Edition 010: What Counts?— GDP, the Corporation, and the Materiality Standard

Every system decides what to count. That decision, which always looks like a technical choice, is also a decision about what to ignore. And a decision about what to ignore is, eventually, a decision about who the system can and cannot see.

When the law decides that harm to a person is not material, not worth disclosing, not worth measuring, and not worth accounting for, it is not making a technical determination. It is making a moral one. It is deciding that the person on the other side of the transaction does not count.

***

I.               GDP as the Scorecard

Start with GDP — Gross Domestic Product, the number by which nations measure themselves and are measured by others. GDP is the sum of four things: what people spend, what businesses invest, what the government spends, and what the country sells abroad minus what it buys from abroad.[1] It is the closest thing Americans have to an official scorecard. Politicians cite it, markets respond to it, and wars have been fought over the conditions that produce it. But GDP, as a measure, cannot tell you whether the people living inside it are doing well.

Consider what it means that GDP has nonetheless become the default language of economic legitimacy, so embedded that it can be deployed, without irony, to prove almost anything. I recently heard two prominent lawyers in AI policy circles comparing Mississippi and France. Mississippi’s GDP, they concluded, demonstrated the superiority of America’s approach to artificial intelligence.

Set aside the leap of logic, just for a moment, and consider that they were wrong on the underlying figure. France’s economy is roughly twenty times the size of Mississippi’s — about $3.36 trillion to Mississippi's $165 billion in 2025.[2] What the lawyers were reaching for was GDP per capita, a different number measuring a different thing. But the fact that two serious people in a serious policy conversation were making this argument at all deserves even closer scrutiny than the correction does. This was not a fringe exchange. Their argument, at its core, was a demonstration of exactly what GDP was designed to do—to make certain things visible, and render everything else beside the point.

Mississippi is the poorest state in the wealthiest country on earth.[3] Its GDP per capita — the output of its economy divided by the number of people who live there — is higher than France’s, the United Kingdom’s, and Italy’s.[4] This is not a political talking point. It is the figure produced by the Bureau of Economic Analysis, confirmed by the International Monetary Fund, and reported in multiple news outlets and think-tank analyses.[5] By the number the world uses to measure prosperity, Mississippi outperforms some of the most developed nations in human history.

But Mississippi’s infant mortality rate is more than twice the average of wealthy nations.[6] Its life expectancy — 72.6 years — falls below Mexico, the lowest-ranked country in the entire OECD.[7] Nearly one in five of its residents lives in poverty.[8] Mississippi’s health system is perennially ranked as the worst-performing in the country.[9] A resident of France, whose nation Mississippi’s GDP purports to surpass, can see a doctor without calculating whether they can afford to. A resident of Mississippi frequently cannot.

My step-grandparents lived in Forest, Mississippi. I lived in Paris. No number can make those places equivalent.

But the number (per capita) tries. GDP counts the output. It does not count what the output costs the people who produced it, or what they were left with after it was produced, or how long they would live to spend it. The number looked at Mississippi and saw France. It looked away from everything else.

An economy can grow impressively while its people grow sicker, poorer, and shorter-lived. GDP will record the growth. It will not record the rest. Mississippi is what that looks like when it lands on actual people. Two lawyers in an AI policy conversation reached for GDP and found confirmation. What they could not find in that number — what the number was not built to show them — was everything that mattered to the people the policy would affect.

***

The same structure — the same decision about what to count, and therefore about who to see — governs the legal framework that determines what American corporations are required to do and to disclose.

To understand how, you need to understand two things that most Americans were never taught, and that the people who benefit from the existing system have little interest in explaining. The first is the corporation. The second is materiality.

Neither of these words appears in the Constitution. Neither of them is taught in most civics classes. Both govern more of your daily life than almost any provision of the Bill of Rights.

II. The Corporation as a Legal Fiction

“[C]orporations have no consciences, no beliefs, no feelings, no thoughts, no desires. Corporations help structure and facilitate the activities of human beings, to be sure, and their ‘personhood’ often serves as a useful legal fiction. But they are not themselves members of ‘We the People’ by whom and for whom our Constitution was established.”

— Justice John Paul Stevens, Citizens United v. FEC (2010), dissenting[10]

A corporation is a legal fiction. That phrase—legal fiction—has a precise meaning. It describes something the law treats as true even though it is not literally true.[11]

The law treats a corporation as a person. Chief Justice John Marshall, writing for the Supreme Court in 1819, described the corporation as “an artificial being, invisible, intangible, and existing only in contemplation of law.”[12] It gives the corporation the ability to own property, enter contracts, sue and be sued, and, in some contexts, exercise constitutional rights. The corporation can exist for centuries, outliving every human being who ever worked for it. It can be in multiple places at once. It cannot die of natural causes. Of course, none of this is true of any actual human being.

