#7 – The True Cost

The Gross National Product (GNP) has been used for decades to measure the growth of the economy and the improvement of the people who work, produce, and buy in that economy. But the GNP indicator only provides the “market” value of the services and products produced by labor and services. GNP only measure economic growth and nothing else. GNP doesn’t measure how technological advance, the improvements in poverty, economic distribution, economic justice, resource depletion, environmental degradation, nor does it take into account the negative effects of the economic growth. Economists make a basic assumption when using GNP, that economic growth is the only way to continue prosperity. Why economist have a fetish for only measuring one part of the economic system to draw such a broad conclusion is unfathomable?

To illustrate the point of how absorbed the use of GNP to measure prosperity, would be to take a completely fictional futuristic T.V. show, Star Trek. How would economist measure the prosperity of the universe in which Star Trek exist? From the apparent technological advances in science, information technology, travel, and quality of life, the planet Earth hasn’t been more prosperous despite the occasional alien attack. The economists today would rate the entire planet has a third world country. Why; because in that Universe, there is no gross national product. There is no “market” value in production. In fact in the Universe of Star Trek money has been abolished completely, because technology has advance to a state where economic growth is pointless, and only would be a detriment to society. Economic growth does not mean prosperity, or economic stability. Economic growth only means what it means, that the economy sold more than last year.   

"The economists today would rate the entire planet has a third world country."

Economic growth also has that hidden cost that nobody mentions for fear of being laugh at. Economic growth has several side effects such as, environmental disasters, overloading the environmental systems, social disorder, and economic disparity. The GNP fetish has been so intertwine in the conventional wisdom that any attempt to attach a social, or public cost to a product is considered heresy. The economic theory has failed and the economists haven’t realized it. The model is too simple and economists in their quest to simplify and understand the abstract invisible hand have forgotten that the economy doesn’t measure wealth or prosperity. It measures only part of the environment and a new theory needs to prevail in order to adjust the model to fit the needs of the day.

"The model is too simple and economists in their quest to simplify and understand the abstract invisible hand have forgotten that the economy doesn’t measure wealth or prosperity"

GNP after all is a number; it is the people that put value into that number. GNP can be more meaningful if it reflected the true cost of production. What if GNP not only took into account production but also the results of that production? How would the growth trend look then when the cost of pollution is added?  How would that trend look when it also represents the displacement of communities due to shifting industries? How would the growth be affected when looking at the wars caused by the increase in the “market” value of food? GNP is just a number and has no social or environmental constraints. Using GNP has anything but the amount of goods produce, is unsustainable.