Joseph Stiglitz - Problems with GDP as an Economic Barometer

[@ThePiratemomma]

I love the fact that he looks at other things that GDP. The fact that natural recourses have an affect on the economy is something I've been saying for years. It's awesome to see that even though I am only a student, I'm not crazy in my ideas and beliefs!!

[@WCSPriest]

You are not a student anymore :P

[@SarwatRattani]

This was very insightful. I recently started my Econ course this summer and this critic gave it a different perspective.

[@DyeTyme]

overall happiness should be the measure of a country's overall wealth

[@4DTHINKER]

By applying the EOGs (Export Oriented Growths) strategy, China has experienced a positive multiplier effect in the economy. Having said that, GDP should not be the only indicator that government cares about since it does not include social sustainability measurements. Look into China’s case, GDP was the main aim, but this does not mean other social measurements were neglected. China’s absolute poverty has fallen by 40% according to the 2004 record.

[@vibhutikhanna4495]

This video is very helpful! According to Joseph, the GDP can be misleading because it only measures the total economic output of a country, without accounting for how that wealth is distributed. He explores various ways to framework the economy. He also critiques the GDP for ignoring environmental sustainability. He highlights the issue of "Green GDP". By referring to China, he illustrated how GDP could fail to reflect the long-term consequences of economic activities that damage the environment. I could relate to the current GDP status of Canada with what Joseph stated. Canada's GDP has been showing moderate growth, though it faces a variety of challenges and influences that impact its economic performance. For instance, after covid 19 pandemic in 2020, the Canadian economy rebounded with significant growth in 2021 and 2022. However, there was a slowdown in 2023 due to higher interest rates. Looking ahead to 2024 and beyond, Canada’s economic growth prospects are somewhat mixed. Inflation is expected to ease gradually, which could provide some relief to Canadian households. However, the Bank of Canada’s interest rate policies are likely to remain tight until inflation moves closer to its 2% target, limiting borrowing and consumption in the short term. Many says, that GDP is an imperfect measure of an economy’s health, for various reasons. For instance, it does not measure the population growth. It does not include illegal activities like illegal trade, informal labour, and unreported transactions. It also does not include factors like public health, mental health and social well-being. It is argumentative about the other tools required to measure the well-being of the countries. Here, he emphasized an alternative like GNP. Unlike GDP, which only measures the value of goods and services produced within the country’s borders, GNP includes income earned by the country’s residents from investments and work done abroad, minus the income earned by foreign residents within the country. GNP measures the total value of goods and services produced in a country. It provides insights into a country's economic health and allows for comparisons between different countries' economic outputs. It takes into account the income earned by the country from investments and work done abroad, whereas, GDP does not. To conclude, the speaker talks about considering the factors beyond the GDP like GNP. He emphasizes the need for a broader, more nuanced approach to measuring economic success, one that goes beyond GDP to include factors like income distribution, environmental sustainability, and social well-being. He argues that if we truly want to measure the progress of a society, we must adopt a variety of metrics that account for both the economic and social dimensions of growth. Only then can we ensure that economic development benefits everyone and is sustainable for future generations.

[@rainzoro]

Summary of the clip: GDP mis-represents 1. Wealth distribution (GDP goes up while 50% population income goes down) 2. Stability (environmental problems may emerge in the future) 3. Actual wealth (difference between GDP & GNP)

[@aoeu256]

Jail spending[America has the biggest % of people in jail increasing GDP], Military spending, Health spending vs outcomes [for example, Republicans voted down an amendment which would allow Americans to buy cheaper drugs from Canada and other industrialized countries causing drug prices to increase, in order to afford these higher prices Americans work more increasing GDP while decreasing health outcomes], things breaking raise GDP, debt spending raises GDP, having no children raises GDP per capita by a lot... for a short while, having lots of people go to college increases GDP, but having them learn anything of use isn't counted, maxing college more expensive so that people are in debt also raises GDP For the complete opposite of GDPism, go learn about Cynic philosophy in ancient Greece...

[@hoodoo961]

Stiglitz is the greatest economists of the present day, and everyone should read his stuff, Making Globalization Work and Globalization and its discontents are both very good.

[@4DTHINKER]

In fact for an economic emerging country, having a high GDP growth is not something of a surprise. Developed countries have small GDP growth because their economies are operating at full capacity. 'Green GDP' comes afterwards. It is difficult to talk about environmental protection in countries like Zimbabwe because they are lacked in basic needs: Clothing, Food, Shelter and Infrastructure.

