Alright, so I am gonna crunch a few numbers here.
GDP: The Holy Grail of governments seeking re-election, political opponents and journalists; The cradle of the Information Age! Master of the numbers, the Kingmaker!
I beg to disagree.
It’s high time that we stopped singing praise about this said Yardstick of prosperity, simply because it is no longer the comprehensive index that it was 80 years ago. No, it’s not the fault of the GDP; It’s everyone’s.
Like all internet armchair revolutionaries, I’ve made my customary opening outrageous statement. Now to start talking fact and elaborate on what I really want to say.
It was a depressed 1931 Washington morning and US President Herbert Hoover needed numbers. He had an assorted bag with him, ranging from indices stating share prices, the volume of road transport with his trusted blast furnace index (an index that pinned down on the amount of steel produced in the country), but it simply wasn’t enough. Everyone knew that there were more homeless people on the street, that unemployment was as high as ever, and that things were bleak. But nobody knew exactly how bad it was. Nobody had any numbers. Many believed prosperity was right around the corner, but nobody knew when or how it would come?
How much stuff could we make?
A brilliant Russian American economist was tasked with dealing with this problem. Simon Kuznets spent the next years laying the groundwork for what would become known as the Gross Domestic Product. How much stuff a country within its borders could make. It would show the number of jobs the country has and would be able to offer, the exact value of the stuff made, and be the indicator of growth and progress everyone wanted at the time.
Overnight, the GDP became the yardstick portraying the sheer might of a country in the new economic world it created. The British had sloppy numbers to work with and even in 1940, Hitler did not have the right figures to fire Germany to its peak production. By the time he got his numbers right, it was already done. The GDP, the most undermentioned player in World War II, had won the game for the Americans.
It changed the world.
Suddenly, the word “economy” took a completely different meaning. Prior to this, many scholars would agree that the term encompassed the meaning of “society” itself. Now, it’s almost a concept so familiar yet very alien. We know how an economy is doing, how it’s going to change in the next 5 years, where it’s predicted to go, but the layman really doesn’t know what an economy really is. Today, the economy is a beast that moves on its own. The leaders can maybe tame it, ask it to move here or go there. Journalists take pictures of it and question the leaders on their taming policies. They check whether the beast is healthy, growing and well-fed. That’s the social system at play right now.
That’s all great until we start looking at the GDP from anything but the so-called economic view. The GDP is a very poor index for understanding the social standpoint of a country. Nor does it rightly encompass human progress over the past decades.
It is not inclusive of volunteering, community service, or boundless gains in knowledge. Free services are a huge headache for the GDP. Wikipedia, which is a completely free knowledge platform, has not added a cent to the GDP compared to the amount of knowledge it disperses. The same can be said for our modern-day devices, which are getting much more complex but at the same time cheaper. The rise of ultra-cheap ultra-efficient Chinese products leaves the GDP with a huge question mark. The ideal citizen these days is a corporate employee, an abusive alcoholic who goes to rehab in the evenings in her Maserati, picking up McDonald’s takeaway on the way to meet her cheating husband with whom she’s going through a nasty divorce.
But these are not huge problems, are they? These could be classified as institutional shortcomings of the GDP but not enough reason to question the existence of the whole index itself, which is the cornerstone of the society we have built?
No, that merit goes to another argument: The Climate Catastrophe
“The problem with the gross domestic product is the gross bit”
A tree in this world has absolutely no value until it’s chopped and sold as timber. That’s exactly the attitude that has led to this situation now. It is no surprise that three of the US and China, two of the largest economies of the world, also happen to be the largest carbon footprint (followed by India). One of the biggest reasons stated by the US and India for not adopting more sustainable policies within their borders is the fear of losing their economic foothold. Then we have hypocrites like Canada who pander to the pro-environment trend and then build pipelines to extract more oil. No country has been bold enough to address the transport or the energy industry for its emissions, solely fearing of the vice grip they have placed the economy under.
There have been multiple movements by economists, think tanks and other organizations to find a plausible solution to this mess, but none have done anything noteworthy so far. Some have named a few substitutes to the GDP, like the Happy Planet Index, Human Development Index, or the Genuine Progress Index. Bhutan uses something very radical, called Gross National Happiness. It uses indicators like spirituality, mental and physical wellbeing and social presence to determine how happy its citizen is. However, it very conveniently avoids the dictatorship of the Dragon King in the small landlocked nation.
I am not giving answers to anything, just posing more questions, challenging a norm set in a different era, an era of war and bloodshed. Maybe in this new sustainable era, we are heading to, just one index might not prove enough. Maybe we would need a dashboard of indices to help us determine what’s right. Maybe we’d come up with another unified index that solves the GDP’s numerous problems.
That’s the issue. We do not know.