David J. Rothkopf: Redefining the Meaning of No. 1

David J. Rothkopf is the author of the forthcoming “Power, Inc.: The Epic Rivalry Between Big Business and Government — and the Reckoning that Lies Ahead.”

...Calculating national income is a relatively new concept. Previously, countries measured their economic well-being by tallying land holdings or counting railroad boxcars. But in the midst of the Great Depression, Congress, showing a great deal more intellectual curiosity than it does today, commissioned a group of economists led by a future Nobel Prize winner named Simon Kuznets to better measure economic activity.

Although Kuznets and his team fulfilled their mission, they released their results with considerable unease. Not only were they aware that the statistic they devised ignored many types of economic activity — from the work of housewives to illegal enterprises — they also knew their number did not assess the social benefits of what they were tracking.

Kuznets warned of this: “The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income” like the one they created. That hasn’t stopped us from making this misleading number perhaps the most influential statistic in the world.

Americans use G.D.P. in discussions about how well we are doing. It’s at the heart of discussions of whether we are in a recession or not, ahead or falling behind....