[@FloppityFlopFlop777]

Excellent points. This is basic stuff that ought to be taught in high school. Especially the difference between GNP and GDP. That "little name change" literally flipped the economic script in this country. Corporations and corrupt politicians can't be allowed to fleece the American people anymore.

[@slobot3000]

he's right about statistics affecting behavior. for example, look at what happened when they started keeping track of saves in baseball

[@edschaeffer]

Stiglitz wisely points out that the median person is an important factor to take in regard. One of the first causes of the recession was that the cost of living was going up, but median income was staying the same. All in all GDP was still an untelling indicator at that point.

[@edgarfuenmayor8453]

For decades, Gross Domestic Product (GDP) has primarily been the primary economic indicator used to gauge how well a country is doing. However, by this indicator, the production of goods and services within a nation, or GNP for short, does not accurately reflect the population welfare. Society has incorrectly linked high GDP with a better quality of life over the years. Consequently, governments and economists have concentrated on boosting this metric without analyzing the social, environmental, or equity impact that such policies might produce. GDP measures a country's total production of goods and services but pays little attention to what these goods do for people. While perhaps stimulating economic gross output, a rise in the manufacturing of things will not improve the quality of life for every stratum of society. For instance, it is possible that a country has a high GDP but also high inequality, and the majority does not benefit from economic growth. As a result, GDP can expand by higher outputs in industries that do not benefit all members of society equally. Moving on, another aspect missed by this index is wealth distribution. A country experiencing an increase in GDP may focus this growth upon an economic elite, with the lower classes not improving their life conditions. In addition, GDP does not explain poverty, social exclusion, or inequity in access to basic goods such as education and health. It creates the illusion of an indiscriminate positive change in the population, where an increase in GDP must mean an overall improvement, but this can hide very real and serious inequality issues. On the one hand, GDP ignores its detrimental impact on nature. Environmental degradation activities like deforestation or pollution positively contribute to GDP by creating an economic output. However, the economic growth associated here can be ecologically destructive over the long run due to environmental costs like biodiversity loss or biophysical resource depletion. Additionally, GDP does not evaluate Sustainability. Policies that expand GDP rapidly, with minimal effort, generally lead to greater exploitation of natural resources and the expansion of public debt, which can generate greater troubles down the road. So, even a high GDP does not ensure sustainable growth or supply renewable resources to achieve that top number. Welfare ends not just when we output more but also on what supports that growth; we cannot ignore the base. Finally, a GDP increase does not necessarily reflect improving quality of life. GDP does not distinguish between activities that benefit the population and those that only increase production volume without improving welfare. For example, the construction of prisons increases GDP due to creating jobs and using materials. Still, this type of infrastructure does not contribute positively to the quality of life. It reflects an increase in violence and social unrest. Another similar case is the increment in healthcare spending, but this increase is not necessarily related to improving public health. An increase in healthcare spending may indicate a health crisis, such as an epidemic or an increase in chronic diseases caused by unfavorable social or environmental conditions. Thus, health spending does not always reflect an improvement in the population's living conditions but could be a symptom of an inefficient health system or harmful living conditions.

[@hediehasgaripoor7871]

Second, GDP does not differentiate between economic activities that enhance well-being and those that are detrimental. For example, expenditures on health care due to pollution-related illnesses or disaster recovery contribute positively to GDP, even though they reflect adverse outcomes. This paradox shows how GDP can grow even when societal conditions worsen. Another major issue Stiglitz raises is GDP's failure to account for income inequality. Aggregate GDP might increase, but this metric does not reveal how the benefits of growth are distributed across a population. In societies with high inequality, most gains may go to a small population segment, leaving large portions of society without improved living standards. This disconnect between GDP and the lived experiences of ordinary citizens diminishes GDP’s relevance as a barometer of societal well-being. Environmental sustainability is another blind spot of GDP. Stiglitz points out that GDP often overlooks the depletion of natural resources and environmental degradation. Economic growth at the expense of long-term ecological health is unsustainable, yet GDP fails to reflect these trade-offs. Stiglitz also critiques the overemphasis on GDP in policy-making. Governments often prioritize policies that increase GDP without considering broader societal impacts, leading to decisions that might harm societal well-being in the long run. He advocates for a more holistic approach to measuring economic success, incorporating health, education, and environmental quality metrics. One particularly insightful point is his emphasis on the need for alternative measures of well-being. Stiglitz references the Commission on the Measurement of Economic Performance and Social Progress, which he co-chaired, as an effort to develop metrics that reflect a broader conception of progress. Measures like the Human Development Index (HDI), Genuine Progress Indicator (GPI), or Happiness Index are better suited to capturing the complexities of modern economies and societies. This video underscores the importance of critically evaluating our tools to measure progress. While GDP remains a valuable indicator of market activity, its limitations necessitate complementing it with more comprehensive metrics. Stiglitz’s critique reminds us that progress is about improving the quality of life, reducing inequality, and ensuring sustainability-not just increasing economic output. His arguments are particularly relevant in an era where environmental crises, social inequality, and technological disruptions challenge traditional economic paradigms.

