Wojtek is completely right. There are many problems with GDP as a measure of the material standard of living, with the non-counting of non- marketed activities being one of the most important ones. GDP does not measure income distribution and this is widely known.
There are measures of income distribution that can be looked at, such as the Gini coefficient or the decile ratio (the latter is the ratio of what the richest 10% earn compared to what the poorest 10% earn). Certainly anybody who wants to know what is happening in a society should look at both changes in GDP (overall output) and changes in income distribution.
I am very sympathetic to where you are coming from as China has had large increases in GDP but has also had very large increases in inequality. I understand that its income distribution may now be as unequal as that of the United States, which has the most unequal income distribution of any wealthy advanced capitalist economy. That inequality in China is both regional, between the booming coastal areas like around Shenzhen and the interior provinces, as well as within local areas in China. This is now known.
There are high GDP nations with great inequality, the United States an example. There are high GDP (per capita) nations with very high levels of equality, Norway being an example, which has almost no poverty. There are low income countries with much equality, Sri Lanka is an example. There are low income countries with very great inequality, Guatemala is an example. Barkley Rosser James Madison University Harrisonburg, Virginia 22807 USA -----Original Message----- From: chang <chang at public.shenzhen.cngb.com> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Thursday, September 02, 1999 5:07 PM Subject: Re: GDP is unscientific and unfair for poor people.
>Date: Wednesday, September 01, 1999 10:52 PM Wojtek Sokolowski wrote:
>>At 09:15 PM 9/1/99 +0800, Ju-chang He wrote:
>>>Do you agree that GDP is unscientific and unfair for poor people?
>>
>>
>>No, I do not agree with either statement. I am not quite sure what you
>>mean by 'scientific' but if that means 'assembled according to a clear and
>>internally consistent methodology' - then GDP is scientific (of course, we
>>all know that the implementation of that methodology varies from country
to
>>country, but that is a different issue). As far as fairness is concerned,
>>the heart of the issue is the *distribution* of the suprplus rather than
>>its overall volume. GDP was NOT designed to measure distribution, it was
>>designed to measure volume - so the criticism of unfairness does not
apply.
>
>When there is a large GDP and a high growth rate of 9% a year, you will say
that
>the economy is great and the financial officer will be proud of it. But I
will
>still say that the economy is bad. It is because poor people's living
standards
>haven't been raised. They don't have work. They have been left out of
prosperity.
>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. They cannot get medical care. If
I say
>that the economy is bad, the
>government has got to make every efforts to raise the living standards of
poor
>people. If you say that the economy is great, there is no need for the
government
>to raise the living standards of poor people.
>
>When there is a small GDP and a negative growth rate of -2% a year, you
will say
>that the economy is bad and the financial officer will be ashamed of it.
And
>then the government has got to make every efforts to raise GDP, not the
living
>standards of poor people. So the poor people are kept poor for ever.
Therefore
>GDP is for the rich to hoodwink poor people's eyes. GDP is unscientific,
because
>it does not tell the whole story; and
>unfair for poor people, because it leaves them out of the prosperity.
>
>Sincerely,
>Ju-chang He
>
>SHENZHEN, P.R. CHINA
>Welcome to My Homepage
><http://sites.netscape.net/juchang/>
>
>
>