Wednesday, March 22, 2006

Todays Thoughts

NP - Katatonia - Deliberation

I was reading this book called "10 Reasons to Abolish the IMF and World Bank" (excellent book, very thing and readable for anyone), by Kevin Danaher. There was this passage I thought was great, about how we measure 'economic growth':

Think about how we measure economic growth - by the annual percentage increase in the Gross National Product (GNP). GNP tallies the dollar value of all domestic production without regards for the effect of the transaction on society. At the end of the day, the bigger the number the better.
For example, lets say I go to a bar and drink ten beers. All the money I spend on that beer is a positive contribution to GNP. Now I'm drunk. I drive away in my car, and crash into a family in their car. They're all maimed, and require intensive medical care for the rest of their lives. The cost of the tow truck, emergency crews, the courts, any jail time I get sentenced to, and the lifetime of medical care for the victims, all count towards the GNP. Under this ridiculous system of economic measurement, oil spills, divorces and plane crashes are positive events because they are occasions to spend money and boost GNP.

Interesting, isnt it. I think its well articulated, and highlights whats wrong with such a system very well.

Posted by illogicist at 12:44 PM

3 Comments

  1. Blogger Mindazi posted at 3/22/2006 07:27:00 PM  
    So what does Danaher propose as an accurate measure of the externalities of drinking the beer?
  2. Blogger Arabian Princess posted at 3/26/2006 12:49:00 AM  
    Intresting, but then .. how does social effects are counted? how can we measure economic growth if we are not going to depend on tangibals?
  3. Blogger illogicist posted at 3/27/2006 02:44:00 AM  
    Good questions. Danaher refers to this thing called GPI - the genuine process indicator, I think it stands for (I gave the book back to the library on friday, so I cant refer to it). It basically discounts 'negative' activity from GDP, and claims a more accurate figure of positive contribution to the economy.

    Check this site for more info:

    http://en.wikipedia.org/wiki/Genuine_Progress_Indicator

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