• MrMakabar@slrpnk.net
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    9 months ago

    And that is why GDP is such a badly flawed metric and why we should not use it as the one and only way to measure progress.

    • Poggervania@kbin.social
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      9 months ago

      GDP just says how well a country is doing and is a good summarization for how imports and exports are doing. However, it also takes into account military spending and real estate, so you could argue the GDP can be inflated via those two measures (to a degree) to look better.

      Consumer Price Index does a better job of showing how well the economy is doing for its citizenry.

    • GenEcon@lemm.ee
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      9 months ago

      Economists of course know of these flaws and use GDP accordingly. Its for example a great measure how complex the economic flows are.

      Of course its known, that countries can easily manipulate the data, for example China, who retrospectively changed their measuring of the economic data of 2022 and increased their GDP growth 2023 that way to 5.2 %. Or Russia, who spent an enormous sum for arms production, financed by debt, which of course led to a higher GDP at the cost of debt.

      Nevertheless, if you consider these kind of ‘tricks’, its a good measure for growth year on year. But this growth can mean two things: higher living standards for its population or a more complex economy.

      Its the same with the BMI. Its a good measure in general, but looking at a specific individual, its a highly deceptive measurement.

      • Rodeo@lemmy.ca
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        9 months ago

        But this growth can mean two things: higher living standards for its population or a more complex economy.

        “A more complex economy” is a great euphemism for the rich getting richer while the masses languish.

        • KevonLooney@lemm.ee
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          9 months ago

          That’s not what they mean. “More complex” means that you start paying for something that you used to do yourself, like paying a cleaner instead of cleaning your place. Or paying for takeout instead of making food. Now there are more transactions happening in the visible economy but you may not be better off.

        • GenEcon@lemm.ee
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          9 months ago

          More complex means that you focus on what you can do best and pay others to do what they can do best. Instead of growing your own wheat and pottery, you and others pay a third person to get a tractor and you can instead focus on doing pottery and sell them and buy wheat. This way more gets produced.

          And while the wheat you grow yourself isnt part of the GDP, the wheat the third person grows for you, is. Therefore a more complex economy significantly boosts the GDP more than increased productivity. So if you produce your own wheat and your own pottery and your neighbor does the same, the GDP is 0. If you sell your pottery and your neighbor his wheat, both get added to the GDP.

      • itsnotits@lemmy.world
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        9 months ago
        • It’s* for example
        • Of course it’s* known
        • it’s* a good measure
        • It’s* the same with the BMI
        • It’s* a good measure
        • it’s* a highly deceptive measurement