by Alasdair MacLeod
There are so many things wrong with GDP, that even mainstream economists are becoming vaguely aware of its shortcomings.
A good friend drew my attention to a Bloomberg article on this subject, which at least shows a growing awareness that there’s a problem. Unfortunately, this awareness does not extend to its underlying nature.
GDP statistics only capture an incomplete snapshot of the economy at one moment in time. Since the economy is continually evolving, that snapshot is immediately out of date, and therefore unfit for the purpose of economic planning. Furthermore, being an incomplete picture of the total economy, GDP badly misleads policy-makers on the subject of price inflation.