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Subject: The Danger of GDP
by Juchang He
E-mail: [EMAIL PROTECTED]

Western economists tend to use GDP (Gross Domestic Product) as a measure of
the economic status of a country. All models of economic growth are set up
on the basis of the GDP. They regard an increase in the GDP as a development
of the economy, or as economic growth, and they calculate the rate of a
country's economic growth, according to the GDP. This is misleading and
unscientific and so disguises the actual economic realities. It perpetuates
poverty. It leads to the pollution and destruction of the earth. It even
leads to war. Why? I'll show you:

(1). It perpetuates poverty and disguises economic realities.
Nowadays, most countries use the GDP to judge and calculate their economic
growth.  When there is a large GDP and high economic growth, say 9% per
year, economists will say that the economy is great and the financial
officers will be proud, but still the economy is bad. It is bad because the
living standards of the poor haven't been raised. There are still many
people suffering from cold and hunger. They can't afford to send their
children to school, and, as a result, too many children are deprived of
education.

If the economists say things are bad, the government has got to make an
effort to raise the living standards of poor people. If the economists say
that the economy is great, there seems no need for the government to raise
the living standards of poor people.

When there is a small GDP and a negative economic growth rate of, say, -2% a
year, the economists will say that the economy is bad and the financial
officers will be ashamed of it.  Then the government has got to make every
effort to raise GDP, but the living standards of the poor are unaffected.
Therefore, it appears that GDP is for the rich to fool the poor people and
keep them poor.

(2). It leads to the pollution and destruction of the earth.
We all know the Earth is getting more and more seriously polluted.  Why?
Because we are blindly developing the economy. Economists uphold the GDP
(Gross Domestic Product) as the measure in developing the economy.  All
activities that increase the GDP are labelled as "development of the
economy" and as a result some people are wilfully destroying the environment
merely for the purpose of making money.  Since they can make a lot of money
by destroying of environment, they employ a large number of workers and say
that they have decreased the rate of unemployment.  They also say that, with
the increase of GDP, they have advanced the development of economy. As
western economists take the GDP to be the measure in developing the economy,
we find it difficult to lay blame on them for the economic activities that
lead to the destruction of environment and, as a result, the earth is
becoming more and more seriously polluted.

(3). It leads to war.
Western economists create prosperity by producing weapons and war. Are you
aware that "the crisis of 1930-39 is generally known as the Great
Depression"? Keynesians say "the Great Depression was ended by the military
Keynesianism of the Second World War." Why do they insist that the Great
Depression can be ended by war? It is because they think that war can
increase the government's spending. The spending increase means the increase
of social needs, which can decrease unemployment and increase GDP and
economic growth rate. Keynesians call it "military Keynesianism". They judge
a country's economic growth and economic growth rate by means of the GDP.
(Keynes's Solution to unemployment was higher public spending which would
add to incomes and through the multiplier process lead to more jobs.)

When someone destroy the environment, GDP shows people that they are
advancing the development of economy. When a war starts, GDP shows people
that wars are good for the economy! When there are a lot of people suffering
from cold and hunger, GDP still shows people that the economy is great.
Therefore GDP is dangerous!

How can we make a change in these phenomenon? The only way out is to use
some other economical measure to replace GDP. What is the exact aim of
developing the economy? The aim of developing the economy is to raise the
quality of life and improve the standard of living. Therefore only the
living standards of the people can be used as a measure of
the economic status of a country. In order to use the living
standards of the people instead of GDP to measure the whole economic
situation of a country, I'd like to offer a criterion of how to measure the
living standards of the people:
    People's living standard can be divided into four grades. The first
grade is necessary consumption of education, clothing, food, housing and
transportation. The second grade is ordinary consumption, which means buying
some more clothes and purchasing TV sets and washers, etc. The third grade
is extravagant consumption, which means going to hotels, restaurants and
dancing-halls and taking cars, etc. The fourth grade is over-extravagant
consumption.

Sincerely,
Juchang He
SHENZHEN, P.R. CHINA
E-mail: [EMAIL PROTECTED]
Welcome to My Homepage
<http://sites.netscape.net/juchang/homepage.html>




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