April 15: Why GDP is not an effective measure of economic growth.

Read the following two articles and post a response to one of the two questions that follow. You must complete your post by Tuesday AM, April 14.

Greening-the-Gross-Domestic-Product

(1) In “Voices: Greening the Gross Domestic Product,” Garrett C. Groves and Michael E. Webber point out that policy makers are often pressured to choose policies that prioritize either the economy or the environment. Groves and Webber argue that this is a false choice – that policy makers should prioritize both.聽 What are the problems with the way in which Gross Domestic Product is currently measured that make this a challenge?

The GDP Myth

(2) In “The GDP Myth: Why Growth isn’t always a good thing,” the authors cite several sources of growth that have had negative impacts on economic growth. Identify one of the reasons they site and explain why this source of growth is actually harmful to the economy.

_________________________________________________________________________________________________ Optional extra credit assignment (for those who wish): answer the following question in a typed one-page short essay. It should be submitted by April 29.

According to Rowe and Silverstein, the assumption about GDP growth among most economists is that “It makes no difference where the money goes, and why. As long as the people spend more of it, the economy is said to ‘grow.'” Thinking back to earlier class discussions about the environmental consequences of unplanned, unrestricted growth for its own sake, what are some of the problems with this view of growth and why?

8 thoughts on “April 15: Why GDP is not an effective measure of economic growth.

  1. Basmattie

    Greening the Gross Domestic Product:

    Currently GDP is calculated as the value of all final goods and services produced in a country during a given year but does not take into consideration a country鈥檚 CO2 emissions, its pollution, its depletion of ecological assets and/or its deteriorating infrastructure.
    Some of the challenges include:

    路 There is a lack of the economic tool to measure all these parameters or
    路 An indicator that incorporates economic robustness and economic wealth into a single metric.
    路 There is a challenge of dividing the natural environment into quantifiable units and giving each a market share and determining a cost or value.
    路 There is a lack of agreement among policy makers as to how to place a dollar value on the planet on both its resources and its growing pollutants.
    路 For a green indicator to be created, a price will have to be put on common goods such as the atmosphere, the oceans and other resources and that means that the resources will have to be prioritized.

    Reply
  2. Solomane Fane

    (1) In 鈥淰oices: Greening the Gross Domestic Product,鈥 Garrett C. Groves and Michael E. Webber point out that policy makers are often pressured to choose policies that prioritize either the economy or the environment. Groves and Webber argue that this is a false choice 鈥 that policy makers should prioritize both. What are the problems with the way in which Gross Domestic Product is currently measured that make this a challenge?

    In the article 鈥淰oices: Greening the Gross Domestic Product,鈥 Garrett C. Groves and Michael E. Webber raised some problems in the way the GDP is measured today.
    The Gross Domestic Product refers to all final goods and services produced in a country during a given year only; and does not take into account a country鈥檚 carbon dioxide emissions, its pollution, its depletion of ecological assets and/or its deteriorating infrastructure. As stated by the authors, the policy makers should chose policies that prioritize both the economy and the environment. According to them the environmental issues are not taken into account because policy makers lack of:
    鈥 The economic tools to do so,
    鈥 An indicator that incorporates economic robustness and environmental health into a single metric.
    They add 鈥淪uch an indicator, if it existed, might be called the Green GDP.鈥

    Reply
  3. Will

    Gross Domestic Product, GDP for short, is a monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Funny thing is, people rely on this number to signify prosperity and growth, Wrong! Wall street loves to hear this number quarterly or yearly, but they never want to know where that growth came from. So how did our country actually grow when we are $18 Trillion in debt!? But back to the question at hand.

    “The GDP Myth: Why ‘growth’ isn’t always a good thing?” hit it right on the money with many reasons. One in particular brings me back to the $18 trillion I mention earlier, our debt problem. This article was written in 1999 and consumer debt has more than balloon since then. The consumer debt then was $1.5 trillion. The writers discuss how halve retails sales in that day were done with $1.4 trillion in debt. Now of course there’s the interest on that debt. GDP adds in those retails sales, but we not done! If those consumers can not pay their debt, you have debt collectors on your tail, meaning more jobs to hunt down folk who bought items they could not afford, those debt collector jobs, services, add to the GDP, growth! Now when those people with debt get tired of debt collectors chasing them, they turn their luck to bankruptcies, which need lawyers to assist, another number that adds to the GDP, that’s more growth. While all this is happening, the hundreds of banks out there are continually sending more and more credit card solicitations, meaning additional future debt…and endless cycle of financial doom, I mean growth!

