Today, we use GDP as a measure of the economy and as a rough measure of how well things are going as a whole. Increased GDP seen as a Good Thing.
Is increasing GDP truly Good? Consider: Crime is good for GDP growth. When crime rates are high, we get more police, use more Victims Services, fill more prisons, pay more cleaners and painters and repairers of damage. We buy more things to replace the things that cannot be repaired, more locks, prevention, preservation and protection, the list goes on. Crime is great for increasing GDP.
Toxic drugs are good for GDP. Somebody, somewhere, is making a profit on narcan (naloxone) kits. There’s also the increased 911, EMS, police and fire staff, the disinfectants and supplies to rescue people from death and the body bags, coffins and funerals of those who are not rescued.
Who wants to live surrounded by toxic drugs and high crime? Not me. I prefer safe, quiet communities, without breaking glass, crashing or sirens.
Our tax dollars at work, increases GDP. Costs for police, 911, EMS, children’s aid, legal aid all go up when there is more crime and toxic drugs. GDP increases when government spending goes up, even when it’s on things we really, really wish we didn’t need.
GDP is a clear, understandable measure. Many people even feel they could do the basic math to calculate it. Just add up the cost of everything in the last year. There’s not even subtraction needed to calculate GDP. If it was bought or rented in the last year, add the price. Bought a hot dog for lunch today? You’ve increased GDP by the value of the hotdog, plus all the trickle-down partial increases like the wage the vendor made, the supplier they bought the hot dogs and condiments from, the maker of the hot dog cart, the propane used to cook hot dogs. The list goes on. It’s not just hot dogs, it’s healthcare and movies, libraries and prisons. It seems like everything we do has a dollar value to it.
Except it matters who does the work. Childcare only counts toward GDP when it’s paid for. When families look after their own children, it doesn’t count. You could even say families who look after their own children are bad for GDP. If everyone paid for childcare, it would increase GDP. Similarly, elder care and housework. Do your part, put Grandpa in a long term care home and hire a maid. It is good for GDP.
People being sick is also good for GDP. The sicker the person, the more GDP increases. Emergency room visits and hospitals care add far more to GDP than an annual checkup on a healthy person. Similarly, air pollution and contaminated water increase GDP as people buy bottled water and air filters.
Yet, we are happy when GDP goes up. GDP is supposed to be a measure of how productive and prosperous our economy is. Productive I’ll grant. Prosperous though, I question. Not all productivity is prosperous. I, for one, want less of the bad productivity based on criminality and illness.
There needs to be a way to measure the good without the bad. A way to include, as a good thing, families caring for their children and elders, cleaning and cooking for themselves. A number value for continued good health, clean air and fresh water.
Replacing GDP with a new number is necessary for us to understand how prosperous our economy has been. A number that goes up when there are more of things we value and that goes down when there are more of the things we condemn. Then maybe we’d have a measure of prosperity, a number that describes how much better or worse life has been over the last year.