I guess I'm kind of confused- additional value to what exactly? The GDP in America is massive but I don't know what are the returns of a growing GDP to my experience as a human, to my family, to my friends, to my quality of life. Will I pass by less homeless people on the way to work if I work harder? Will there be less hungry children in my schools if I make the economy grow, and by how much? What "additional value" is actually occuring?
(EDIT: This is a genuine question; I'm not highly educated on economics and I'd like to know the approximate models that currently exist on how much growing the economy helps numbers like homeless population, healthcare coverage, lifespan, birth survival, food security...)
> "A better life for everyone" is economic growth, by definition (the creation of more value - whether tangible or not - given access to the same limited input resources).
But GDP only measures value that gets traded for money, not all value created. For example, if I care for my child at home for free, I'm creating value that isn't measured in the GDP. If instead I send my child to a child care facility, that is measured.
The reason that GDP growth is so important is because it raises the standard of living for those who aren’t yet born. If you accept the premise that lives in the future matter just as much as those today, then the vast majority of human lives are yet to be born and therefore deserve consideration about what to do __today__.
Even small changes in GDP growth (e.g. 1-2% per year) has dramatic compounding effects over a multi decade timeframe.
The economy grows because value is being created. If we follow your advice and create less value, economic growth measured by GDP will finally become a total vanity metric of who can create the most bullshit jobs and the most taxable transactions without creating any output. It stops being a good measure for wealth creation.
A parent leaves their kids with their grandparents during the day = $0 GDP.
A parent drops of them off at daycare = +$X GDP.
Just because people were not working in the economic system does not mean there was not real value creation.
My mother sometimes worked, sometimes did not. The difference in the quality of our lives was quite noticeably more negative when she worked. That 'negative value' is not measured in the GDP - only the 'positive value' of her income.
I'm not saying that she shouldn't have, and certainly not that there should not have been mass reforms - but it's important to remember that much of 'real consumer surplus' is simply not measured in the GDP.
Policies that focus on the GDP tend to overweight measurable economic activity - while other elements are externalized and suffer.
The environment, community, social cohesion - they all have value to us but because we don't put numbers behind them, they don't fit into the equations very well.
Increase in GDP also brings very tangible improvements in income, life standards, modernization of cities, new technologies and a lot more to be happy with.
It depends. If it generate any kind of money exchange it counts to GDP. But there are many solutions that don't generate growth (like walking to work instead of using other means of transportation)
The way we measure growth is nuts. the best way to acknowledge that is to watch this speech from Robert F Kennedy
I would argue that raising GDP indirectly allows easier access to clean water, food, solid housing, vaccines, etc. All of those things allow for better quality of life. Where I agree with you is in the spiritual or philosophical sense of “quality of life”—aka happiness or fulfillment. At a certain point, no, money does not increase happiness or fulfillment. But it does increase quality of life.
I’ve often had this question about GDP. Does the overpriced US healthcare system contribute to it? Not throwing shade, just genuinely curious about GDP’s value as a measure.
Obviously more GDP means more resources, the question is whether it solves issues like homelessness "by default" as suggested by the OP I responded to. My opinion is that it greatly depends on the dominant cultural narratives of the general public and of the ruling party.
In the UK we've seen fairly reasonable GDP growth in the last decade but have also seen a large overall increase in statutory homelessness acceptances over the same period [0]. That's just the official records: the Crisis charity estimates that the number of "hidden homeless" single adults has according to government estimates increased by a third over roughly the same period [1]. The reasons for this are generally given to be the lack of affordable housing being built, and welfare reforms such as capping the housing allowance.
The cultural narratives in play here are that a prolonged austerity was required in order to salvage the economy, and that our welfare is subject to significant levels of stress from deliberate "benefit cheats" or "welfare mummies". Both of these are contentious, as far as I've been able to gather.
It comes up commonly in discussions about how poor GDP is as a measure of societal wealth. For example, if we would strike a bargain to do each others' laundry for a trillion USD per year each, the GDP would "magically" go up by two trillion compared to if we would just do our own laundry. However, no additional value is created compared to the current situation.
Maybe a better question is if it increases or decreases the aggregate wellness of the individuals in our society. (Using a sort of utilitarian metric to motivate our actions.) Maximizing GDP does not necessarily correlate with what we actually care about improving as a collective.
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.
It is only one measure of success, but it is not misleading. You can just use it and 6 other measures. Then if infant mortality goes way up you can still say let's figure out how to manage that and if it costs some gdp, that's fine. In fact real policy is saying we should spend more of that gdp on prenatal care for example. Doing that will neither make gdp go up or down.
And it's unclear who they're even talking about here. In the democracies politicians hardly talk about it at all. It's usually healthcare, some group is bad, or something should be regulated differently (like energy).
People don't generally starve in countries with high GDP - when they do, it's a distributional problem and a flawed social system at work.
If we define GDP as the totality of transactions people are willing to make, then an inflation adjusted growth means that the average citizen will enter more transaction of a higher subjective value. Therefore (again, assuming inflation and the price of basic necessities is controlled for) it stands to reason more of those transactions will be directed towards the basic necessities.
So, generally, higher GDP means fewer people starving, with the distributional and inflation caveats mentioned.
(EDIT: This is a genuine question; I'm not highly educated on economics and I'd like to know the approximate models that currently exist on how much growing the economy helps numbers like homeless population, healthcare coverage, lifespan, birth survival, food security...)
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