Couple comments on David’s Suzuki’s article this morning published in the Huffington Post.
1. Reading the article I began to reflect on how seemingly paradoxical it is to be a liberal. In the article, Suzuki makes the point that many of the problems we currently face stem from our misguided obsession with a consumption-based economy. Ironically, liberals tend be greater proponents of Keynesian ideology of stimulating demand and consumption than conservatives, despite also being greater advocates for environmental issues.
2. Suzuki quotes the oft-cited examples of how increasing GDP can sometimes be correlated with decreased well-being, thereby decreasing its reliability as a measurement:
Here are some other ways you can help keep the economy strong, according to John de Graaf and David K. Batker, authors of What’s the Economy For, Anyway? You could have a car accident. That would mean money spent on repairs, insurance, investigations, and maybe even a new car. You could get a divorce. All that money spent on lawyers and court services is good for the economy. On a larger scale, you could hope for a massive oil spill. Cleanup costs contribute to a growing economy.
These claims ignore the fact that GDP is just a measure of economic output – it is not built to measure the overall well-being of a society. To even attempt to do that, you would need much more than one statistic. However, in the cases that he provides, our society does improve at the margin as a result of this output, which is what economists care about.
GDP does not increase because of the car accident, but rather it increases afterward because the car was able to be fixed. GDP doesn’t increase because the two people have fallen out of love, but rather because a lawyer could manage the breakup in a civilized manner. GDP doesn’t go up because oil was spilt – in fact, it would decrease with the resulting loss in oil sales. GDP only goes up when people deploy services to minimize the environmental damage of the oil spill and clean it up. At the margin, all the examples he provides make a bad situation a bit better and thus reflect an overall improvement in the state of affairs and should be included in GDP.