Commentary By Ron Beasley
The Gross Domestic Product, GDP, is the measure of economic well being - but is it? If you are part of the one percent the answer is probably yes in the short term. Short term is the key, GDP does not take into consideration the future negative impact of growth now. There are also a few other problems with GDP and they are explained here: Beyond GDP: New Measures For A New Economy.
So what are the problems with GDP?
- GDP does not distinguish between spending on bad things and spending on good things. By this measurement, the BP oil spill in the Gulf of Mexico �positively� contributed to the economy just like the many good and services that people actually want or need.
- GDP doesn�t account for the distribution of growth. Our total national income has doubled over thirty years, and so has the share of national income going to the wealthiest households, but average households have seen little or no income gains.
- GDP doesn�t care if growth is captured by a few or widely shared.
- GDP doesn�t account for depletion of natural capital and ecosystem services. If all the fish in the sea are caught and sold next year, global GDP would see a big boost while the fishing industry itself would completely collapse.
- GDP doesn�t reflect things that have no market price but are good for our society, like volunteer work, parenting in the home, and public investments in education and research.
GDP measures things that are good short term but not so good long term. It is the essence of our instant gratification society.