GDP is a poor measure for quality of life. Credit: Getty
“It’s the economy, stupid” was Clinton campaign guru James Carville’s slogan for the 1992 election. But what if it’s not? Sure, in every election, the economy tops the list of voter concerns. But voters are focused on short-term factors like inflation, not on the factor that is generally deemed more important by politicians and economists: the estimated long-term rate of national GDP growth. And, in practice, voters have many non-economic concerns. The huge Democratic victories in the 2026 midterms seem to owe as much to opposition to the Iran war, rejection of Republican extremism, and disgust with President Trump, as to affordability. It follows that strategists in both parties can safely ignore the policy wonks and pundits who argue that, in order to win, they must have a coherent plan to boost GDP over years or decades to come.
The idea that the federal government has the responsibility and the capacity to increase the rate of overall economic growth is relatively new. The United States grew from a collection of mostly agrarian ex-British colonies in the 1780s into the world’s dominant industrial and military power by the mid-20th century. But such growth was an accident, the incidental byproduct of policies promoted by various factions for their own short-term purposes. Industrialization to supplant imports was championed by American manufacturing interests that sought to corner the US home market for themselves. These interests successfully used tariffs to exclude manufactured imports from Britain and other industrial nations. Simultaneously, agrarian and mining interests sought the expansion of the borders, at the expense of indigenous Americans and countries like France, Spain, and Mexico. Employers and various economic interests that benefited from more workers or more consumers promoted mass immigration, which was limited mostly by law to white Europeans before the 1960s. American growth resulted from these various selfish projects, not a long-term master plan.
The possibility of endless economic growth itself came into question during the Great Depression. Underlying the early New Deal was the assumption that the most recent industrial revolution, based on automobility and electricity, had reached a plateau. Thinking that continued high growth was unrealistic, many New Dealers sought to focus on distribution of the gains from the existing industrial economy to the less-developed South and West through infrastructure investment, higher profits for farmers through government programs, and higher wages for the working class by means of unions and the minimum wage. FDR made this view clear in a famous address at the Commonwealth Club during his first campaign for president in 1932: “Our industrial plant is built; the problem just now is whether under existing conditions it is not overbuilt…. A mere builder of more industrial plants, a creator of more railroad systems, an organizer of more corporations, is as likely to be a danger as a help. The day of the great promoter or the financial Titan, to whom we granted anything if only he would build, or develop, is over…. The day of enlightened administration has come.” Many New Dealers feared that the country would lapse into repression and technological stagnation following the end of the mobilization for World War II.
Optimism about the prospects for permanent economic growth, guided by the government, grew after 1945. That confidence was accompanied by the mainstreaming during the war of statistical measurements: GNP (gross national product of national firms at home and abroad) and GDP (gross domestic product only).
From the beginning, many economists have warned against the promotion of GNP or GDP growth rates as the focus of national economic policy. One of them was Simon Kuznets, who played a major role in the development of the system of national income accounts and pioneered the term GDP. As early as 1934, Kuznets told Congress that “the welfare of a nation can, therefore, scarcely be inferred from a measurement of national income.” Subsequently, he warned: “Goals for more growth should specify more growth of what and for what.”
GDP not only ignores externalities, like the costs of pollution to society, but makes no distinction between bad and good economic activity. Car accidents can increase GDP by generating more income for emergency responders, hospitals, lawyers, and towing companies, for example.
To complicate matters, GDP is calculated as productivity times employment, defined as hours of work. This means that in an economy with zero productivity growth, GDP can be increased in various undesirable ways: by increasing the number of workers in the labor market, for example, by importing huge numbers of low-wage, uneducated immigrants; or by legalizing child labor; or abolishing Social Security and Medicare to force people to work until they die. Alternatively, you can increase work hours with the same workforce — making workers labor seven days a week with no holidays. In a country with zero workforce growth or work-hours growth, GDP can still rise solely as a result of productivity growth. A country with stagnant productivity growth but a ballooning workforce will be worse off over time than one with a stagnant workforce and growing productivity — but the two nations could share an identical GDP growth rate on paper.
These issues have not prevented politicians on both the Left and the Right from claiming that their policies will boost the overall rate of economic growth as measured by GDP. In the 1960s, many technocratic liberals associated with John F. Kennedy’s “New Frontier” and Lyndon Johnson’s “Great Society” were confident that finely tuned, so-called Keynesian fiscal and monetary policies could produce non-inflationary growth. In the 1960 election, the Republican nominee, Richard Nixon, criticized the “growthmanship” of the Kennedy campaign and for neglecting public priorities other than growth.
The “stagflation” (combined stagnation and inflation) of the 1970s led to the adoption of new, non-Keynesian kinds of GDP-driven growthmanship by the mainstreams of both parties. Neoliberals of the Right and the Left, in their different fashions, both claimed that the market would generate greater growth if supply constraints were removed.