[@4DTHINKER]

Coal mining industry does pollute air and damages environment, but by blinding closing them down or reducing funding will only result Hysteresis which Britain has suffered Hysteresis ever since its coal mining industry in the 1980s. Therefore sometimes it is inevitable to damage the environment in the short term, but of course in the long run, a sustainable development is the wiser approach. After all London was quite ‘foggy’ as a result of the Industrial Revolution until the 1950s.

[@howardpatters3461]

I like his comment about "private interests" in relation to mines. It's true that when foreign investors risk their capital to mine resources, the locals see only a minuscule amount of the resultant revenue. Their trade-off is to receive infrastructure improvements and jobs in exchange for pollution and exploitation. This begs the question, "How much revenue would locals receive if foreign interests did not risk their capital to open a mine?" I appreciate Mr. Stiglitz's efforts to rouse the rabble, but his discussion is pandering to a more "intellectual" crowd, whose aim is "control". That arrangement would be much less equitable for the poor than any they reach with foreign investors.

[@AKYUMYUM]

psa12....wrong. Simon Kuznetsk, the individual who created the formula in 1934 warned when presenting it to Congress, that “The welfare of a nation can scarcely be inferred from a measurement of national income.” He know that the government could use the formula to paint whatever picture they wanted based on spending. For example, the "New Deal" was championed as a miracle yet it was governmental spending that put it in a positive light not the true health/strength of the American economy.

[@4DTHINKER]

Indeed there is a conflict between high productive growth and sustainable development especially when a country is still at the stage of relying heavily on the manufacturing sector rather than the tertiary sector (banking, services…). For the last thirty years, China has grown immensely and for the last 10 years, it has retained an average growth in GDP of 8-10%.

[@tietajajoshua]

Electronic account system, GDP projection and graphing, BR-0 com/accounts htm without .'s or link off my page

[@Visfen]

Funny seeing Stiglitz talking about the problems of GDP, and then talking about green gdp and "how people are doing". Kinda tells you where he is coming from. He should talk about the problem of GDP as an indicator of even economic growth. Especially G and Exports, which government stimulate by borrowing and spending money and of course inflation. He does hit the nail on the head about sustainability. As usual this has already been worked on by Austrian economists.

[@stephentsang2000]

Chinese leaders don't care too much about GDP figures, which are simply dead digits on paper for the appetite of those living in the ivory tower of academic arena. Chinese leaders focus on letting all people feed well, all people owning at least one apartment of their own, and everyone having a job. These are much more practical and useful goals than pursuing the growth of GDP.

[@aoeu256]

I think the first priority of all leaders may be their own power...

[@aaroncutting]

Found the indoctrinated party member

[@quat56]

Measurement of GDP of a Country is 1 Mystically far fetched that sometimes it is used as a lemony biased measure to focus on just macroeconomic development regarding Industrial output growth,exchange rate & BOP stability,not focusing much on health index ,Cost of living,purchasing power of people to measure in real aggregate GDP..

[@archdeaconj]

If you take an index based on 'desirable goods and services', instead of GDP, you find that since about the mid eighties it has been in decline. This is puzzling. Why, when more of us are working longer, harder, and more efficiently, and when new technology has replaced much drudge, is the average standard of living going down?

[@neko7309]

Stiglitz you are such a great economist

[@wabwab2754]

The reason is that China doesn't invest in the Nobel fund. For instance, Japan invests about 1.5 billion yen in the Nobel fund every year.

[@calvinjonesyoutube]

If deforestation eqaulling income seems odd to you then Beyond Growth has in covered, a great book by Herman Daly.

[@floopy312]

The land where the forest was has not such a value, because it is not within a city or near a city, it is only valuable for farms but not for schools, homes etc. because u dont want to have ur home in the middle of the jungle, u want ur home near services and jobs that only a city can provide you, that is why your house land cost more than a bigger land within a farm. The big question here is: what do we need more, FOOD or WOOD? Then we could choose between a farm or a forest.

