Mnementh said:
GDP is a very bad measure for how strong an economy is (it's maybe the best measure we have, but it's not good). The reason is, it is counted in units of the used currency. So the simplest way to increase the GDP in a great way is inflation. If the next year the currency is worth only the half, but the same amount of products is produced, then the GDP has doubled. But in reality the economy hasn't changed. Another point: If a new production scheme can reduce the cost of producing say a car to the half, and so the price for cars drop, what happens. People do not buy much more cars, if you have one you're ok. If the people save the money they spared, then the GDP has reduced, but everyone has more wealth as before and economy is stronger through innovation. Thrid example: if people do some work for nothing. That's usual in non-governmental-organization, political parties or in the open source scene. This is called 'ehrenamtliche Tätigkeit' here in germany. These people often produces values for the societies, often services (for instance many caring services are made by organisations like the red cross). That makes the life in modern societies better. But because this work doesn't involve money, it isn'T counted by the GDP. So looking at GDP alone doesn't say anything about how strong an economy is. That's not all. A strong economy doesn't guarantee for good wealth for the people or a good system. In the times of the industrial revolution the economy of Great Britain really growed very, very strong. But back then the life of most people get worse. Many starved, was ill. The environment was destroyed, the air was thick from burning coal. So, a good economy alone doesn't make our life better. Most countries accepted this, no single country in the world uses pure capitalism. |
All official GDP figures you read are adjusted for inflation. All countries use GDP to measure their annual output, so the fact that it's a universal standard means it works perfectly. As long as the majority of the world uses it as a standard for economic output measurement, than it works fine. You have miscontrued what GDP is intended to do.
