Author Archives: Darren Martin

The yardstick for the success of an economy is the measure of its Gross Domestic Product or GDP. It is essentially the sum of all goods and services that a country produces, corrected for seasonal fluctuations and inflation.

The modern concept of GDP was developed by Simon Kuznets for a U.S congress report in 1934. President Herbert Hoover had the challenge of tackling the Great Depression with only a mixed bag of numbers that were extremely ineffectual when trying to answer the question, “how is the economy doing?”

Over the next 80 years the GDP not only became the way in which politicians, journalists and the public measure the economy, it actually defined what the modern economy is.

So what’s the problem?

The problem with the GDP is that it pretty good at measuring the things that you can see but is terrible at measuring things that you can’t see. Therefore things that are easily measured like manufacturing and monetary transactions push the number up whilst advancement of knowledge, community service, clean air, are all pretty much ignored. Even worse, the social damage caused by an activity is not factored in negatively, in fact the transactions that relate to poor health, depression, pollution, societal breakdown like divorce lawyers etc. actually push the GDP up.

In his book Utopia For Realists, Rutger Bregman highlights this point humourously but with a large dose of dark truth.

“If you were the GDP, your ideal citizen would be a compulsive gambler with cancer who’s going through a drawn-out divorce that he copes with by popping fistfuls of Prozac and going berserk on Black Friday.”

The fact that a huge chunk of government policy is formed on the drive for growth at all costs based on a measure that rewards things like carbon polluting manufacturing, deforestation, over-fishing etc. goes a long way to explaining why we live in such an unequal society.