Why GDP Cannot Be Used to Measure Economic Benefit

ByPrimary Researcher

Table of Contents: Select a Link to be Taken to That Section

Executive Summary

  • GDP as a Measure of Economic Benefit
  • What Makes Up GDP?
  • The Implications of This View

Introduction

One of the falsehoods of modern economics is that the profession has a strong way of measuring the economic benefits that the economy produces. The way they do it is by combining all economic transactions within a country in a calendar year, and call it the “Gross Domestic Product” (GDP). When a doctor performs an operation that goes bad and the patient gets sepsis and dies, and the bill comes to $130,000, that is marked down as a transaction and counted as part of GDP.

What Makes up GDP?

Car accidents, legal fees, and purchases of luxury goods all count as part of GDP. Whether any of these transactions is of any benefit or a good allocation of resources is irrelevant to modern economists. Like most people, economists are lazy, and they would greatly prefer to use an easy but flawed measurement, over something that would take more work. The entire profession requires an overhaul in how it measures, what it measures and a removal of the highly doctrinal pro-concentrated power orientation. A recent article in Global Research.ca bring this point up very well.

Many cite increased per capita GDP as evidence of the revolution’s benefits, but GDP is a poor measure of benefits. It merely measures the sum total of economic transactions in terms of the culture’s money, neglecting the effects of economic activity on the quality of human life. – GlobalResearch

Implication of this View

Most statistics cited by economists have either been doctored (such as unemployment or inflation) or are poorly related the health economy (such as GDP). The fact that the vast majority of economists continue the charade, by quoting these statistics without mentioning their inherent weaknesses tells a lot about the general integrity of the economics profession. Two sources who point this out are Dean Baker at the CEPR, and Kevin Philips.

References

https://www.globalresearch.ca/index.php?context=va&aid=19782

https://www.mindfully.org/Reform/2008/Pollyanna-Creep-Economy1may08.htm