The Prosperity Scoreboard Politicians Keep Missing

Originally published on Substack.

​Washington has a measurement problem. Politicians see prosperity and too often yell, “Government did that!” That’s like a rooster taking credit for the sunrise.
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Government matters. It should protect property rights, enforce contracts, keep the peace, and provide a stable rule of law. But too often, it gets in the way through taxes, inflation, debt, regulations, subsidies, and favoritism.

A recent Crémieux post on X comparing living standards made an important point: Americans still enjoy some of the highest material living standards in the world. Yes, but the measure deserves care.

The original chart used Net Adjusted Household Disposable Income per worker, an OECD measure of purchasing power supported by the average worker after taxes, government transfers, and individually consumed public services. The percentages for reach country are the value compared with America. Useful? Yes. Easy to explain? Not really. Easy to misread as “redistribution creates prosperity”? Absolutely.
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That’s why I rebuilt the comparison using Actual Individual Consumption per capita, another OECD measure that better answers the kitchen-table question: how well do people actually live?

AIC measures what people consume, whether bought directly by households or provided individually through government transfers or nonprofits, such as health care and education. It also adjusts for purchasing power, so we’re not pretending a dollar buys the same amount in Texas, Switzerland, or Japan.

Three lessons matter.

1. Measure the right thing. GDP measures production. NAHDI measures worker-supported household purchasing power. AIC measures actual consumption. For comparing living standards, AIC per person is cleaner than a technical worker-based income measure.
   
   
2. Don’t confuse the scoreboard with the game. AIC includes public services because people consume them. It does not mean government created the wealth behind them. The scoreboard records the points. It didn’t block, tackle, pass, or score.
   
   
3. Prosperity starts with production. Before government can spend, someone must earn. Before benefits can be distributed, someone must create wealth. Workers, entrepreneurs, investors, businesses, and families do that through work, saving, risk-taking, innovation, and exchange.
   
   

Government can tax wealth. It can move wealth. It can regulate wealth. But it cannot redistribute wealth that was never created.

America’s advantage is not that Washington discovered a magic formula. It’s that, despite Washington, Americans still build, invest, invent, compete, serve, and solve problems better than most others.

That advantage is not guaranteed. Inflation, excessive government spending, housing restrictions, overregulation, tariffs, corporate welfare, and dependency all weaken the productive engine. They may come wrapped in good intentions, but good intentions don’t pay the bills.

The lesson is that living standards rise when people are free to produce more, trade more, invest more, and keep more of what they earn. So let’s measure prosperity honestly. Then let’s stop pretending government is the hero of every success story.

The hero is the person getting up early, taking risks, building a business, raising a family, learning a skill, saving for tomorrow, and serving customers today. That’s how we get more opportunity, affordability, and abundance. That’s how we let people prosper.
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If you found this helpful, share it with a friend who needs better economics and fewer slogans. And leave a comment: what measure best captures prosperity?