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This reminds me of an old "ad" (not sure it was ever placed anywhere) questioning a similar tendency [1]: > For years, economists have defined the economic hea

This reminds me of an old "ad" (not sure it was ever placed anywhere) questioning a similar tendency [1]: > For years, economists have defined the economic health of a country by its gross domestic product. Trouble is, every time a forest falls, the GDP goes up. With every oil spill, the GDP goes up. Every time a cancer patient is diagnosed, the GDP goes up. Is this how we measure economic progress? Economists must learn to subtract. [1] https://www.youtube.com/watch?v=0q-lEATP-9Y https://www.youtube.com/watch?v=0q-lEATP-9Y

dmurray 3y ago
This is usually called the broken window fallacy, from an essay by Bastiat in 1850. https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window
- Qwertious 3y ago
  More specifically, some valuable types of activities are not even measured in GDP - if you build your own table out of roadside scrap, then you might be immensely satisfied by the table, but it will contribute $0 to GDP. If you follow free instructions online (and look various stuff up on Wikipedia), that will again improve your life but not GDP.
  - sixstringtheory 3y ago
    I wonder how that kind of reclamation project could be valued in terms of avoidance of waste, avoidance of expenditure of new resources, and the skill development of the person doing the work (in terms of either/both faster pace of the same value created in future reclamations, and/or future marketability of the skills towards a saleable product).
    - dmurray 3y ago
      You could start by valuing it at the price someone would pay for it, plus the price the worker would have paid for that many hours of hands-on education. This isn't totally farfetched: in some countries if you own your house you pay tax on the rent you would have paid to yourself [0]. Taxing someone for feeding or educating himself seems like a small and natural next step. [0] https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent
  - ryathal 3y ago
    The big thing is childcare from stay at home parents. That counts as 0 GDP, but put them in daycare and give the parent a job that's a net loss financially to the family and GDP has grown considerably.
HPsquared 3y ago
Eisenhower put it well. "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter with a half-million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people.... This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron." https://en.m.wikipedia.org/wiki/Chance_for_Peace_speech#The_speech https://en.m.wikipedia.org/wiki/Chance_for_Peace_speech#The_...
- karp773 3y ago
  With all due respect to Eisenhower, this is an example of incredible political myopia. A country does not exist in a political vacuum and has to be able to protect its freedom and the very right to exist. So freedom is not free but comes at a price. How high the price is depends on the situation. Sometimes it's very high, unfortunately. Complaining about this fact is as productive as complainig about gravity: if only we could float around effortlessly, imagine how much we would save on bridges and roads and fuel!
  - geysersam 3y ago
    It's not a fact that the US needs to spend 50% of the global military budget. If anything is myopic, that is. It can still be argued that it's worth the expenditure. But the cost should be weighted against the alternatives. Neither Russia or China can be said to threaten the US with their military, except with nuclear weapons, but no defence budget protects against those.
    - oblio 3y ago
      It's also myopic to think that having a large conventional army that deters rivals from attacking smaller trade partners is not beneficial. Also, the US Navy protects vital global sea lanes that benefit US trade. Also: > Neither Russia or China can be said to threaten the US with their military China is arming up at a huge pace, even outside of nukes.
nvm0n1 3y ago
> cancer patient is diagnosed, the GDP goes up. Is this how we measure economic progress? Yes, obviously so! Diagnosing cancer early is one of the best ways to save someone from it. The cancer is there anyway, it's a natural occurrence. The economic activity that leads to and follows a cancer diagnosis is what economists call wealth: the things we do for each other than make each side mutually better off. All the examples are like that. Nobody wants oil to spill, but accidents are a fact of life. The GDP created by mopping it up on the other hand leads to a cleaner environment, which is another form of wealth.
- HPsquared 3y ago
  I think it was more that the harm caused in these (presumably) avoidable examples is not counted negatively. Preventing cancer makes less GDP than curing it; smoothly transporting oil without incident makes less GDP than spilling it.
  - nvm0n1 3y ago
    Why does preventing cancer make less GDP than curing it? That would surely depend on how you're trying to prevent cancer. By prevent do you mean keeping a cancer somewhat under control? > smoothly transporting oil without incident makes less GDP than spilling it. Oil creates huge economic activity when used. It does no good spread over the ocean. The cleanup generates activity, but it's clearly far better for GDP to smoothly transport oil around than constantly lose it, if only because ships constantly sinking would cause people to transport things way less and so markets would be less efficient, yielding less wealth.

