I am disagree with that statement.
GDP is not a Measure of Economic Welfare
Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production. For seven decades, gross domestic product has been the global elite’s go-to number.
GDP is a gross number. It is the sum total of everything we produce over a given period. It includes cars built, Beethoven symphonies played and broadband connections made. But it also counts plastic waste bobbing in the ocean, burglar alarms and petrol consumed while stuck in traffic.
1. GDP is born of the manufacturing age.
GDP doesn’t do services - at least not very well. It is good at quantity, but lousy at quality. If the food or service improves in your local restaurant, GDP will not notice.
2. GDP is flummoxed by the Internet.
If I buy my own cheap airline ticket, check myself in online and pick my own aisle seat, my convenience has gone up. But GDP has gone down. I am my own travel agent, a job that would once have been performed by a fully paid-up GDP-producing employee. Wikipedia provides all human knowledge free of charge. In GDP terms, it is worth zilch.
3. From GDP’s perspective, bigger is always better.
In the real world, that is not always so. When the financial sector got bigger and bigger, it ended in financial crisis. When the US health service gets bigger and bigger, it means costs are out of control.
4. In general, GDP measures only cash transactions.
In Europe that includes heroin and prostitution. However, volunteer work, housework or looking after an ageing relative count for nothing. GDP has skewed priorities.