    Reply
  4. Sergey Bolotov

    In 鈥淰oices: Greening the Gross Domestic Product,鈥 Garrett C. Groves and Michael E. Webber point out that policy makers are often pressured to choose policies that prioritize either the economy or the environment. Groves and Webber argue that this is a false choice 鈥 that policy makers should prioritize both. What are the problems with the way in which Gross Domestic Product is currently measured that make this a challenge?

    The GDP is the value of all final goods and services produced in a country during a given year. However, if we take into account a country鈥檚 carbon dioxide emissions, pollution, depletion of ecological assets, deteriorating infrastructure and so on, the total GDP will be lower. The main problem, in my opinion, is that the GDP growth is what desired by economy and governments worldwide are striving to promote GDP growth. The next problem is to price and count the natural environment, the pollution and the waste we produce. Also, our elected officials haven鈥檛 felt enough pressure to make changes towards greener economy.

    Reply
  5. C.Neri91

    The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period. According to the article by Groves and Webber however, GDP does not take into account a country鈥檚 carbon dioxide emissions, its pollution, its depletion of ecological assets and/or its deteriorating infrastructure. Although Groves and Webber believe that these factors should be included in the GDP number, there are a few challenges that may get in the way of this. One obstacle is the lack of having tools to measure the levels of waste and emissions that are actually produced. Another obstacle is finding a dollar value for the waste and emissions that are being created. Lastly there is a clear cut argument as to whether these value’s should be included in the GDP value. If there wasn’t an argument on this topic then we wouldn’t even be talking about it.

    Reply
  6. lvilardi36

    In 鈥淰oices: Greening the Gross Domestic Product,鈥 Garrett C. Groves and Michael E. Webber point out that policy makers are often pressured to choose policies that prioritize either the economy or the environment. Groves and Webber argue that this is a false choice 鈥 that policy makers should prioritize both. What are the problems with the way in which Gross Domestic Product is currently measured that make this a challenge?

    GDP or gross domestic product is currently being measured by the value of all the final goods and services produced in a country during a given year. According to Groves and Weber this method has many flaws because it fails to calculate many this such as a country’s carbon dioxide emission, amount of pollution or even depletion of natural resources. This method of counting GDP recording a counties total assets and revenues without recording the countries expenses. This being said the new proposed green GDP would also be very hard to calculate being as it states in the article how do you put a price on the amount of damage a storm does or even a price on the amount of pollution. In my opinion its very important this these green aspects are incorporated into a countries GDP. Like Nobel laueate Joseph Stiglitz stated ” What we measure if what we strive for”, so if we measure the amount of pollution a country produces then they will strive to lessen it.

    Reply
  7. Bob Mendez

    Q1. In 鈥淰oices: Greening the Gross Domestic Product,鈥 Garrett C. Groves and Michael E. Webber point out that policy makers are often pressured to choose policies that prioritize either the economy or the environment. Groves and Webber argue that this is a false choice 鈥 that policy makers should prioritize both. What are the problems with the way in which Gross Domestic Product is currently measured that make this a challenge?

    The Gross Domestic Product has been used for decades to illustrate the production of goods and services manufactured in each individual year by a country. The problem that Garret C. Groves and Micheal E. Webber address is that the negative environmental impact from the production is not being taken into account. The negative impacts include a great increase in carbon emissions and a series of unpredictable weather patterns caused by the depletion of natural resources, and an increase of waste and pollution throughout the century. Both Groves and Webber suggest that policy officials need to be proactive and take notice of this global issue as soon as possible. Policies should not only prioritize economic growth but the environment as well. The term ‘Green GDP’ is a more refined and accurate way of including the environmental ramifications to the final production of the goods or services manufactured by a region. Metrics of global harm need to be weighed in the overall GDP that has been used for many years.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *