GDP does not give the full picture
Imagine this: the President of Cashewland (my favorite snack) has approved the creation of an oil refinery that aims to create thousands of jobs for the country. The project has generated excitement and momentum throughout the country as an enormous amount of money is expected to be generated and “trickle down” throughout the economy to the poorest citizens.
As an entry-level employee fresh out of college you are excited about the prospects. Yet events don’t go as expected. While you are making a decent salary, you notice that some things are off. Your schedule makes it very difficult to socialize with your friends after work. You can’t attend hockey games anymore or get daily jogs in. Even your coworkers who are parents must work an insurmountable number of hours to provide for their families.
You also hear that petroleum dumps from the refinery are being dumped into a nearby lake, making the residing community sick and destroying local ecosystems. Due to continuously working shifts, your mental health has gradually taken a toll and you think about potentially leaving the refinery. Yet, you have bills to pay and decide to remain as an employee. Besides statistics show and policymakers state that the GDP is rising.
Mainstream economic dogma holds that the gross domestic product (GDP) is the main determinant of economic growth for any society. For many of my non-economics majors out there, the gross domestic product can be defined as the “total monetary or market value of all the finished goods and services produced within a country’s border in a specific time period.”
In summary, it functions as a general scorecard for the performance of a country’s economy. The modern concept of the GDP was first created in 1934 by economist Simon Kuznets to make sense of the Great Depression and its overall impact on the American economy. As a simple indicator, it proved effective and was adopted in 1944 as the main tool for measuring a country’s economic growth.
However, Kuznets cautioned against using it as a single measure of human welfare due to its potential to vastly oversimplify economic issues. Despite these warnings, successive policymakers would view higher GDP numbers as the sole indicator of human well-being. In part, individual workers would view accumulating personal wealth through productivity as the main goal in life.
With this extensive focus on productivity, the GDP would represent a manifestation an overtly materialistic society that prioritizes the accumulation of material wealth over physical, mental, and spiritual health. Excessive indulgences in materialism leads to a rise in individual selfishness that erodes the bonds that hold us together as a community.
Currently, our world is plagued by the corrosive effects of climate change. Data shows that human activities — the exploitation of natural resources and the continual burning of fossil fuels have been the dominant cause of this crisis. Inequality also persists as the wealth-income gap has dramatically widened over the past 40 years in all countries. Additional issues remain prevalent in our daily lives such as racism, sexism, and political polarization. Yet the GDP cannot and is unable to measure these issues. In fact, the GDP would show that everything is fine and there is no need to worry. GDP would still rise and decrease so all will naturally be well. As a society, we chose not to see the full picture.
GDP is an inadequate measure of the full human being. As an economic indicator, it does not take into consideration that human behavior is not wholly calculated and mathematical but rather spontaneous and spiritual. To echo the Rule of Saint Benedict, “To be content with living simply and finding balance in work, prayer, and leisure.”
Like many other thinkers of his time, Saint Benedict understood that humans are holistic, and mechanisms must be in place to partake in this behavior. Applying this tenet to our times, Saint Benedict would admonish us all to cultivate a balanced lifestyle that distinctly separates our professional from our personal lives. This clear separation would allow us to care for other things that matter in life such as spending time with family and friends, exercising, listening to reggae music, or taking leisurely walks on the beach. This balance would allow for a strengthening of communal bonds which will allow for the gradual breakdown of our excess materialistic culture.
The philosopher Aristotle coined the theory of the “good life” which was based on four principles: (i) virtue (ii) fulfillment (iii) excellence and (iv) happiness. Aristotle believed that the goal of humankind was to reach this lifestyle. The creation and utilization of alternative measures of human development would allow policymakers to craft better economic policies that allow people to work productively while cultivating a balanced and healthy lifestyle. In other words, this would allow for a multidimensional economy that strengthens our chances of attaining the “good life”.
GDP does not need to disappear. In fact, I believe that it should remain a main indicator of a country’s economic productivity. However, for the current issues we face as a planet, it must not be the driving metric that determines how we must run our lives.
Liam Miller is a senior economics student at the College of Saint Benedict and Saint John's University.
This article originally appeared on St. Cloud Times: GDP does not give the full picture
