What made it land differently was the setting. A politician, running for the most powerful office in the world, was publicly dismantling the very metric by which his performance would be judged. It was an act of unusual intellectual honesty. And it has been quoted in economics papers, philosophy departments, and policy documents ever since — without, it should be said, doing very much to dislodge GDP from its throne.
Why It Matters
This isn't just a historical curiosity or an academic debate about index construction. The metrics a society chooses to optimise shape what that society becomes — quietly, structurally, over decades. If you run a company by revenue alone, you get a company that sacrifices margin, culture, and sustainability to hit a top-line number. The same logic applies at national scale. Several countries have experimented with alternatives — Bhutan's Gross National Happiness index, New Zealand's Wellbeing Budget, Scotland's membership of the Wellbeing Economy Governments partnership. These efforts are uneven and contested, but they reflect a genuine recognition that Kennedy's critique still holds. For anyone thinking about their own financial life, there's a parallel worth sitting with. The personal equivalent of GDP is net worth, or income — the number most people use to measure how well they're doing financially. It's not useless. But it can be gamed in ways that quietly cost you. More hours worked, less time for the things GDP famously doesn't count. Kennedy's speech is, among other things, a prompt to ask what your own measuring stick is actually measuring.
A Question to Ponder
If you replaced your usual measure of 'doing well' — financially, professionally, or otherwise — with a different metric, what would you start counting, and what would you stop optimising for?
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