My answer to Does GDP measure how wealthy a country is?
Answer by Desmond Last:
No. GDP – Gross Domestic Product is only of use to Politicians. It is a measure of the amount of Turnover ie the amount of money passing through the economy as an output value.
It measures the monetary gross product of the capital that is used by a country to obtain its output of goods and services.
Thedefines GDP as "an aggregate measure of production equal to the sum of the of all resident, institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)
You could in theory have one person turning over all the money and everybody else with no jobs and no money.
That is why it is ineffective as a measure of productivity, efficiency and technology utilization.
In the U.K relative low labour costs have been used to provide a rising GDP. Hence Cameron and Osborne are able to say that the U.K is the fastest growing economy in the OECD.
What the GDP does not say for the U.K, is that in some parts of the U.K there is no GDP to measure and for others there is little in the way of benefit to be received by a rising GDP. It also does not say what the cost of getting that rise has been. Such as immigration infrastructure and capacity limit, rents increasing, a credit fulled housing bubble, increased crime etc. and of course borrowing costs.
Due to the Government's significant budget deficit, the national debt is increasing by approximately £73.5 billion per annum, or around £.1.4 billion each week.
In modern economics the GDP should be consigned to the history bools.
It gives no indication of how you are making the GDP. It shows no relevance to Climate Change costs and affects nor to how your real GDP is weighted against other countries. Your country may have a high GDP but the cost of that GPD may be higher than another country with a lower GDP.
It leads politicians to grow economies at any cost – environmentally and structurally ie not wanting dirty industries such as coal and steel rather instead wanting financial services and service and assembly industries.
When I was in the U.K Labour Party and before I emigrated to Australia I met Claire Short the Labour M.P. She criticized a paper I had written on the negative effects of pursuing growth at any cost.
Claire Short could not seem to grasp the fact that growing the economy by only pumping money into it was not the same as increasing efficiency, becoming more productive and utilizing all new technology advancements. Here I am 25 years later and Jeremy Corbyn is still glued to the same economic theory that Claire Short advocated.
Priming the economic pump will not work when the demand is always ahead of supply and the system is inefficient and not maximizing the production opportunity.
The U.K is a good illustration of your question. It has a rising GDP but the wealth is not shared equally amongst its people with Public Infrastructure and Public Services. There is in fact no wealth to share.