Posts Tagged Inflation

Why GDP is False Accounting

Why GDP is False Accounting.
GDP is the Gross Domestic Product of a country and is calculated by adding together the nominal value all economic activity (including inflation from property speculation & money spend on repairing the damage caused by polluters) of a country and hopping it will measure economic wellbeing so investors/ governments can compare their performance with other countries & over time.
Not all economic activity is beneficial so should be subtracted from the totals.
• The cost of collecting & processing all waste produced by the production & distribution systems
• The cost of health care to restore everyone back to the health they had before the economic activity
• The cost of dealing with pollution such as oil spills, mining disasters or contamination of land/water
• The cost of dealing with “natural disasters” like flooding resulting from man’s activities such as deforestation, urbanization or negligence
• The cost of dealing with high crime rates
• The cost of compensating all that are harmed by any of the above

GDP gets inflated
• when businesses extract more profit by raising their prices above costs eg drug & utilities
• when a few benefit from speculating in the land, property, commodity, stock or finance markets at the expense of the majority
• and when governments increase inflation by issuing more money (that they borrow from private companies called banks) to stimulate demand.

GDP does not include the value of voluntary work (including women’s domestic work) nor the value of those produce their own food. The value of economic activity is determined by those who control the markets and undervalues the work of those who are not empowered to choose the type or location of their work.

As Robert Kennedy said before being assassinated in 1968 “GDP does not measure productivity, income, wealth, health, wellbeing or life expectancy of people nor the sustainability, inequality & injustice of society so measures nothing of importance” so should be scraped and governments made to use True Cost / Benefit Analysis as a tool to improve their activities.

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