GDP growth is not indicative of a higher standard of living. It just means more things are part of the economy.
If I grow my own food and play board games with my family, it doesn't boost the GDP. However, if I go to MacDonald's and then send my kids to daycare while I go to the movies (3 economic transactions), it increases the GDP since those services are now commoditized.
Increasing the GDP might boost the standard of living in really poor countries, but there's a healthy ceiling until it becomes growth for the sake of growth.
"GDP growth is not indicative of a higher standard of living. "
Whoa there, GDP is absolutely correlated to the standard of living, this is not contentious. That it's not a direct measure, true, but it's definitely 'a' measure. Moreover, growth or contraction in per-capita GDP in a nation is definitely correlated with increasing/reduced economic prosperity even in 'rich' countries. Yes, many things are 'not measured' particularly leisure, but most things of material value are. The GDP is one of the 'least bad' measures we have.
Our comments aren’t conflicting. I was mostly saying that at some point the continued growth of the GDP means turning every aspect of human interaction into an economic interaction, where everything becomes commoditized.
Home cooked meals or housing my aging mother aren’t impactful on the GDP like supporting the restaurant and retirement home industries, but I’d say it’s a healthier way of life.
A sleepy town may not be booming but I’d prefer it to a high GDP output city.
Yes, I see what you are saying, but those 'high GDP output zones' are where a ton of the surpluses get created. A million 'happy little towns' won't create a lot of the very specific things we need and depend on for our standard of living to be high. We depend very heavily on 'exceptional organizations' and those things involve inherently greater dedication than many other jobs. For example, I don't think that Tesla would ever happen were it not for the fairly intense work of the leadership there, and they are 'forcing' the market on electric cars. A lot of things behind the scenes like this. Admittedly, on the other hand, a lot of jobs are pushing paper ...
Two macro economists are taking a walk in the park. They come across a pile of dog shit and one says to the other ”I’ll give you $500 if you eat that.” To his surprise, the other complies. The money is handed over. After a while more, they come across another turd. The dare is repeated, the other way around. One says to the other, ”you know I can’t help but feel like the only thing we got out of these transactions is that we’ve both eaten dog shit.” The other shakes his head and replies ”The GDP has gone up by $1000.”
If I grow my own food and play board games with my family, it doesn't boost the GDP. However, if I go to MacDonald's and then send my kids to daycare while I go to the movies (3 economic transactions), it increases the GDP since those services are now commoditized.
Increasing the GDP might boost the standard of living in really poor countries, but there's a healthy ceiling until it becomes growth for the sake of growth.
reply