Throughout the world, the Gross Domestic Product of a country is used as the most important indicator of a countries economic progress. One shortcoming of GDP that it uses activities that are detrimental to the long term economy like over fishing, deforestation, strip mining, and murders. GDP inventor Simon Kuznets was adamant that his measure had nothing to do with wellbeing.
GDP was a measure created in the manufacturing age as a means of fighting the Depression and is not capable of giving sensible signals about complex modern economy. Former president Nicolas Sarkozy commissioned a panel led by Joseph Stigiltz, a Nobel economist to look at the effectiveness of GDP. Sarkozy concluded, it created a gulf of incomprehension between experts sure of their knowledge and citizens” whose experiences of life is completely out of sync with the story told by the data”.
GDP is good at quantity and bad at assessing quality. If my food at my restaurant improves, it does not affect the GDP. If my car runs good that’s bad for the GDP. It’s better for the GDP when I have to pay a mechanic. It increases the GDP if I crash and have to buy a new car or my family has to spend to bury me if I die.
GDP has nothing to say about distribution. Averages are misleading. A rise in GDP can be caused by 1% of the population income increasing astronomically and the vast majority of the population wages remain constant. This is a global trend and Guyana is not exempt.
GDP measure only cash transactions. Voluntary work or housework, which is invaluable to a society is not measured but prostitution and transaction that’s a product of drug dealing is measured.
GDP is not a measure of wealth it a measure of income. It does not indicate whether a country can do the same next year. It lacks a balance sheet. Companies have balance sheet as well as income statement but nations don’t. Does that make sense?
GDP tell us something about a countries economy but other measures are needed. Measures of wealth, equality, leisure, and it needed to be adjusted for negatives like pollution and homicides.
Guyana needs a more comprehensive measure of development and economic activities. Bureaucracies and politicians are guided by the public acceptance of data so a better measure is needed.
Brian Ellis Plummer
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