The corporation-as-person construct is purely an invention of the law, created because the invention was “useful.” It has allowed people to pool resources, share risk, and build enterprises larger than any individual could build alone. It has allowed investors to limit their liability to the amount they invested, rather than risking their entire personal wealth on the success or failure of a venture. It has made the accumulation of capital at scale possible in ways that transformed the American economy.

It also created something that the people who invented it did not fully anticipate: an entity with the legal rights of a person and the moral obligations of — what, exactly?

The question hung over American corporate life for most of the twentieth century. Milton Friedman answered it in 1970, in an essay in The New York Times Magazine titled “The Social Responsibility of Business Is to Increase Its Profits.”[13] Friedman’s argument was simple. “Only people can have responsibilities,” he wrote. A corporation is an artificial person and so may have “artificial responsibilities,” but business as a whole cannot.

The corporate executive is an agent of the shareholders who own the company, and the executive’s only legitimate duty is to act in the shareholders’ interest. This means, with rare exception, making as much money as possible while following the law. Any executive who spends corporate resources on social goals the shareholders did not choose, such as reducing pollution beyond what the law requires, hiring the unemployed at the expense of more qualified workers, holding prices down to fight inflation, is, in Friedman's framing, imposing taxes on the shareholders without their consent.

Friedman closed the essay by quoting himself: "there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

The argument stuck. It has become the foundational principle of corporate governance and business school canon. Making money for shareholders is the central premise of American capitalism. And courts that interpret the corporate laws have contorted themselves through the years to accommodate this whatever-this-is.

In the real-world, a human person has obligations that arise from their humanity, and the fact that each individual is embedded within a community held together by relationships and bonds. Individuals are accountable to each other, both legally and socially. They can feel shame, guilt, pride, loyalty, and other emotions that are all intertwined with the people who know them, set by the norms of the communities they live in, and embedded within their own conscience.

A corporation has none of these things. It has shareholders, whose primary interest is the economic interest represented by the return on their investment. It has a board of directors, whose primary legal obligation is to those shareholders. It has employees, who work for compensation. It has customers, who pay for goods or services. And it has legal obligations, like contracts.

Its moral compass, if it can be said to have one, points only at profit. In a person, we would call that greed. In a corporation, it is the law, and the law has nothing to say about the people who fall outside the contract or the people who live downstream from the corporation’s factory or whose job applications were processed by its algorithm in the middle of the night.

These people exist in the law’s peripheral vision at best. They appear only because of specific statutes, like environmental, anti-discrimination, and consumer protection laws, that create targeted obligations in targeted domains. But they do not appear in the fundamental structure of corporate law. The corporation’s primary legal obligation runs to its investors. Friedman's doctrine said the legal arrangement was also the right one. Everyone else depends on specific rules that someone had to fight to create, and that someone is always fighting to weaken.

III.             Materiality As The Measure of What Matters

The corporation’s primary obligation runs to its investors. That is the rule from section II. The law then has to decide what the corporation must tell those investors, and what it can keep to itself.

The rule is called materiality. The law says a corporation has to share any information an investor would think is important when deciding whether to buy or hold the company’s stock. If a piece of information would matter to an investor, the corporation must disclose it. If a piece of information would not matter to an investor, the corporation can keep it quiet.

The question is always: would a reasonable investor care? And by reasonable investor, we mean someone who reads the company's reports carefully and makes thoughtful decisions about where to put their money. That hypothetical person is the measuring stick for materiality. If that person would want to know, the corporation has to say so. If that person would not, the corporation does not.

The rule has worked, in its way. It has produced decades of lawsuits, billions of dollars returned to people who were misled about the companies they invested in, and a disclosure system that gives American investors more information about the companies they own than investors anywhere else in the world.

The rule has nothing to say about anyone who is not an investor. It has nothing to say about the millions of job applicants whose applications were processed by algorithms their employers were never required to disclose, explain, or justify. The investor wanted to know whether the algorithm was making the company more profitable. The law made sure the investor was told. No one was required to ask whether the algorithm was deciding people’s lives.

This is what the materiality standard does. It tells the investor whether the hiring algorithm reduces costs. It does not tell the investor whether the hiring algorithm discriminates. Those are not the same question, and the law was built to answer only one of them.

***

Now step back and look GDP, the corporate fiction, and the materiality standard — they look like separate features of the economic and legal landscape. They are not.

GDP counts productive output—not who receives it, not what it costs the people who generate it, and not how long they live afterward. The corporate fiction creates a legal person whose only enforceable obligation runs to its investors — not to its workers, not to the communities it operates in, and not to the public absorbing its consequences. The materiality standard defines what the corporation must disclose, measured against what a reasonable investor would consider important. The investor is the measure of all things. No one else counts.

Together they form a closed loop. The corporation serves its investors. It discloses what its investors need to know. And GDP confirms the whole arrangement is working by measuring output, and only output, and calling that the health of a nation.

Everyone else exists outside the loop: people downstream from the factory, applicants the algorithm has already discarded, residents of a Mississippi whose economy, by the number, outperforms France.

This is the system. It was built to count money and to serve the people who own it. It does that work with precision. Everyone else is invisible.

