GDP is unscientific and unfair for poor people.

[Wojtek Sokolowski]

At 04:31 AM 9/3/99 +0800, Ju-chang He wrote:
>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.

Ju-chang He, I fully agree with your statement - high GDP growth does NOT
mean high human development growth.  But you did not ask me if i think that
GDP is 'humane' (to which my answer would have been no for the reasons you
list in your missive) - you asked me if GDP is 'scientific' - to which most
rational people would answer 'yes.'

As I argued in other postings to this thread, science has to be analytical
rather than politically correct.  I argued thatusing diffrent indicators of
economic growth and human development is mor analytica than using a single
conflated measure.  I have also shown that gdp can be used in a very
critical way, for example by serving as the base for comparing social
welfare spending among different countries (i.e. what share of national
wealth is being spent on human development).  

so it is not the indicator itself, but how it used that is fair or unfair
to poor people.

best

wojtek