Gdp fetishism

"The time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being. And measures of well-being should be put in a

context of sustainability."

-Nobel Laureate Joseph Stiglitz

By:Blake AltemaraKendra SennJasmine He Jason Choe

"GDP Fetishism"

1) Wealth Distribution and Income Inequality2) Sustainability of Growth and Environmental impact3) Factoring in Debt and Leisure time to GDP4) What is being produced in an economy and why

-Wages have remained stagnant to lowered for the majority of Americans since 1979.

-GDP only went up due to the fact that the wealthiest Americans captured most of the resulting GDP growth.

Wealth distribution & income inequality

-Even though GDP has recovered since the Recession Employment has not been able to catch up.

-Unemployment was at 4.5% in 2007 and peaked at 10%.

-Gains in GDP does NOT mean gains in employment.

Wealth Distribution & Income Inequality

Sustainability of Growth and Environmental Impact

-Western Developed Economies in particular have dramatically increased their CO2 Emissions Post WWII and now currently living past our capacity that the environment can provide.

-Negative externalities include the following:1)Rising Food Prices2)Increase in Natural disasters 3)Increase in the cost of insurance4)Increase of input costs for business (i.e. Oil)

Sustainability of Growth and Environmental Impact

-Example of Negative externality due to air pollution.

-Increase in health care cost would add to GDP in this example yet the effect would not be desirable.

Factoring in Debt and Leisure time to GDP

"The resulting report amounts to a treatise on the inadequacy of GDP

growth as an indication of overall economic health. It

cites the example of increased driving, which weighs in as a positive

within the economic growth, as it requires greater production of

Gasoline and Cars, yet fails to account for the

hours of leisure and work time squandered in traffic

jams, and the environmental costs of

pollutants unleashed on the atmosphere"

-P. Goodman

minutes per day and personPaid work, Unpaid/Housework, and Leisure time

Factoring in Debt and Leisure time to GDP

-GDP growth does not show the debt imbalance that occurs for households (i.e. credit card, student loan, and mortgage debt) that can often lead to bubbles in the economy.

-When debt financed consumption happens for a sustainable period of time financial crisis occurs.

What is being Produced in an Economy


-The United States spends more on Healthcare than any other country (both per capita and as a percentage of income)

-Healthcare spending has increased GDP

-Not a desirable situation to spend money at a hospital and considered "Uneconomic growth"

-US spends nearly double what other countries do yet we have higher infant & adult mortality rates.

-Healthcare systems more efficient when spending in OECD nations in general compared to the US yet GDP does not account for this.

What is being produced in an economy:

-Four straight quarters of positive GDP growth due to reconstruction measures by the Japanese government after the resulting Earth Quake and Tsunami that hit.

-Japanese citizens would have been much better off a year and half ago without all of this reconstruction had the earthquake not hit at all.


The End

Possible questions for discussion:

1) What is the difference if any to GDP when a consumer takes on debt compared to a government?

2) Outside of the Norway example how do a country's natural resources affect GDP?

3) Our article assignment was written in 2009, how might have Joseph Stiglitz (the author) written it differently if he wrote it this week?

4) What would be a better measurement of social progress or happiness for a group of people?

5) How would politicians adjust legislation if they used different metrics outside of GDP growth?

Economy & Finance

Gdp fetishism