4 thoughts on “GDP: nonsense on stilts”

  1. Posted 02/11/2011 at 17:08 | Permalink

    Although I generally agree that GDP is not the best measurement concept, so far it’s the best we’ve got (it’s like Churchill’s quote on democracy).

    And being on the subject, I can’t agree on the following: “But an increase of capital (i.e. savings and investment) means that current living standards are held back in the short term. So guess what: GDP statistics take little or no account of saving, the sine qua none for long term growth!”

    This isn’t true I’m afraid. Capital spending category includes inventory accumulation, residential and nonresidential construction, equipment expenditure, software etc. This category is essential for starting up economic growth and is very well seen as a driver of GDP upwards or downwards (investment fell 34% in the US during the crisis). The very reason we’re not seeing GDP growth now is due to investments being locked down.

  2. Posted 03/11/2011 at 10:54 | Permalink

    Terry, I think this is a bit exaggerated. The weaknesses of GDP are well known, and far too much is made of small changes in GDP such as the 0.5% growth rate for the last quarter – but nevertheless awareness of the approximate size of a country’s GDP is invaluable in current debates about the size of the deficit for example, and awareness of the very rapid growth in China’s GDP is surely useful. It’s not totally “devoid of cognitive value”.
    If free-market economists refuse even to use the common currency of debate, they are unlikely to have much of an influence.

  3. Posted 23/11/2011 at 18:11 | Permalink

    An excellent observation about the limitations of GDP – or, more specifically, GNP – was made by Robert F. Kennedy in 1968: “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 redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children. 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.”

  4. Posted 30/11/2011 at 15:17 | Permalink

    It’s “sine qua non”, not “sine qua none”. Please fix this.

    (I like the article, by the way.)

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