***

But the system is not the whole story. It rests on something older, namely, a set of beliefs about what the market is, what it can be trusted to do, and what kinds of things can be bought and sold inside it. Those beliefs are so ingrained that questioning them sounds naïve. Of course, land can be owned. Of course, your time has a market price. Of course, money is a scarce resource that follows its own laws.

These feel like facts. They are choices. And they are not the only ones. That’s where we go next.

‍ ‍***

[1] U.S. Bureau of Economic Analysis, The Expenditures Approach to Measuring GDP (June 3, 2025), https://www.bea.gov/news/blog/2025-06-03/expenditures-approach-measuring-gdp. Accessed 11 May 2026.

[2] France 2025 nominal GDP: $3.362 trillion. International Monetary Fund, World Economic Outlook (October 2025), https://www.imf.org/external/datamapper/profile/FRA. Accessed 11 May 2026; Mississippi 2025 nominal GDP: $165.07 billion. U.S. Bureau of Economic Analysis, Gross Domestic Product by State, available at https://fred.stlouisfed.org/series/MSNGSP. Accessed 11 May 2026.

[3]See “List of U.S. States and Territories by GDP.” Wikipedia, en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_GDP. Accessed 11 May 2026.

[4]See Iordache, Doloresz. “Poorest US State Rivals Germany.” Euronews, 3 Jan. 2025, euronews.com/business/2025/01/03/the-poorest-us-state-rivals-germany-gdp-per-capita-in-the-us-and-europe; and Carswell, Douglas. "Opinion: Mississippi GDP Per Capita Passes Britain." Northside Sun, northsidesun.com/opinion-mississippi-gdp-capita-passes-britain. Accessed 11 May 2026.

[5]See McMaken, Ryan. "Britain—Like France and Spain—Is Poorer than Mississippi." Mises Wire, 2 Apr. 2025, mises.org/mises-wire/britain-france-and-spain-poorer-mississippi. Accessed 11 May 2026.

[6]See Ely, Danielle M., and Anne K. Driscoll. “Infant Mortality in the United States, 2022.” National Vital Statistics Reports, vol. 73, no. 5, 25 July 2024; “International Comparison.” America's Health Rankings 2023 Annual Report, americashealthrankings.org/publications/reports/2023-annual-report/international-comparison. Accessed 11 May 2026.; and “Mississippi Declares Public Health Emergency Over Infant Mortality Rate.” ABC News, 22 Aug. 2025, abcnews.go.com/GMA/Wellness/mississippi-declares-public-health-emergency-infant-mortality-rates/story?id=124885120. Accessed 11 May 2026.

[7]See “Life Expectancy in OECD.” TheGlobalEconomy.com, theglobaleconomy.com/rankings/Life_expectancy/OECD/; “Life Expectancy: Society at a Glance 2024.” OECD, oecd.org/en/publications/society-at-a-glance-2024_918d8db3-en/full-report/life-expectancy_37a61588.html. Accessed 11 May 2026; and “Health System Outcomes.” World Health Systems Facts (citing OECD Health at a Glance 2025), healthsystemsfacts.org/health-system-outcomes/. Accessed 11 May 2026.

[8]See “What Is the Poverty Rate in Mississippi?” USAFacts, usafacts.org/answers/what-is-the-us-poverty-rate/state/mississippi/. Accessed 11 May 2026.; and “Poverty in States and Metropolitan Areas: 2024.” U.S. Census Bureau, www2.census.gov/library/publications/2025/demo/acsbr-026.pdf. Accessed 11 May 2026.

[9] See “U.S. Health Care Rankings by State 2025.” Commonwealth Fund, commonwealthfund.org/publications/scorecard/2025/jun/2025-scorecard-state-health-system-performance. Accessed 11 May 2026; and Eriator, Ike, et al. “Mississippi's Long-Running Poor Health Care Performance: Malignant Neglect or Complacency?” Journal of the Mississippi State Medical Association, vol. 66, no. 5/6, 2025, jmsma.scholasticahq.com/article/140455. Accessed 11 May 2026.

[10]See Citizens United v. FEC, 558 U.S. 310, 466 (2010) (Stevens, J., concurring in part and dissenting in part); and "The Highlight Reel from Justice Stevens' Citizens United Dissent." Constitutional Accountability Center, theusconstitution.org/blog/the-highlight-reel-from-justice-stevens-citizens-united-dissent/. Accessed 12 May 2026.

[11]See "Legal Fiction." Wex, Legal Information Institute, Cornell Law School, https://www.law.cornell.edu/wex/legal_fiction. Accessed 12 May 2026.

[12] See Trustees of Dartmouth College v. Woodward, 17 U.S. 518, 636 (1819).

[13] Friedman, Milton. "A Friedman Doctrine — The Social Responsibility of Business Is to Increase Its Profits." The New York Times Magazine, 13 Sept. 1970, www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html (paywall). Accessed 12 May 2026.