GDP is a concrete measure that is difficult to fake. Once you start arguing about the economic value of volunteering, divorce, income inequality, and crime -- you've opened the door to never being able to trust GDP again.
Should we create new metrics to track progress? Sure. Should we stop tracking GDP? No way.
How incredibly selfish of us to decide we shall be the select few that get to live on a single planet when the universe has the potential to support so many more lives.
Every second we delay, countless earth-like planets are being consumed by black holes, never to be seen again.
You don't know that. We don't know what happens to objects that fall into black holes. In fact, it's quite possible we're already inside a black hole.
If we could live another ten, one hundred, or a thousand of humanity's lifetimes, that's not temporary in any meaningful sense.
To put it differently: making plans today for the earth's demise due to the sun's expansion is a rather extreme case of premature optimization.
(There are some other problems with Chinese GDP figures, but Ghost Cities aren't among them.)
[1]: https://www.economist.com/graphic-detail/2022/09/29/a-study-...
[2]: https://bfi.uchicago.edu/working-paper/how-much-should-we-tr...
But more broadly, it's important to understand GDP in PRC is (and has always been) guestimate to appease foreign investers / media for comparison wank. It's well known PRC smooths GDP to show general trends, but internally they've used their own metrics like LKI index (proxy measurement using combination of rail freight activity, electricity usage, industrial activity etc) and total social financing to measure economic activity. A few years ago, the most rigorous western analysis of Chinese GDP I'm aware of was conducted by CSIS who comprehensively reverse engineered Chinese GDP reporting from ground up, sector by sector, and concluded China was (~1 trillion USD) larger than official numbers purported to be.
Also remember PRC has incentive to underreport GDP to keep developing economy perks. Ultimately, GDP like all statistics, is political. It's why internally PRC leadership is focusing on quality growth and "comprehensive national power" , a nebulous but (IMO) more useful composite index to guide development.
Li Keqiang index, Context from wiki:
>According to a State Department memo (released by WikiLeaks), Li Keqiang (then the Chinese Communist Party Committee Secretary of Liaoning) told a US ambassador in 2007 that the GDP figures in Liaoning were unreliable and that he himself used three other indicators: the railway cargo volume, electricity consumption and loans disbursed by banks.
Total Social Finance - do a quick google for summary, another composite indicator because up until 2010s PRC just had shit tier data reporting without even factoring in central gov lack of trust of local gov reporting. LKI became mainstream when he became premier in 2013, both LKI and TSF gets reported in domestic and foreign analysis on PRC econ since.
GDP smoothing: https://www.economist.com/free-exchange/2015/07/15/whether-t...
>There is a difference between smoothing data and totally fabricating it. Evidence suggests that China is guilty of the former (the lesser charge) but not the latter (the more serious allegation).
There's better academic writings in past decade that goes into why PRC smooths GDP, but TLDR circles back to GDP is more politically useful as setting a "target" for growth (for both local officials and to inform foreign media/investors) than actual "measure" for growth, which is better gauged with other indicators, that can still be gamed but less so than cells on a spread sheet.
>NBER study from 2017: https://www.nber.org/papers/w23323 Also discusses LKI and other background in PRC gdp reporting. As well as a country specific analysis vs Martinez let's crudely apply blunt metrics to every country generalist approach. Note this was published same year as Martinez study.
CSIS analysis: https://www.csis.org/analysis/broken-abacus The reports seems to be removed/for pay now, but there's podcasts from author that summarizes the study and degree of potential underreporting.
As for incentive to under report, that's more conspiracy theory but IMO well justified. PRC benefits structurally from being treated as developing economy much than transient PR of reaching high income per capita. If one believes PRC is under reporting GDP, or overreporting population, especially by some of the higher end numbers, then PRC per capita GDP may have reached higher income, which has been a contentious issue by other (developed) countries at the WTO who wants to strip PRC from benefits reserved for developing countries.
Repeat across the entire country for 20 years at every level of government, and as a result it is now estimated that China's actual GDP is half of its official GDP.
Being valid in China is a very high bar, there is very little that a totalitarian government can't fake if it tries hard enough.
Government expenditure on services is included in GDP at cost. Transfers to individuals are not.
Transfer the same to an individual in return for their hours and it will be included in GDP. Instant boost of GDP with no material change in output.
It's very easy to fake because GDP isn't all transfers, it's just some of them and like all dividing lines the one chosen is largely arbitrary.
Who is saying we should do that? These items have value, that is not debatable. It might not be economic value, but that's not the point. The point is, these items are not being valued on a national scale, or at least extremely undervalued against GDP. If you have extreme wealth inequality, GDP is a pretty poor measure of basically anything.
