In DecentralizedLeft GrahamLally mentions his distaste for GDP being used as the general yardstick of progress. In OnMarkets I agree with this in general, but note that I think there are political reasons for this focus, rather than it having anything to do with our use of free markets.

Indeed, I do recall Guillaume learning about a whole bunch of interesting alternative yardsticks, and indeed I believe it's becoming increasingly popular within economics circles to look into other more 'social' measures of 'progress towards the good society'.

However, changing these measures would not get away from basic laws of nature.

In this vein I'm starting to realise that GDP could be thought of as a rough indicator of the effective work rate of a given country. More people = higher work rate = higher GDP. Higher productivity per person = higher GDP. Overall higher GDP is therefore a good indication of a higher effective work rate (even if each person actually works less time).

And maybe the work rate of a country is a kind of measure of it's strength (e.g. it's potential ability to keep fighting a long duration war). GDP growth is therefore growth in the general strength of a country.

Taken over many decades, differences in these growth rates will lead to countries being significanly out of step in terms of the rate at which they effectively work. This in turn makes them significantly out of step in terms of the rate at which they can acheive certain ends.

In other words if country A's GDP growth rate is consistenty higher than country B's then after a long time (say 50 years) country B is likely to look (and feel) poorer than country A. Country A can go to the moon, country B can't.

Of course the people of country B might actually be happier!! than those in A

Hmm... so where does this leave me? Maybe (roughly):

GDP growth = growth of a country's effective strength = growth in military and political influence

GDP growth is not equal to growth in a country's happiness.

So, should the politicians care more about a country's happiness .. or it's strength?


(PS: That last sentance felt so 'Sex and the City' )

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