Toronto Star: There's more to life than GDP

There's more to life than GDP
Canadians need a new, holistic measure of societal progress that goes beyond economics

Jun 10, 2009 04:30 AM

Roy Romanow


For many years – and particularly since the onset of the global recession – Canadians and people around the world have been bombarded with news about the gross domestic product. Numbers have been issued and then updated. Predictions have been made and then revised. So powerful and predominant has GDP become, that the New York Times referred to it as "a celebrity among statistics, a giant calculator strutting about adding up every bit of paid activity ..."

But what is GDP? What does it tell us about how well or poorly we are doing as a society? More important, what does it leave out? And what are the consequences of this omission?

GDP is simply the value of all goods and services produced in a country in a given year. It was first introduced in the U.S. during the Great Depression as a way of measuring how much and how quickly the U.S. economy was shrinking. Over time, GDP has emerged as a surrogate for wellbeing, something it was never designed to be. Even the "father of the GDP," Nobel laureate Simon Kuznets, recognized that "the welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP."

GDP makes no distinction between economic activities that are good for our wellbeing and those that are harmful. Spending on tobacco, natural and human-made disasters, crime and accidents, all make GDP go up. Conversely, the value of unpaid housework, child care, volunteer work and leisure time are not included in GDP because they take place outside of the formal marketplace. Nor are subtractions made for activities that heat up our planet, pollute our air and waterways or destroy farmlands, wetlands and old-growth forests. The notion of sustainability – ensuring that precious resources are preserved for future generations – doesn't enter the equation. .........(more)

The complete piece is at: http://www.thestar.com/comment/article/648141