Utopia for Realists: And How We Can Get There

By many existing metrics of economic measurement, environmental and geopolitical disasters are actually a good thing because they provide an opportunity for rebuilding and thus a degree of growth impossible under normal conditions. Common sense suggests, however, that this assessment is flawed, and the enormous destruction and instability is not worth the increase in economic activity. This problem speaks to the weakness of Gross Domestic Product (GDP) as the principal measurement of economic activity. GDP is meant to measure the overall production of goods and services within a country, but it misses many important contributors to social welfare overall. It does not account for unpaid labor, or illegal businesses which nonetheless contribute to economic activity—in some countries quite substantially. In addition, mothers breastfeeding their children has enormous economic value, but few countries have tried to quantify it. Technology accounts for a smaller fraction of GDP as it becomes more advanced and thus cheaper. A person with many social problems contributes more to GDP than a healthier one, yet GDP takes no account at all of inequality. The banking industry accounts for a huge portion of GDP even though it does not actually produce anything.

All of this reflects a preoccupation with economic growth that is out of step with most people’s economic reality.