Wednesday, August 12, 2009

This Time, We Can't Leave the Middle Class Behind

Another sad example of what passes for economic thinking ("We've got to get the GDP up!")

Eric Zencey is only the latest person to deconstruct the notion that GDP measures anything useful or important, writing in last Sunday's New York Times:

When the GDP blips up, all the pundits say "we're in recovery." As Zencey notes, this is like holding a match to a thermometer and concluding that the room is getting warmer. Or, put far more elegantly, it's a "fallacy of misplaced concreteness."

GDP has to go. It contributes enormously to the destruction of the environment by failing to account for the costs of the loss of natural capital. If we want to keep it around for sentimental reasons, it should be renamed "Gross Domestic Transactions."
Read the Article at HuffingtonPost