GDP is unscientific and unfair for poor people.

chang chang at public.shenzhen.cngb.com
Sat Aug 28 21:04:27 PDT 1999


Economic theory should not be regarded as a theory of how to increase demand, investment, employment and GDP. It should be considered as a theory of how to raise the living standards of people, especially poor people, and also a theory of how to increase the world wealth and resource. Although war is generally thought to be able to decrease unemployment and increase GDP and economic growth rate, we should not say that wars are good for the economy. It is because wars destroy wealth and resource and lower the living standards of people.

Nowadays, most countries all over the world use Gross Domestic Product to judge the economic growth of a certain country and, according to this GDP, calculate this country's economic growth rate. This method of calculation is really unfair for poor people, for it fails to judge whether the poor people's living standards have been raised. For example, the yearly economic growth rate of some countries has reached 9-10 percent, but their poor people's living standards haven't been raised. There are still a lot of people suffering from cold and hunger. They can't afford to send their children to school, and, as a result, too many children are deprived of education. Therefore, a new economic theory is badly needed to judge a country's economic growth. My article "On The Development of Social Economy <http://sites.netscape.net/juchang/>" has established a set of complete economic theories and also a new model of economic growth, by means of which we will be able to judge a country's economic growth accurately and fairly. And I also argue that we should use the living standards of the poor people and the sufficiency of the first and second grade consumption goods as the criterion to judge the economic situations of one country and the achievements of its government. Only when poverty is eliminated, may we say that the social economy is developed. Only when the living standards of the low-income people is improved, will we be able to take just and accurate measurement of the economic growth of a country. So, the economic growth of a certain country can't be measured by GDP. GDP is unscientific. The measurement of social economic development by means of GDP can only lead to the Military Keynesianism, lead to war.

Consumption and demand can be divided into four grades. The first grade is necessary consumption of education, clothing, food, housing and transportation. The second grade is ordinary consumption, which means buying some more clothes and purchasing TV sets and washers, etc. The third grade is extravagant consumption, which means going to hotel and restaurants, taking cars and going to dancing-halls, etc. The fourth grade is over-extravagant consumption.

Sincerely, Ju-chang He

SHENZHEN, P.R. CHINA Welcome to My Homepage <http://sites.netscape.net/juchang/>



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