GDP Insanity

I've been starting to see an increasing number of articles that are pondering the question of whether this current economic crisis is the beginning of the shift in our society away from the insatiable quest for excess through consumerism. I would hope that consumerism has reached its logical conclusion but it certainly appears as though the world governments are determined to keep it on life support for as long as possible by installing economic policies that intent to get us back on the same track that created this crisis in the first place.

It really disturbs me that the main focus, of what appears to be the majority, of the world's economists is to increase GDP at any cost. I could write for hours of why this is such a flawed strategy, and others have, but my basic argument against this strategy is that GDP has become a very poor indicator of progress and increased standard of living. Raising GDP at all costs creates some interesting accounting of what is 'good' for society. The theory states that a rise in GDP correlates to an increase in our standard of living and if that is true then the Exxon Valdez spilling its contents on the Alaskan shoreline was 'better' for us as a society than if it had sold its contents for use on the open market. The funny (and by funny I mean insane) part of GDP accounting is that nothing subtracts from raising it. A riot in an inner city that destroys property and causes untold amounts of chaos results in a greater increase than funding schools and other social programs aimed at helping the impoverishedd in that area. 'Funny, isn't it'.

Changing GDP accounting would have a huge environmental impact as well. I don't think many rational people would agree that degrading air and water quality is beneficial to society or raises our standard of living in any way. Unfortunately, doing those very things results in an increase to GDP.

Crisis provides an opportunity to examine those things that simply are not working and are at the root of it all. I think we're at a point in history where accountants and economists can change the world.