Why is GDP such a “deeply foolish” measure of well-being?
The first and largest problem is that it doesn’t measure well-being at all; it measures the sum total of the monetary value of market transactions. Because of that, it adds together things that are costs and things that are benefits, without making much distinction between them. That’s foolish. And even as a summary of all costs and benefits it fails, because it fails to count costs accurately. What does it miss? The most significant, in my opinion, are the environmental costs of economic developmentthe losses in natural capital, and hence natural capital services, that come with the destruction or radical simplification of complex ecosystems. No civilization can survive the loss of the natural capital services on which it depends. If we fail to account for losses of these services in our basic reckoning of national income accounts, we’ll develop ourselves right into extinction. Could you give examples of natural capital services? Certainly! The terminology is still rather new, but awa
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