What good is a high GDP?

[Anarchist420]

It means things are more expensive, it doesn't measure cost effectiveness (e.g., making low cost high quality products for niche markets), and it doesn't take waste into account (e.g., bullets manfactured to be wasted in useless wars). It also takes government contractors into account.

Shouldn't we be aiming for a significantly lower GDP?

 

[MJinZ]

It means things are more expensive, it doesn't measure cost effectiveness (e.g., making low cost high quality products for niche markets), and it doesn't take waste into account (e.g., bullets manfactured to be wasted in useless wars). It also takes government contractors into account.

Shouldn't we be aiming for a significantly lower GDP?

So how are you going to eat if you're not working?

 

[IronWing]

GDP can certainly be misleading. As the Adbuster's ad used to say "Every time someone is diagnosed with cancer, the GDP goes up".

 

[Craig234]

The best comment I've seen on GDP is from Robert Kennedy.

"Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.


"Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans."

It also matters where the growth go. For 30 years, it's all gone to the top.

Robert's brother John said 'A rising tide lifts all boats'.

Progressives would like for it to do so again.

 

[bamacre]

GDP can certainly be misleading.

/thread

 

[Fenixgoon]

GDP can certainly be misleading. As the Adbuster's ad used to say "Every time someone is diagnosed with cancer, the GDP goes up".

GDP is absolutely misleading...but it's one of the few ways to quantify a country's wealth.

of course it tells you nothing about how that wealth is distributed, standards of living, etc.

 

[bamacre]

GDP is absolutely misleading...but it's one of the few ways to quantify a country's wealth.

of course it tells you nothing about how that wealth is distributed, standards of living, etc.

Yeah, and it also doesn't tell you much about how that wealth is gained, i.e, if you get a credit card and buy a bunch of crap, your GDP looks good.

As for standard of living, this is a better argument, and our health care system is a perfect example. We are spending too much for what we get, and that boosts GDP. But since we are spending too much on health care, that gives us less money to spend on other things, lowering our standard of living.

 

[IHateMyJob2004]

If GDP went down over time, that owuld be called deflation.

I think the OP needs to read up on "fiat curency" and "Keynesian economics"

http://en.wikipedia.org/wiki/Keynesian_economics
http://en.wikipedia.org/wiki/Fiat_money

 

[nonlnear]

GDP is absolutely misleading...but it's one of the few ways to quantify a country's wealth.

of course it tells you nothing about how that wealth is distributed, standards of living, etc.

GDP only quantifies wealth when all wealth is consumed, or at least depreciates very rapidly. Of course the entire marketing industry is pushing society towards such a state, but it doesn't have to be that way by definition. If we as a society could bring ourselves to not feel compelled to rip out kitchens every 10 years, use a rag and bucket instead of Swiffers, and buy fewer - but more durable - clothes, etc. we would find that GDP has very little to do with our stock of wealth at all. I don't bother seriously hoping that such a thing could happen to the USA, but it's an important point if for nothing other than perspective.

 

[piasabird]

One of the things that affects a GDP is what we purchase from outside the country. When our imports grow too much that means that people cant find work and our money is funding someone elses economy. Nothing wrong with imports, but everything should be in moderation. Sending communists and socialists our hard earned money is putting our own people out of work. The more we pruchase imports the less we should expect our children to be able to find work.

 

[her209]

If I sell something I own (mind you I didn't make it) to someone for $20 on Craigslist and then bought something else for $20 from that same person a day later, did GDP just go up $40?

 

[charrison]

If I sell something I own (mind you I didn't make it) to someone for $20 on Craigslist and then bought something else for $20 from that same person a day later, did GDP just go up $40?

GDP only counts things that gets reported.

 

[her209]

GDP only counts things that gets reported.

Well, imagine if it was reported, would GDP still go up by $40 even though nothing was really created?

 

[heyheybooboo]

If I sell something I own (mind you I didn't make it) to someone for $20 on Craigslist and then bought something else for $20 from that same person a day later, did GDP just go up $40?

I don't believe the calculations quite work that way.

It's more like a double-entry ledger of national accounts. 'Snapshots' are taken monthly, quarterly and annually (up to 5 years back IIRC to reconcile GDP as specific numbers are available).

Though folks fixate on the quarterly BEA GDP ("advance" estimate) reports, the second 'estimate' for the quarter (given one month later) incorporates better statistical data.

Twenty-five percent of the "advance" estimate reflects 'trends' in the economy, and with the second estimate this is reduced by half.

The biggest point of contention is normally the Export/Import Account (with our trade imbalance reflecting as a drag on overall GDP).

Back to your question: In your 'ledger' you would credit $20 to your Personal Income Account that would be offset by $20 to your Personal consumption expenditures (PCE) account.




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[LegendKiller]

It means things are more expensive, it doesn't measure cost effectiveness (e.g., making low cost high quality products for niche markets), and it doesn't take waste into account (e.g., bullets manfactured to be wasted in useless wars). It also takes government contractors into account.

Shouldn't we be aiming for a significantly lower GDP?

How would it make goods most expensive?

 

[charrison]

Well, imagine if it was reported, would GDP still go up by $40 even though nothing was really created?

My guess is yes, it would go up. As you would be getting $20 back on the $100(retail price) of the item you purchased before.

 

[Martin]

GDP is like BMI. It'll give you a broad summary, but it'll also mislead you sometimes.

 

[Infohawk]

GDP is like a grade in school. It tells you that you've done well but it doesn't tell you how to do well.

 

[BoberFett]

GDP is like a grade in school. It tells you that you've done well but it doesn't tell you how to do well.

But does it really? If GDP goes up by 5%, does it really mean we created 5% more wealth* than we did the previous year or does it just mean that inflation is at 5% and we produced the same amount we did the previous year only now everything costs more?


* Bear in mind that money is not wealth, goods are wealth

 

[QuantumPion]

If I sell something I own (mind you I didn't make it) to someone for $20 on Craigslist and then bought something else for $20 from that same person a day later, did GDP just go up $40?

If the guy you sold the $20 item to valued that item at $30 then the GDP increased by $10. Reason being is that you now have the item you would have spent $30 on for $20, plus $10 left over to buy something else. It's called comparative advantage.