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Tuesday, 20 April 2010

GDP: Debate in The Economist

This week's online debate in The Economist concerns the following question:
This house believes that GDP growth is a poor measure of improving living standards.
Utopian Realism wrote:

Dear Sir,
for me it is impossible to answer the posted question with a simple 'yes' or 'no', because two matters appear to be confused at the very root of the debate:
a) whether or not GDP measures (there are various measures) are precise indicators of 'living standards'
b) whether or not growing GDP is a desirable political aim (for already wealthy nations)

It might very well be that the answer to a) is in the main yes, but the answer to b) no (if so, there is an optimal level of GDP, and GDP is not to be maximized, but optimalized).

This possibility, however, presupposes that the debate's term 'living standards' is highly ambiguous, and a poor choice of terms. Which it is. In market terms, GDP measures are quantitative measures (even though they do refer to the 'demand' of economic stakeholders with means). The 'living standard' Oswald has in mind appears to be of a qualitative nature.

The Norwegian philosopher Arne Næss distinguished systematically between 'standard of living' (a quantitative measure of wealth) and 'quality of life'. If such a distinction had been introduced in the polled question, I would have been able to take a stand. As it stands, a 'yes' would imply conceptual ignorance, and a 'no' ethical ignorance.

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