> How do you answer their
> fundamental criticism. That calculations
> of GDP count all interactions as positive (e.g
> the more car crashes the
> better GDP)
>
The original quote from the article was from Ralph
Nader and was, "Every time there is a car
accident, the GNP goes up." You used the very
subjective word 'better' in your paraphrase but
the reason that I point this out is the
misparaphrasing is a good example of the
fundamental problem. I think that the author of
the article has goods and services confused with
'good' things and 'service' to your fellow man or
woman. GDP (which is more common today than GNP)
is simply a measure and it is not meant to pass
judgement on what it measures. If you weigh 80
kilos and you eat a kilo of tofu you will weigh 81
kilos. If you eat a kilo of potato chips you will
also weigh 81 kilos. Which is better? that is a
more subjective question that has to be answered
by taking other measurements like the amount of
protein intake, calories, cholesterol, etc. More
importantly, the answer to the question "which is
better?" requires an agreed upon definition of
better. None of this changes the fact that in
either case you will weigh 81 kilos which can be a
useful measurement in itself. Shall we throw out
the scale and the concept of weight along with it
just because it can't tell us the difference
between good and bad food? Likewise, if 0.5% of
the automobiles produced in one year are to
replace ones that have been destroyed in auto
accidents shall we strike these from the measure
of total output because we have determined auto
accidents to be a bad thing? GDP is used by
politicians as a general (the key word is general)
measure of whether their policies are working.
More importantly, (and probably more legitimately)
it can also be used by the Federal Reserve to
determine if the economy is growing so fast that
inflation might become a problem. If you disagree
with their interpretations of the numbers that
doesn't mean that we should throw out all of the
numbers or redesign economics. If there are too
many car accidents then there are other numbers
designed to capture this fact and they can be used
to answer the problem directly. Economics is a
science which, like many of the natural sciences,
is our best attempt at trying to measure something
that exists naturally. As soon as people began
living in groups, the economy meme was born. It
would still exist even if we threw out all of the
text books and killed all of the economists. The
problem is that the economy is a CAS (complex
adaptive system) much like an ecosystem in biology
or the brain,etc. Because of this it is
notoriously difficult to understand. The present
state of economics is our cummulative best attempt
at understanding but it is far from perfect.
Economics is not designed, however, to adress our
social problems. The author of the article has
some valid complaints but in his lack of
understanding he has decided to attack economics
and has amassed a large number of ad hoc quotes
taken out of context to try and underscore his
proposed solution to our social ills through a
revamping of economics.
> there is no demand for food in India because
> people haven't the money
> to buy it. That's crazy! But in traditional
> economic jargon, that makes
> sense."
> --- Hunter Lovins, Rocky Mountain Institute
>
This is another tongue in cheek comment that is
trying to imply the ridiculous notion that
economists believe that peole in India have no
need of food. Come on. Demand in the economic
sense is simply used to express the very real
relationship between the price of a good, the
amount of good that is being produced and the rate
at which the good is being consumed. The also very
real problem of hunger in India will not be solved
by throwing out this mathematical realtionship
(which, by the way, exists whether or not we have
named it or have understood it) or even by
renaming what the economist means when he says
demand.
Jeff