For Republican champions of “supply-side economics,” the chief constraint on growth was the supply of capital. The solution was to cut spending on the many and to cut taxes on the rich, who would invest their greater share of national income in growth-promoting private enterprise. But the shortage of capital for investment is a myth. In fact, there has been too much American and global investment capital in search of too few opportunities for high returns. The result of cutting taxes on the rich and corporations may have been the funding of genuinely beneficial new technologies, in some cases. But another result has been reckless gambling in assets, leading to a series of bubbles and crashes in stocks and real estate for the past three decades.
Among Democrats, Left neoliberals of the Clinton-Obama school had their own version of supply-side economics, based on the false claim that the biggest constraint on American economic growth was a supposed shortage of crucial skills by Americans: “Learn to code!” This mistaken analysis led to two policies that harmed the American economy, while enriching two important Democratic constituencies: educators and Silicon Valley donors.
Raising the number of young Americans herded into colleges and universities didn’t boost American productivity, and it ruined the lives of great numbers who found themselves doing jobs that didn’t require their expensive college degrees. But the overwhelmingly Democratic education industry cashed in.
Meanwhile, tech, finance, and other white-collar industries abused the myth of a skills shortage to justify importing foreign workers who, it was claimed, possessed those critical skills. Silicon Valley became dependent on a pipeline of young, male workers from India, who weren’t, in fact, better educated than Americans — indeed, many were educated at American universities. But many were willing to work for relatively lower wages as indentured servants bound to US companies or Indian “body shops.” While importing (mostly) young Indians to replace American tech workers or undercut their wages, Silicon Valley simultaneously exported much tech production to low-wage, unfree labor forces in other countries, chiefly China, which combines the worst aspects of communist tyranny and capitalist exploitation.
The mythical skilled-labor shortages of neoliberal propaganda weren’t limited to high-tech industries. Dairy farmers, summer resort owners, hotel chains, trucking firms — all claimed that they couldn’t find Americans with the skills needed to work in their industries, when the truth is that they couldn’t find Americans willing to work for the low wages they were willing to pay in the degrading conditions they insisted upon. This massive, economy-wide “labor arbitrage” — the substitution of lower-wage workers for higher-wage workers with different legal rights or in different countries — was enabled and rationalized by the educational-failure hoax spread by Clinton-style Left neoliberals.
Between them, Reaganite Right-wing supply-side economics and Clintonite center-Left supply-side economics have deindustrialized the US economy to the benefit of China, Mexico, Vietnam, and other low-wage countries. Many of the promised “good jobs” in the tech sector have gone abroad to China or to Indian indentured servants on American soil, instead of to American citizen-workers of all races and class backgrounds. Working-class Americans mostly have jobs in the domestic service sector, where unionization and wage levels have been suppressed by mass immigration, mostly of poorly educated Latin Americans. Republican tax cuts for the rich, far from stimulating economic growth, have ballooned the federal debt and deficit — giving Right neoliberals an excuse to call for cuts in Social Security, Medicare, and Medicaid, instead of raising taxes.
Trump and Joe Biden both broke in important but limited ways with the bipartisan neoliberal consensus. In the Biden years, Democrats subordinated economic growth to “social justice” or “equity.” The centrist Democratic authors of the 2025 manifesto “Deciding to Win” found that between 2012 and 2024, the frequency of the word “growth” declined by 32% — while the frequency of “climate” increased by 150%, the term “environmental justice” by 333%, the term “equity” by 766%, and the term “LGBT/LGBTQI+” by 1,044%.
The logic of the Inflation Reduction Act was political, not economic. All sorts of giveaways could be provided to Democratic voters and donors in the name of promoting the “just transition” to a carbon-free economy based solely on “clean” (renewable) energy. Democratic donors who invested in wind and solar facilities got tax credits. Democratic nonprofit community groups were showered with money to fight climate change by paying people to weatherize buildings and the like. Upper-middle-class Democrats got tax credits for their electric cars and solar-powered heat pumps. Construction unions were promised jobs in the build-out of electrical transmission capabilities, wind farms, and so on.
Racial minorities? Climate-change projects could require race-and-gender tokenism and funnel money to poor, disproportionately black and Hispanic communities. Feminism? Progressives warned that green construction jobs couldn’t be monopolized by those designated enemies of progressive Democrats: namely, white males. The new Rosie the Riveters, building windmills and soldering solar panels, would need publicly funded day-care for their children during work hours — a long-term feminist goal, given a coat of green paint like other progressive priorities.