[@dungcat513]

hey after watched this > i have a question : "•How does a focus on GDP as a measure of ‘success’ influence policy and behavior?"

[@NamLE-dz7in]

I have the same question with you !!!

[@cishikawa0]

A bit late, but a country focused on increasing GDP is likely to make policies that assists economic growth but not the overall welfare of the people.

[@ThiNguyen-161]

GDP is high, then production is high, which means that people have the money to purchase goods. This in turn means that firms have the money to employ people. So, a major advantage of GDP is that it gives a clear indicator as to how well (or badly) an economy is doing

[@mockingbird83]

this guy is my new god. Committing career suicide as chief economist of the world bank for bringing to truth to the table about social issues of globalisation and economics because it was the right thing to do. The man deserves a medal. Oh wait, he got one XD

[@borocks84]

Stiglitz says government have to spend lots of money on prisons which boosts GDP. However, he doesn't mention that incarcerating people prevents them from working and earning (legally or illegally!) in the economy and thus adding to output. Second, government have to finance prisons with taxes. These taxes decrease income that would otherwise be available for consumption and investment. I therefore doubt that prisons have any significant and positive net effect GDP. Any thoughts on this?

[@jackdav34]

Just discussing this in my ECO 100 class.

[@champanzeebro]

Apparently people down on comment knows more than a noble prize winner in economics 🙃🙃

[@kingmatt2563DABEST]

Problem with gdp is it takes government spending. Looj ar China for example, most of its GDP is made up.

[@Kitten_Stomper]

Listening to Stiglitz is a lot more enjoyable than listening to Krugman.

[@shawnzuercher7262]

Global fair trade should be a standard of consumption and population

[@Cruciblious]

Excellent video.

[@4DTHINKER]

As a student studying Economics, I greatly appreciate Joseph Stigilitz's lecture here. But I think for developing countries, there needs to be a certain period of time when they need to FIRST concentrate MAINLY on GDP.

[@namekuji9014]

We should subtract gov. spending on entitlement programs from the GDP calculation.

[@hoodoo961]

@34Illmatic Indeed, I have also purchased Freefall yet but have yet to read the whole thing.

[@BloggerMusicMan]

@abuabu41 If you watched the whole video, he actually talks about Green GDP and Green GNP throughout the video.

[@robby1303]

This is fantastic.

[@justnotcricket]

yeah, its an old truism as far as even my dad can remember; when some gets cancer, the gdp goes up etc etc.

[@bjornnordling269]

How was he so relevant 15 years ago?

[@buzwazfuz]

stiglitz is the man

[@tnguyen318]

i think the study and teaching of economics is done with. Until we can re-write economics, it should be exposed because it has been causing so many problems.

[@cliffovski]

google the happy planet index. novel economic measure which takes into account sustainability measures.

[@Stormwern]

Another matter is the number of transactions. In a socialist state, the government pays doctors for example. In america it's employer -> (employee ->) HMO -> hospital -> doctor. Four times the transactions means four times the GDP. The military industrial complex is structured the same way.

[@infokemp]

The problem with the US is that the anti gun laws mean there are only criminals with guns on the streets, there are too many armed young men at home or in prison and too few in the armed forces. If you have 2 million wasted lives in prison thats a symptom of failed education and social policy. The US will need 5 million service men if Pakistan goes up, (does the US army want to recruit prisoners no, they are ill suited to military life but they may have to recruit prisoners) where's man power

[@BloggerMusicMan]

@BloggerMusicMan *Green GNP throughout. (Redundant)

[@usespanner1]

It's too difficult to measure green GDP.. What's the more valuable? A national park in France, or a cultivated land(vineyaerd)? A beautiful grassland in Czech Republic, or a forest instead of that (which was planted to chop down after 50years)? I don't know the answers..

[@aaleyr1]

A GREAT THINKER ...

[@ThoseWhoStayUofM]

@VividlyContemporary How do you measure the effectiveness of one country's preventive medicine as opposed to an other's? Cultural habits are huge lurking variables that are almost entirely unavoidable in those types of studies. Preventive medicine is just not something that can be measured effectively in almost all cases. Is there a study that shows the United States has poor preventive medicine? I have never heard that.

[@behradkabiri8171]

2025 still gold

[@lacelin]

I am from Singapore, my leaders base everything on GDP. They ignore the poor.

[@JimmyMarchy]

Who’s here in 2024 to understand how the Dems messed up so much?

[@bloo152]

Thank you kindly. :D

[@PrincessTS01]

We should change the system world wide.

