GDP Measuring nothing of value
Remarks from TPEX consultancy for decision makers.
Rethinking Progress: The Case for More Comprehensive Economic Indicators
Written SH on 2024-06-04.
As the UK 2024 general election heats up, the Green Party, as is typically the norm, has posed the most interesting questions to the electorate. In an interview, Ramsay offered this remark regarding GDP (Gross Domestic Product).
blunt instrumentRamsay, A., 2024. Focus on GDP not way to fairer society, say Greens. BBC. online.
GDP is an economic indicator that measures the total value of all goods and services produced within a country over a specific period. As a reflection of economic health, GDP encompasses various sectors including manufacturing, services, and agriculture. It serves as a barometer for policymakers, investors, and analysts to gauge the performance of the economy, make informed decisions, and formulate fiscal and monetary policies. In the UK, fluctuations in GDP are closely monitored, as they influence everything from employment rates to public spending and investment strategies, making it a vital metric for understanding and steering the nation’s economic trajectory.
This is not the first time that the suitability of GDP as a measurement of societal value has been questioned.
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.Kennedy, R., 1968. Election Rally Address. University of Kansas, March 18, 1968 online.
While GDP remains a cornerstone of economic analysis, alternative measurements have gained traction for providing a more nuanced understanding of a nation’s well-being. Indicators such as the Human Development Index (HDI), which assesses life expectancy, education, and per capita income, offer a broader perspective on quality of life. The Genuine Progress Indicator (GPI) adjusts economic activity by accounting for environmental degradation and social factors like income inequality. Moreover, measures like the Happy Planet Index (HPI) and Gross National Happiness (GNH) prioritize sustainable well-being and happiness over mere economic output. These metrics reflect a growing recognition that economic prosperity should encompass environmental sustainability and social equity, offering a more holistic view of progress in the UK and beyond.
However, this shift in prioritization requires all of society to reconsider its values and priorities. Consider,
By the early 21st century, American society’s top priority became its bottom line, net worth became synonymous with self-worth, and a billionaire businessman who repeatedly pointed to his own wealth as proof of his fitness for office was elected president.Cook, E., 2017. How Money Became the Measure of Everything. online.
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References
Kennedy, R., 1968. Election Rally Address. University of Kansas, March 18, 1968 URL.
Ramsay, A., 2024. Focus on GDP not way to fairer society, say Greens. BBC.URL.
Cook, E., 2017. How Money Became the Measure of Everything.URL.
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