On one issue, the Biden administration was ultra-neoliberal: immigration. Sacrificing low-wage American workers to the goal of importing future Democratic voters, the Biden administration unilaterally rewrote immigration law to vastly increase semi-legal immigration, while signaling that most illegal immigration would be tolerated. The result was a stampede from abroad to the US-Mexico border, creating a popular backlash that helped re-elect Trump in 2024.
The second Trump administration’s crackdown on illegal immigration, racially inflected and brutal as it has often been, has worked in creating tighter labor markets and higher wages in some sectors formerly dependent on a steady stream of foreign serfs. And in his second term, Trump has accelerated the reshoring of industry with inconsistent but sometimes effective tariffs. With these exceptions, however, Trump policy mostly amounted to warmed-over Reagan-Bush-style Right neoliberalism: anti-tax, anti-regulation, and anti-labor.
At the beginning of Trump’s second term, Treasury Secretary Scott Bessent exemplified “growthmanship” with his announcement of a “3-3-3” plan: 3% GDP growth, 3% budget deficits, and 3 million barrels of oil a day by 2028. But with higher taxes and defense-spending cuts ruled out by Bessent, the deficit-reduction goal could be reached only by massive — and thankfully politically impossible — cuts in spending on Medicaid and other middle-class and working-class earned benefits.
At least Bessent’s goal of boosting the GDP growth rate to 3% is more modest than candidate Jeb Bush’s promise in 2015 to boost GDP growth to 4% and Republican presidential candidate Ron Paul’s claim in 2012 that unleashing the free market would cause the growth rate to skyrocket to 10% or even 15% a year.
In the real world, the US economy has only grown on average by 3% since the 1950s. And mid-20th century growth was boosted by an expanding workforce. In 21st-century America, with a swelling share of retirees and political limits to immigration, most GDP growth must come from productivity gains.
The problem is that productivity growth depends on unpredictable scientific and technological breakthroughs and their impact on the economy. As the economist Joseph Schumpeter and others have pointed out, technological innovation tends to come in bursts, driven by a transformative “general purpose technology” like the steam engine, the internal combustion engine, electricity, and computers. Governments can help only up to a point, by directly or indirectly subsidizing R&D and promoting the diffusion of new technologies.
Artificial Intelligence may turn out to be a GPT that inaugurates a new age of prosperity — or it may not. Outside of information technology, most breakthroughs in the material world occurred generations ago. Nuclear energy, photovoltaic solar panels, and jet engines were all developed before 1960. The US Bureau of Labor Statistics projects that between 2025 and 2035, the US economy will grow by only about 2.1% each year, the result of a mere 0.3% growth in the workforce combined with around 2% average productivity growth.
But most of the growth is likely to be concentrated in a few high-tech software or manufacturing sectors — think self-driving cars and trucks — while most new jobs will be in occupations that can’t (yet) be automated or offshored in the nontraded domestic service sector — think nurses and caregivers for the elderly.
Here is an opportunity for a new center Left — and perhaps a new center-Right. as well — to break decisively with both Right-wing tax-cut neoliberalism and centrist-liberal skill-shortage neoliberalism. In principle, there is nothing wrong with an economy in which labor-saving technology allows goods production, agriculture, transportation, and, in time, construction to be done by robots and computers, with humans working in “high touch” personal service jobs — as long as those service sector jobs pay good wages and have good benefits and good hours.
We can debate what government policies are necessary to ensure that, say, nursing-aide jobs are middle-class jobs — “predistributive” measures like increased collective bargaining, or “redistributive” measures like after-tax subsidies to low-wage workers and their dependents. Social conservatives who want to subsidize family caregivers at the expense of commercial or public care can take part in the debate. But except as annoying hecklers, free-market conservatives will have no part in our national conversation on how to share the gains of whatever growth there may be, for the simple reason that free-market dynamics, without some kind of government intervention, will never translate the profits of investors in self-driving cars into higher wages and guaranteed vacations for nursing aides.
If there is a lesson from all of this, it may be that abstract long-term national economic growth shouldn’t be an object of public policy at all. Nobody, including academic economists and federal civil servants and Wall Street analysts, is smart enough to devise a plausible plan to grow GDP at this or that target rate. Most voters don’t know what GDP is and choose between the parties on other issues. In practice, growthmanship leads to promises that are quickly forgotten, like Bessent’s 3-3-3 plan, or to giveaways to partisan constituencies justified with the rhetoric of growth, like Biden’s Inflation Reduction Act.
It might be best to avoid the hubris of post-1945 growthmanship in all its forms and return to the tradition of focusing on particular opportunities or threats — knitting the country together with canals, railroads, or highways, using tariffs to replace British imports with American manufactured goods, replacing slavery with free labor, beating the Germans to the atomic bomb, developing computers, satellites, and rockets in the course of geopolitical competition with the Soviets — and then welcoming, or dealing with the unwanted consequences, of any growth that happens to be generated as a side effect.