dmurray 3y ago

This is usually called the broken window fallacy, from an essay by Bastiat in 1850. https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window

Qwertious 3y ago
More specifically, some valuable types of activities are not even measured in GDP - if you build your own table out of roadside scrap, then you might be immensely satisfied by the table, but it will contribute $0 to GDP. If you follow free instructions online (and look various stuff up on Wikipedia), that will again improve your life but not GDP.
- sixstringtheory 3y ago
  I wonder how that kind of reclamation project could be valued in terms of avoidance of waste, avoidance of expenditure of new resources, and the skill development of the person doing the work (in terms of either/both faster pace of the same value created in future reclamations, and/or future marketability of the skills towards a saleable product).
  - dmurray 3y ago
    You could start by valuing it at the price someone would pay for it, plus the price the worker would have paid for that many hours of hands-on education. This isn't totally farfetched: in some countries if you own your house you pay tax on the rent you would have paid to yourself [0]. Taxing someone for feeding or educating himself seems like a small and natural next step. [0] https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent
- ryathal 3y ago
  The big thing is childcare from stay at home parents. That counts as 0 GDP, but put them in daycare and give the parent a job that's a net loss financially to the family and GDP has grown considerably.

HPsquared 3y ago

Eisenhower put it well. "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter with a half-million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people.... This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron." https://en.m.wikipedia.org/wiki/Chance_for_Peace_speech#The_speech https://en.m.wikipedia.org/wiki/Chance_for_Peace_speech#The_...

karp773 3y ago
With all due respect to Eisenhower, this is an example of incredible political myopia. A country does not exist in a political vacuum and has to be able to protect its freedom and the very right to exist. So freedom is not free but comes at a price. How high the price is depends on the situation. Sometimes it's very high, unfortunately. Complaining about this fact is as productive as complainig about gravity: if only we could float around effortlessly, imagine how much we would save on bridges and roads and fuel!
- geysersam 3y ago
  It's not a fact that the US needs to spend 50% of the global military budget. If anything is myopic, that is. It can still be argued that it's worth the expenditure. But the cost should be weighted against the alternatives. Neither Russia or China can be said to threaten the US with their military, except with nuclear weapons, but no defence budget protects against those.
  - oblio 3y ago
    It's also myopic to think that having a large conventional army that deters rivals from attacking smaller trade partners is not beneficial. Also, the US Navy protects vital global sea lanes that benefit US trade. Also: > Neither Russia or China can be said to threaten the US with their military China is arming up at a huge pace, even outside of nukes.

nvm0n1 3y ago

> cancer patient is diagnosed, the GDP goes up. Is this how we measure economic progress? Yes, obviously so! Diagnosing cancer early is one of the best ways to save someone from it. The cancer is there anyway, it's a natural occurrence. The economic activity that leads to and follows a cancer diagnosis is what economists call wealth: the things we do for each other than make each side mutually better off. All the examples are like that. Nobody wants oil to spill, but accidents are a fact of life. The GDP created by mopping it up on the other hand leads to a cleaner environment, which is another form of wealth.

HPsquared 3y ago
I think it was more that the harm caused in these (presumably) avoidable examples is not counted negatively. Preventing cancer makes less GDP than curing it; smoothly transporting oil without incident makes less GDP than spilling it.
- nvm0n1 3y ago
  Why does preventing cancer make less GDP than curing it? That would surely depend on how you're trying to prevent cancer. By prevent do you mean keeping a cancer somewhat under control? > smoothly transporting oil without incident makes less GDP than spilling it. Oil creates huge economic activity when used. It does no good spread over the ocean. The cleanup generates activity, but it's clearly far better for GDP to smoothly transport oil around than constantly lose it, if only because ships constantly sinking would cause people to transport things way less and so markets would be less efficient, yielding less wealth.