“Forget GDP”

In the first place there was the gross national product for fitness for war. In the early 1940s, the US government wanted to estimate how many people and supplies it could put into the war economy without the population starving and freezing. Gross Domestic Product (GDP) was the fruit of concerted effort.

After the war, GDP represented consumption and prosperity – cars, refrigerators, televisions, holidays in the Mediterranean and more free time for everyone. For nearly 30 years, revenues have soared across the board. Even the poor could afford more. “The tide (a rising GDP) is lifting all boats,” John F. Kennedy reportedly said. Nobody agreed. In the summer of 1981, the Geier Sturzflug group said, “Now we are spitting on our hands again, we are increasing the gross domestic product.” GDP we have remained one thing.

Then comes the big turning point

Since the 1990s at the latest, GDP no longer represents more wealth, but less unemployment. To this end, we are even ready to forego private and state consumption: multinational companies create jobs here rather than there, we reduce taxes and wages as part of space competition. But it’s not for everyone as GDP continues to grow.

In Switzerland, for example, GDP per capita grew by 32 percent from 1996 to 2019, but low and medium wages increased only 17 percent, or CHF 700 per month, while the top tenth increased by 40 percent or CHF 12,000. When it comes to pure market income (capital income before wages and taxes), there is an even bigger gap – the richest 30 percent earn ten times more than the poorest 30 percent. In Austria, the median income has remained unchanged in real terms since 1998, while the poorest tenth lost 28 percent.

the survey method makes less sense

This makes clear what we’ve always known: GDP doesn’t measure how much the baker or banker contributes to the common pot, but just how little and how much the other scrapes. The common pot still exists, but the method we use to measure it makes less and less sense. The statement that GDP is growing by x percent says nothing about how this affects “our” well-being. There is no such thing as “our” anymore. Having and being (happy) are becoming more and more different. Yachts will only make you happy until your neighbor has a longer one. Same with Ferraris and Gucci bags. And to capture the jobs created by GDP growth, you first have to immigrate – say from Romania – to Switzerland.

In addition, we need to devote an increasing portion of our efforts to dealing with the increasing complexity of the market and healing its losses. Think of the massive redistribution bureaucracy, the runaway financial markets, the advertising, the ever-expanding transportation routes, the burnout clinics needed to fix the extremely one-sided income distribution.

All this creates jobs and inflates GDP while doing nothing to meet real needs. Let’s forget GDP. Our happiness no longer depends on how much we produce, but on how production organizes (disorders) our coexistence.