this post was submitted on 08 Oct 2024
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During WWII they invented the concept of gross domestic product to quantify a country's ability to wage war. The higher the GDP, the bigger the military it could support.
GDP is a measure of how much economic activity there is. If I pay you and then you pay someone else and then that person pays me the same amount we've increased the GDP without actually doing anything. So the US, knowing this was their key performance indicator, set about increasing GDP.
So they make everyone buy a car, then gas, then service, then insurance instead of building rail infrastructure. The same goes for child care: If you make it so both parents have to work and pay someone else to watch their kids that's a much bigger boost to GDP than one or even both parents being able to stay home and raise their kids. Having everyone in a suburb have to buy their own lawnmower and trimmer and grill and stove and washer/dryer and dishwasher also boosts GDP way more than sharing things.
Plus there's the fact that cars require a lot of the same technologies and factories as a lot of war materiel. If we were ever to be in another global conflict we'd need to build all the guns and trucks and uniforms at home, and without a strong car industry we'd have to start a lot of that from scratch.
But we've got the biggest GDP in the world so I guess that's something.
You're kind of right that GDP is strictly a measure of economic productivity, and a lot of people look at it to represent a lot of other things like the size of the economy, the health of the economy, how well citizens are doing, etc.
However, you are dead wrong on this point:
It's possible that, you've "increased the GDP without actually doing anything" if you're each not doing anything actually useful (see the broken window fallacy). However, in most case, each of those steps resulted in a useful service or product.
I dunno if I'd say that, really. "useful service or product" is inferring a lot about the context in which these transactions are done, it doesn't really open up the box, there. Is gambling a useful service to have access to, for instance? What about, say, setting everyone about buying a big suburban house, a car, running out a ton of asphalt to these places, putting out utilities to them that are both financially insolvent in the abstract and also take up too many resources for what they are? Like, I dunno, if we're considering the alternatives, there, which incur much less consumption, and thus, much less trade, the alternatives that cost a whole lot less, I would say that the idea that this is a useful measurement really at all begins to totally fall apart. I dunno. I maybe wonder if, say, free healthcare might be thought to decrease the GDP of a country simply because less money is being thrown around.