Economic With The Truth
The GDP Illusion: Why We’re Measuring the Wind and Missing the Storm
How well have we done?
Whether you like it or not you will be bombarded with the answer once a month in the news and on your social media feeds.
It is true that economic success is important. The more the economy grows, so the story goes, the wealthier we become. More taxes mean lower government borrowings mean more money to spend on essential infrastructure like hospital, railways and water reservoirs.
So how excited do you feel when you hear about growth in the economy of 0.1%? Does your bank account exhale in relief?
Of course not. Because that figure has almost nothing to do with your life.
Measuring the Wrong Things
We measure economic “success” through “Gross Domestic Product (GDP)”—a simple tally of how much money changed hands. To make it sound scientific, we adjust it for inflation based on the spending habits of an “imagined” person who likely looks nothing like you.
Using GDP to measure our collective health is like checking the wind direction to decide what to wear outside, or what crops to plant for the year ahead. It tells you which way the air is moving, but it says nothing about the temperature, the likelihood of rain, whether the sun will shine, or anything about which crops are most likely to succeed. It may be a metric for sailors and windmill operators, yet we use it to dictate the lives of millions.
The True Cost of “Growth”
An economy can grow while its people wither. GDP goes up when we spend money on antidepressants, when we pay for repairs after a climate disaster, or when we take out high-interest loans to cover rising rents. In the eyes of GDP, these are “successes.” In reality, they are symptoms of a society under stress.
If we want to know if our economy is actually working, we need to stop asking how much money moved and start asking:
How healthy are we?
How secure is our housing?
What is the state of our collective mental health?
How much do we value the average worker, care worker, or anyone else in our extended family?
These aren’t “soft” metrics; they are the “temperature” and “sunshine” of our economic weather. They tell the story of what is really going on in our lives.
Demanding the Whole Truth
We would never accept a weather forecast that only reported wind speed while ignoring the rain. So why do we accept economic reports that ignore human suffering?
To hold our leaders truly accountable, we must demand a deeper truth about our economy. We need to report on our collective wellbeing with the same frequency and fervour as we do GDP. The economy was designed to serve people, not the other way around. It is time we demanded the data that proves it. If we change what we measure, we change what we prioritise. Let’s stop obsessing over the speed of the wind and start focusing on whether the people are being left out in the cold.