Screw GDP! The Liberal Agenda Is More Important!
Every morning I check a series of news outlets looking for something to write about for the day, and hope for some really interesting economic headlines. Really, if I had it my way, we’d discuss nothing but economics here. I try to keep it topical and interesting and exciting though, so we end up discussing the wide range of topics you see in the categories list. Today though, I saw a headline “Why we should abolish the GDP” from the Washington Post, and was just thrilled to find a liberal economist in need of a good thrashing.
GDP stands for Gross Domestic Product. It is an economic indicator of the sum total of all final goods and services produced by an entity’s economy within a given a period of time. It is certainly not the only thing that matters, but it’s still a pretty important indicator. So why do Sean McElwee and Lew Daly at the Washington Post want it abolished?
Because they prefer a thing called GPI, or Genuine Progress Indicator. A leftist economic abomination that attempts to measure “progress” by what’s being done to solve “problems” like inequality, climate change, and 24 other economic and social measurements. In their opinion this gives a more complete economic outlook, allowing, or rather, forcing, governments to do more to address these issues they think are very important.
Maryland, Oregon and Vermont have already begun using GPI to measure their economy. What they found was that while they were performing well economically as measured by GDP, the GPI gave them a more negative outlook because environmental and social indicators lag.
You can see why this appeals to people who despise the rich and generally want to ruin everything good in the world. Looking at a chart of GDP vs. GPI shows economic output overall increasing steadily, while “progress” stagnates. This makes the perfect excuse for governments to step in and stunt economic growth, in the name of “progress”.
Cap & Trade, socialized medicine, income redistribution, and other left wing economic policies would inverse this chart. Bringing GDP down, and “progress” up. Economic illiterates cheer for this kind of thing like Paul Krugman cheers for hurricanes and broken windows.
That is, until GDP experiences stagnant or negative expansion. When you sacrifice economic output in favor of “equality”, you rather quickly find there to be less incentive to foster economic growth. That combined with structural debts and deficits, along with an ever expanding debt based money supply, quickly leads to catastrophe because the entire system depends on perpetual growth.
The Federal Reserve aims for 2% annual inflation of the dollar. In theory, the way to do this would be to print money at a rate 2% greater than the increase in available goods and services. That methodology would be too honest for the Federal Reserve, they barely even acknowledge that printing money has any effect on inflation. Rather, they measure inflation by the CPI, or consumer price index. Instead of measuring inflation by the increase in the money supply, they measure inflation by the increase in retail prices. Which retail prices they measure is constantly shifting to keep inflation measurements downwards, which justifies an ever increasing amount of money creation.
The US Federal Government perpetually spends more money than it has, largely in the name of addressing all these social factors our liberal economist friends are always complaining about. They do this based on the notion that the economy is perpetually expanding, and can be paid for later.
Just imagine using those models in an economy that discourages economic growth. The total amount of goods and services produced (GDP) slows or even retracts, while the money supply and national debt continue to expand. Hyperinflation and default quickly become imminent. Then your life story quickly starts to look like the end of Atlas Shrugged, only you have no Galt’s Gulch to escape to.
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