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# Alternatives to the GDP? Discuss...

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Alternatives to the GDP? Discuss... [#permalink]

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12 Mar 2008, 11:34
You may have noticed that I like to "stir the pot" on traditional thinking and question the masses. On top of that, I like to think about topics such as this and consider better alternatives (like abolishing the penny - but that's another debate).

So here is some brain candy to chew on... I look forward to reading your thoughts!

The Question
Should policy makers base important decisions on the trend of the GDP? Do better alternatives exist? Can GDP grow perpetually? Even if it does, are people happier?

My inference is that the GDP has a place in society, just not in defining quality of life or general social welfare.

Why Here
I posed this question here because I want to hear the thoughts (and encourage the pondering) of the members of GMATclub, specifically the ones in B-School.

The Data
The term recession is defined (loosely) as: 2 consecutive quarters of a reduction in the GDP.

GDP = Consumption + Gross Investment + Gov't Spending + Net Exports

US GDP: ~\$13.8 Trillion

While this is only one of several key measures considered when analyzing the "health" of an economy, it is the most widely accepted (and discussed). So essentially, we (the world market) base our economic (and arguably healthcare, environmental, welfare, etc.) policies on this figure.

The Problem
The more we pollute (cleanup), destroy (rebuild), waste (over consume), get sick (cancer treatment), etc. the more the GDP DIRECTLY grows.

Equally important are the positive actions, which would decrease the GDP: Saving, Volunteer, Reusing, Localized economies, organic/healthier food, etc.

GDP Opposers
Robert Kennedy (US Attorney General, 1960-1963):

"The gross national product includes air pollution and advertising for cigarettes and ambulances to clear our highways of carnage. It counts special locks for our doors and jails for the people who break them. GNP includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm, and missiles and nuclear warheads... it does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry or the strength of our marriages, or the intelligence of our public debate or the integrity of our public officials. It measures everything, in short, except that which makes life worthwhile."

Simon Kuznets (The creator of the GDP indicator):

"Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what."

GPI, Genuine Progress Indicator, is a recognized alternative which considers many of the problems with the GDP. http://www.rprogress.org/sustainability ... icator.htm

Check out these sites for more detail:
http://www.rprogress.org/index.htm
http://www.glaserfoundation.org/program ... ogress.asp

I guess I'm pretty bored at work... Chew on it!
Alternatives to the GDP? Discuss...   [#permalink] 12 Mar 2008, 11:34
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# Alternatives to the GDP? Discuss...

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