Anti-GDP

“[GDP]measures everything, in short, except that which makes life worthwhile.” - Robert F. Kennedy

Suppose you are an ET coming to the Earth taking notes on the national economies, the first question you ask a country would very possibly be "What's your GDP?"

GDP, Gross Domestic Production, is surely one of the most important measures. Nonetheless, like any measures, it has its fallacies. Here's an incomplete list:

• Sustainability - it doesn't account for irreversible destructive behaviors, like deforestation.
• Efficiency - increased efficiency (eg. by reducing health care cost) will actually decrease GDP.
• GDP vs. GNP, or Gross National Production - doesn't measure what's happening across national borders (outsourcing, FDI, etc.)
• Black Market activities, which is a big thing in some Latin American countries, not included
• Income Distribution - it's an aggregate that doesn't represents how income is distributed. Or it doesn't measure inequality.
• Most Importantly, Structure - GDP is a hodge-podge measure that doesn't address the structural problem.

A most illustrative example of the structural problem is the former USSR (our endeared big old brother). After the Soviet Union collapsed, the Russian economy shock-therapied 50% of GDP out of itself, much worse than the Great Depression by the measure of GDP. When asked why, a Soviet scholar said, "We made guns." The USSR economy was 1/3 military related.