It’s entirely true that there are problems with GDP. It doesn’t measure unpaid labour, or indeed most non-market transactions. It doesn’t detail the distribution of incomes. It is, however, a measure of possibilities. The more value we are creating then the more aggregate income there is that can be consumed. That’s a useful measure in itself.
But there’s a much more important point to it too:
Personal wellbeing rather than economic growth should be the primary aim of government spending, according to a report by the former head of the civil service and politicians.
Launching a report urging a sea change in thinking from ministers, Gus O’Donnell, who served as cabinet secretary to three prime ministers, said Britain could lead the world by making wellbeing the goal of government policy.
The call to unseat growth as the main measure of government success comes as the Treasury gears up for a three-year spending review, due this summer, which has been scheduled despite the Brexit turmoil gripping the Tories.
Wellbeing is an amorphous thing. For example, Bhutan claims to be run on the basis of gross national happiness, something which involves banning tobacco. Many think that entirely right, many others don’t - so we’ve proof that a move to this more subjective measure is going to smuggle in some, well, subjective goals.
Such national wellbeing usually does include such subjective matters too. Most oft mentioned is “equality” as a goal to be pursued. By which is meant not that equality which we fully support, that of opportunity, but of outcome. It will be measure by the likes of the Gini, Theil and other such indices. That is, obviously, to smuggle into our definition of the good life entirely subjective definitions of what that good life constitutes.
Which is to end up with that crowning glory of GDP as a useful target or measure. It’s objective. It isn’t subject to varying interpretations, it’s a plain number that we can observe. Which is why, if we’re to have a measure of our success at all, it’s so useful. And presumably why those who are judged by it would prefer something else.