I don't think anybody is arguing that we should stop measuring or looking at GDP entirely. The article argues that we need to recognize that we can't just close our eyes to the value of these things.
It's kind of like talking about the value of a human life in dollars. We know this number is more than 0$, and we know this number is less than __POSITIVE_INFINITY__$, and we're probably never really going to agree on a number somewhere in the middle, but it's still an important number to consider.
Or, to push it in the other direction: sell a service back and forth. I sell you a message for 1 billion and then you sell me one for 1 billion. Now we’ve increased gdp by 2 billion (although you need to live in a zero VAT and zero income tax country to do that as a private person and still have it count)
Which means GDP is difficult to fake.
Changing the included values and operands, then calling it a new standard, is common in the US. GDP has been an unreliable metric for decades.
I noticed when the multitude of chip fabs, across california, closed down had coincided with the president announcing the stockmarket gains were being rolled into the accounting. I thought it was obvious that it was not a meaningful metric for measuring production.
Of GDP? Source?
The best counter to that I've ever heard:
"Let's say I pay you $10M to eat a pile of shit, then for kicks you pay me $10M to eat a similar pile of shit. You know what the end result is? The GDP has increased $20M, and we both have huge shit-eating grins".
The GDP is laughably easy to fake.
If people were buying piles of shit for $10M, then that is what the GDP would be. That's not faking GDP.
It’s not literal, it’s just an illustration of how easily the gdp can be faked.
Still the same answer. Services are counted as production.
> It’s not literal, it’s just an illustration of how easily the gdp can be faked.
Of course it's not literal, but that's just not faking GDP. What do you actually think GDP is a measurement of?
And yes there are workarounds, but clearly it's not that easy to manipulate GDP. If anything, you want to underreport these numbers so you don't owe as much.
I’m not sure how true this is. There are international standards, updated over time, with variable adoption by per-country agencies tasked with measuring GDP.
These agencies typically rely on surveys of industry specific activity to measure different metrics and at times imputation and inference of unmeasured or missing values to form a picture of overall economic activity, from which a single GDP figure is derived.
All of which is to say “measuring” GDP is nothing like measuring a concrete physical quantity such as temperature, and there is ample opportunity to fiddle with the standards or fudge the statistics, either innocently or nefariously.
See for example how incorrect construction data cleansing lead to Japan overstating its GDP for several years.
It's trivial to fake. Just pull some asset values out of your ass, which Wall Street does a million times a day. GDP became a lot less useful when the economy shifted from mostly tangible goods to mostly intangibles (e.g. software) and services, then utterly useless with the over-financialization of our economy. There are many measures that are more informative than GDP (or GDP per capita), that enable more rational decision making. GDP is just a vanity number.
GDP is a bad measure for all the reasons above, and because prices do not work the way GDP want's them too. As another poster alluded to, increase total production and cause prices to fall across the board, and the logic of the system is that GDP drops. The only reason we see GDP increasing is that there is an underlying increase in the measurement (money), and that feeds into the measurement data.
Measuring well-being and happiness will never be straightforward and uncontroversial, despite what the authors of the article say.
You don't need to look much past the first few paragraphs of the article to see an obvious bias about income inequality. That reveals what attempts to find new metrics are really about: the authors want to use a set of metrics which have built-in left-wing assumptions about how society ought to look.
To think that such controversial metrics could serve as a replacement for GDP only reveals the authors' own naivete.
> left-wing
> such controversial metrics
Your politics are showing
Introducing political statements on HN and feeding them is frowned upon, but I will bite: the right wing also needs an answer to the problems caused by inequality. Solving issues caused by inequality can easily be a right wing objective: for example when fixing an issue also helps the middle class or the rich.
A metric for inequality can be politically completely neutral, yet it will trigger partisans on the left or right. I do agree that metrics and solutions often have covert political biases.
I think that regardless of your political inclination, the core message of the article remains the same.
But to argue the point a bit more, and this is something that Thomas Piketty (an economist that studies inequality) always brings in his books: one measure is not enough. GDP is one measure, we need to look at many more measures. GDP does say something, it's not meaningless, but we need other measurements to get the full understanding of the picture.
And we actually have lots of them, GDP sadly fails to capture a lot of externalities, so it doesn't really capture very well for example environmental damage; think of china, their GDP is growing a lot but we can all see it's not growing in a sustainable manner. Or think of the USA, highest GDP in the planet but this isn't being reflected in life expectancy for example which actually has been declining for a while now.
And as I said in the beginning, inequality very much affects people's well being and the well being of an economy as a whole as well. So it is definitely a measurement that we ought to take seriously. It seems silly to me to say "these are left wing metric". These are metrics that have a reason of being, inequality has real effects on our economies and there is a lot of work, and good work at that, that you can read on why precisely this is the case.