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GDP is an extremely artificial measure of an economy, and like most overly simplistic measures, it has lead to gaming the statistic. GDP growth is an easy headl

GDP is an extremely artificial measure of an economy, and like most overly simplistic measures, it has lead to gaming the statistic. GDP growth is an easy headline for politicians. Yet even when our modern understanding of GDP was invented (by Kuznets, a US economist, during the Great Depression), he closed the document with several paragraphs criticising and limiting it. The final sentence of which being "The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above." In the context of pollution, environment and climate change resources are not part of GDP until they are used or harvested. A tree has zero value until it is cut, oil has zero value until it is in a pipeline, a river so polluted it catches fire is of zero consequence in GDP. Neither does it consider the health and welfare of a population, quality of life and other non monetary activity (within a household, community schemes etc). Lastly it does not account for progress: It is purely a monetary measure. No account is made of improvements to efficiency or new methods. We could have negative GDP growth without reducing quality of life, as it's not all about money. Solar panels, computers etc are getting more capability for less cost, environmental damage and pollution has monetary costs to health, perhaps mental wellbeing too. Thus it tends to promote purely the monetary aspect, and belittle to the point of insignificance (by calling it an externality) everything else. In short it doesn't measure anything especially useful.

crispinb 8y ago
That's all true, and let's be clear that this problem is fundamental to the very notion of economics. It is not fixable. An 'economy' doesn't map usefully to physical realities. Say you wanted to develop a 'real', comprehensive GDP-alike metric. Even if you could develop measures for all the mutual interactions between a so-called 'economy' and the ecological system with which it is enmeshed, the interactions are so manifold & complex, you'd have to end up with those metrics as parameters in whole-ecology models in any case. We live in ecologies, not economies.
- NeedMoreTea 8y ago
  Sadly I tend to agree that it's not fixable, certainly not in the timescales we seem to have. I suspect a simplistic metric could be achieved to replace GDP that would have to assign value to leaving things alone. The ore or oil in the ground, and the tree uncut. If nothing else to remove absurdities where polluting then cleaning up and grassing over is "good" for the economy (because money was spent, which is GDP positive) is better than leaving some pristine acres of mature forest (because money is not spent). I doubt that would be a popular metric with some though as that would imply far more value to not exploiting than doing so. That's before you get to the more vague aspects of quality of life that can't be given spreadsheet space like community, family, friendship, health etc. > We live in ecologies, not economies. Too true. I'm not optimistic for how the next 100 years plays out.
- mirimir 8y ago
  > We live in ecologies, not economies. That depends on what "we" means. If "we" means human meat machines, that's arguably true. On an evolutionary timescale, the global ecosystem is incredibly resilient. We could likely take out most multicellular species, and within a billion years or so, they'd get replaced. The problem, of course, is what we'll have for dinner, in the interim. And maybe we could work around it all. The "free market" to the rescue! But damn, that'd be a different world, for sure. And if we went full virtual, we could let the global ecosystem recover. Or just use the mass for something else.

crispinb 8y ago

That's all true, and let's be clear that this problem is fundamental to the very notion of economics. It is not fixable. An 'economy' doesn't map usefully to physical realities. Say you wanted to develop a 'real', comprehensive GDP-alike metric. Even if you could develop measures for all the mutual interactions between a so-called 'economy' and the ecological system with which it is enmeshed, the interactions are so manifold & complex, you'd have to end up with those metrics as parameters in whole-ecology models in any case. We live in ecologies, not economies.

NeedMoreTea 8y ago
Sadly I tend to agree that it's not fixable, certainly not in the timescales we seem to have. I suspect a simplistic metric could be achieved to replace GDP that would have to assign value to leaving things alone. The ore or oil in the ground, and the tree uncut. If nothing else to remove absurdities where polluting then cleaning up and grassing over is "good" for the economy (because money was spent, which is GDP positive) is better than leaving some pristine acres of mature forest (because money is not spent). I doubt that would be a popular metric with some though as that would imply far more value to not exploiting than doing so. That's before you get to the more vague aspects of quality of life that can't be given spreadsheet space like community, family, friendship, health etc. > We live in ecologies, not economies. Too true. I'm not optimistic for how the next 100 years plays out.
mirimir 8y ago
> We live in ecologies, not economies. That depends on what "we" means. If "we" means human meat machines, that's arguably true. On an evolutionary timescale, the global ecosystem is incredibly resilient. We could likely take out most multicellular species, and within a billion years or so, they'd get replaced. The problem, of course, is what we'll have for dinner, in the interim. And maybe we could work around it all. The "free market" to the rescue! But damn, that'd be a different world, for sure. And if we went full virtual, we could let the global ecosystem recover. Or just use the mass for something else.