BERLIN – Gross domestic product is the most powerful metric in history. The US Commerce Department calls it “one of the great inventions of the twentieth century.” But its utility and persistence reflect political realities, not economic considerations.
Most of us understand GDP as the measure of a country’s economic output, expressed as a single monetary value. But it’s more than that. GDP, and how fast it is growing, is the universal indicator of development, wellbeing, and geopolitical strength. Positive GDP growth is every government’s goal.
But GDP has well-documented shortcomings. For example, short-term GDP grows as a result of productive activities that pollute or degrade the environment, but not as a result of unpaid housework, childcare, and other obviously valuable activities that it barely accounts for (if at all).
Fundamentally, GDP is a materialistic concept: higher production is the sole imperative; the more goods produced and services rendered, the better. Whether any of this actually makes people better off is a different matter entirely.