[@richardvanderpuije]

@CytherLynx just downloaded it. I'll hit you up with feedback when I'm done reading it. Appreciate the reference.

[@JBvictoriaCISV]

Brilliant

[@texans1806]

the guy next to him laughs when his Stiglitz voice squeeks. haha

[@richnfamous59]

@MissYoungsta1990 it's "layman's terms", btw

[@tnguyen318]

You can not calculate gross domestic product when you do not know the numbers of the products to calculate with. (LOL)

[@Zatzzo]

i admire stiglitz, but i have a question: am i mistaken that he pronounces the word "state" as "steak"? english is not my first language, so i'm not shure. no offense, really!

[@frisbeeeater]

will not gdp naturally evolve into green gdp on its own?

[@danpt2000]

@RandomConcepts: Gross Distorted Publication

[@Tyrant_13]

@tnguyen318 You mean its absence of free market application? ...lol

[@vaj99]

He made a catastrophc squeeky sound at around 4:30.

[@supersatie]

you are not alone.. but he makes sense :P

[@vaj99]

At 4:24.

[@Jokamutta]

What?

[@shawnzuercher7262]

It's not hard to find global statistics there is a global bank

[@allanmherrera]

That was interesting.

[@pdxeddie1111]

i hear all these economists talking and it makes me think that they are trying to figure out how to screw things up worse than ever

[@mtmassociate]

@leemyster2 No, I watched it as well for my Macroeconomics class. I would not do this for a living though.....

[@TheHotdoggirl]

GDP is the most common way to measure the economy. fact! As you have heard it is deeply flawed!

[@vanities7374]

I believe he is incorrect on healthcare.

[@la_viee7460]

Our current president needs to watch this video🤦🏾‍♀️!

[@dmityajd]

Yes, but I pronounce 'vagina' as 'pumm pumm' and the Washington Consensus mispronounced 'GDP' as 'paradigmatic success.'

[@tnguyen318]

We should send teachers to fields where it matters. Stop wasting time and resources teaching balgony things and begin reforming this country.

[@aitbfo]

Not true. GDP is a measure of production, not transactions.

[@NamLE-dz7in]

in what ways might GDP be considered a poor indicator of welfare??

[@dungcat513]

wow wut an fascinating question

[@superlemon8382]

Think about Luxemborg. Some really rich ppl make the GDP higher. But in fact the average luxemborg citizen, hasnt more wellfare then a german for example.

[@aoeu256]

Military spending is included in GDP so Nazi Germany where everyone was working 60 hours where soldiers would then die to Russians had a much higher GDP than Thailand or Spain

[@hitch4645]

now why the hell can't he take geithner's job?

[@shawnzuercher7262]

With the gold standard that's b*******

[@rhino015]

yeah true aitbfo

[@iDaljeTako]

Little by little, the look of the country changes with the men we choose to admire. . . (This quote describes both our recent decline -and- our current attempt to restructure our leadership.) First we restructure the House - then - the Senate. Search & Watch from12/20/09 Tim Cox Founder GOOOH Get Out Of Our House - Fox And Friends GOOOH (Get Out Of Our House!!)

[@aaroncutting]

Fun fact: Lumber companies have a strong incentive to replant forests and to manage their forest resources. If they do not; they will soon run out of trees entirely.

[@pervezak]

You have to visit a supposedly underdeveloped country like Pakistan to appreciate what he is saying.

[@galo15551]

great video, but he tip toes around the point, capitalism doesnt care about human well being

[@borocks84]

No it's not. Basic microeconomics theory exactly tells u this. Utility is a positive function of consumption and leisure: U(C(I),L) Marginal utility is positive but decreasing in income: dU/dI>0 and dU/d^2I. That is, an additional unit of income, and thus consumption, has a much higher value for a poor (or unemployed) person and it has for a rich person. Only really stupid economists with no regard for microeconomic foundations would tell you otherwise.

[@SewellyTV]

cheaz m8 xxx

[@shawnzuercher7262]

Way to way oversimplify things

[@mockingbird83]

borocks - im not an expert but my interpretation: those are in jail, are in jail for committing crimes... crimes which probably lower GDP through various forms of fraud and unlawful acquisitions. People in jails are often not the most upstanding, contributing members of society in any other case. 2nd: the other problem with GDP is that it doesn't reflect the benefits of savings. Taxes WILL be spent, translating to instant GDP increase. Ppl may have otherwised saved that money, meaning no GDP inc

[@dakid1102]

zZzZzzzZzzzZZZZ