Down with the GDP

In the November, 2009 edition of The Atlantic, Megan McArdle reminds us why we need to wean ourselves of using the GDP as an indicator of economic health.  Here’s a sample:

GDP does not, and cannot, reflect the waste of enormous effort, and precious natural resources, that went into building something that suddenly no one wants. Moreover, it misses many other aspects of our existence. Strip-mining a picturesque mountaintop, or clear-cutting a primeval forest, shows up in GDP only as a boost to output. Meanwhile, in India’s national accounts, all of Mother Teresa’slabors among the poor would have had only the most minimal possible impact. GDP can record how much money we spend on health care or education; it cannot tell us whether the services we are buying are any good.

So how do you accurately measure a nation’s health?  One alternative is the HDI.

Share
Tags: , ,

Erich Vieth

Erich Vieth is an attorney focusing on civil rights (including First Amendment), consumer law litigation and appellate practice. At this website often writes about censorship, corporate news media corruption and cognitive science. He is also a working musician, artist and a writer, having founded Dangerous Intersection in 2006. Erich lives in St. Louis, Missouri with his two daughters.

This Post Has 6 Comments

  2. Avatar of Erich Vieth
    Erich Vieth January 5, 2010 Reply

    Spot-on observation by Monbiot.com:

    "Though we know they aren’t the same, we can’t help conflating growth and well-being. Last week, for example, the Guardian carried the headline “UK standard of living drops below 2005 level”(3). But the story had nothing to do with our standard of living. Instead it reported that per capita gross domestic product is lower than it was in 2005. GDP is a measure of economic activity, not standard of living. But the terms are confused so often that journalists now treat them as synonyms. The low retail sales of previous months were recently described by this paper as “bleak”(4) and “gloomy”(5). High sales are always “good news”, low sales are always “bad news”, even if the product on offer is farmyard porn. I believe it’s time that the Guardian challenged this biased reporting."

    http://www.monbiot.com/archives/2010/01/04/consum…

  3. Avatar of Erich Vieth
    Erich Vieth July 7, 2010 Reply

    John Robbins on GDP:

    Using the GDP to measure prosperity and assess economic well-being is leading us terribly astray. It is a statistical index that is guaranteed to mislead us, and relying on it as we have done has added greatly to the economic misery in people's lives. Two months before he was assassinated, Robert F. Kennedy eloquently explained why:

    "Our gross national product 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 redwoods, and the loss of our natural wonder in chaotic sprawl. It counts napalm, nuclear warheads, and armored cars for the police to fight the riots in our cities. Yet the gross national product 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. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile."

    This article directly and persuasively devastates our over-reliance on the GDP. Another key quote:

    The whole thing is reminiscent of Edward Abbey's reflection that "growth for the sake of growth is the philosophy of the cancer cell.

    <a href="http://www.huffingtonpost.com/john-robbins/how-the-gdp-is-leading-us_b_637037.html” target=”_blank”>http://www.huffingtonpost.com/john-robbins/how-the-gdp-is-leading-us_b_637037.html

Leave a Reply