GDP, GPS, & Growth Without Well-Being

GDP, GPS, & Growth Without Well-Being
Profile photo of Caleb McMillan

Screen Shot 2017-07-25 at 12.27.53 PMWilliam Watson has an opinion piece over at the National Post pondering whether using Google Maps messes with the nation’s GDP.

What else could we expect from a columnist who believes that a beautiful new road he drove on in Atlantic Canada was only made possible by “federal equalization payments,” that is, by siphoning wealth from richer parts of the country?

Now, I understand his frustration. You want GDP to mean something, otherwise, what’s the point?

If GDP is, at best, a meaningless figure, and at worst a statistical weapon governments and banks can use to destroy the economy, then what exactly are economic classes teaching?

Amazed at Google Maps and smart-phone technology, but cautious of “how free apps fit into GDP,” Watson inadvertently makes the case for why we should dispense with these pseudoscientific terms.

First, he correctly points out the opportunity costs. We forget how to read maps but, Watson reminds us, think of the “billions of hours in wrong turns not taken,” and other travel time and anxiety avoided.

But then Watson is concerned people aren’t consuming physical maps and therefore “GDP goes down.”

Watson admits that, with smartphone apps, “well-being has gone up,” but, apparently, that’s not enough.

Never-mind that, “the economy,” is a result of human actors working to remove the inconveniences of nature and raise their living standards through unplanned and voluntary mutual cooperation. 

No, the economy is something more abstract that can only be defined with metrics like a “Gross Domestic Product,” and planned through “Inflation Targeting.”

Of course, he admits that some apps “do produce some GDP,” when talking about how app-makers sell ads.

But, “How strange that miracle apps can change our lives but not our GDP,” Watson writes.

How strange that some economists can claim to be scientists while ignoring their subject matter completely.

Watson has, pardon the phrase, mistaken the map for the territory.

GDP is supposed to be a measurement of prosperity, not the reality itself.

And of course, as “Austrians” are well aware, if a vandal breaks a window and causes its replacement, GDP goes up.

If governments spend more money on endless “infrastructure” boondoggles that amount to endless road and sidewalk construction — GDP goes up.

If a terrorist runs down innocent bystanders and the victims’ families must make funeral arrangements — GDP goes up.

So perhaps instead of questioning whether we can fit the “app-economy” into GDP metrics, perhaps we should question the GDP itself.

“Mainstream economics” is like a calendar that doesn’t line up with the seasons or even the length of days.

GDP is like taking astrology seriously. It lacks the scientific rigour required when describing the circumstances of economic reality.

So who does have true economic knowledge? The “Austrians” or other camps?

Who’s calendar is more accurate? Who’s doing astrology and who are doing science? The people who predict financial bubbles, or the people who’ve routinely said there won’t be another crisis right before there is one?

Profile photo of Caleb McMillan

Caleb McMillan is a writer that lives in Vancouver, British Columbia.

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