GDP is a dishonest measure of progress (was: Re: Need help with a GDP calculation problem...)
- From: "Enough Already" <enough_already@xxxxxxxxx>
- Date: 1 Dec 2006 18:47:18 -0800
wardnine@xxxxxxxxxxx wrote:
Was wondering how to calculate the GDP? I've attempted this and think
my answer is wrong:...
The first step in dealing with GDP is not to get hoodwinked by the
superficial value of money. See
http://enough_already.tripod.com/money.htm
Money tricks people into thinking that GDP/GNP growth can continue
forever in a finite world. Greed overrides common sense and physical
parameters get ignored. The ENRON and WorldCom collapses were blamed on
greed and lack of physical assets, but the whole U.S. economy operates
on similar principles. That's why our national debt is in the
trillions. No single corporation could survive that burden so it gets
spread out and put off. Aggregate economic growth is like a drug dealer
selling more stuff to more addicts. Said addicts are always looking for
things like bigger homes, fancier cars, and most significantly, ways to
support more kids (either their own, or via welfare). The next "fix"
always has to be bigger because more people demand it each year. That's
3 million and counting, currently.
Skipping the usual money abstractions, here's a physical equation for
GDP bulk items; the things that keep us alive.
RM x LF = FG
RM = Raw Materials (finite, or renewable at fixed demand levels)
LF = Labor Force (population size, expected to grow indefinitely)
FG = Finished Goods (end-products, restricted by quantities of RM & L)
That formula works in one direction because finished goods can't be
turned back into pristine resources. Recycling is never 100% efficient.
Labor and innovation can only go so far in a physical context. People
don't produce bulk matter that didn't already exist in nature, they
just shape it into different forms and assign subjective value to it.
When you collect a paycheck, you're getting a value judgement, not a
resource. Barter was long ago corrupted by financial tricks.
What we call "production" is just consumption and conversion of
existing resources. Where we now grow crops, trees and grasses once
stood. Where cattle graze, bison once did. Large segments of modern
economies depend on things that have little to do with survival. The
insurance industry creates invisible debt in the billions, based on
risk-perception. Most people never regain what they paid in. Money
literally clones itself in the financial sector, yet economists treat
it the same as physical matter. The metal and plastic (petroleum) in a
PS3 console only has "increased value" to video game players, and so
on...
It should be self-evident that raw materials are limited by the
_physical size_ of the Earth, specifically the thin outer crust. Some
resources are clearly finite, like fossil fuels, water, minerals and
land acreage. Others are renewable only if demand doesn't exceed
regenerative capacity, i.e. timber, fisheries and crop-growth.
Regeneration will never be infinite, but economists pretend it "could
be," even as mounting evidence points in the opposite direction. They
flat out ignore critical omens like the state of ocean fisheries. See
http://tinyurl.com/yz6yeg (if that's not evidence of depletion, what
is?)
Those points alone debunk the fantasy of endless growth, but the
opposition is stubborn. Many people claim that physical parameters are
meaningless because "They" (future magicians) will find an endless
supply of resources to replace all of the above. These same people also
insist that nature (wilderness and wildlife) is not critical to human
survival, which to them is all that matters. This is pure
anthropocentrism. In the mind of a growth-addict, open space just begs
for new houses and roads to be built. They never talk about the end of
greener pastures, or brown pastures in increasingly crowded deserts.
It's as if the physical world is only in our imaginations. I call this
insanity but others call it macro-economics!
Be skeptical of any argument that depends on "They" or other unknowns
for economic salvation. "They" is a fantasy construct that knows no
physical limits; often referred to as the "power of the human mind"
e.g. Julian Simon's Ultimate Resource. It's a type of fundamentalist
zeal, not pragmatism. Question it and you'll be called a pessimist or
ecofreak. Physical reality doesn't sit well with growth-addicts. They
seek an unworldly high and confuse wants with needs.
Most scientific evidence shows continuous resource depletion
(http://tinyurl.com/yds9fm) with no magic creation of substitutes on
useful scales. The sooner we halt mindless population/economic growth,
the better. The labor pool can't grow indefinitely and society will
age, but the alternative is an ecological mess. Social Security in its
current form is unsustainable, as are most pyramid-promises. We just
have to think differently and lighten the load. Attempts to grow the
GDP forever are blocking true economic progress.
E.A.
http://enough_already.tripod.com/
If any other species behaved like Man we'd call it a plague.
.
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