… is from page 6 of Diane Coyle’s 2014 book, GDP:
It [GDP] is a measure designed for the twentieth-century economy of physical mass production, not for the modern economy of rapid innovation and intangible, increasingly digital services. How well the economy is doing is always going to be an important part of everyday politics, and we’re going to need a better measure of “the economy” than today’s GDP.
DBx: Yes indeed. But until we get such a measure, GDP is the best that we’ve got. It must be used with care, but I don’t see how we can avoid using it until a better measure of economic performance is developed.
Worth noting: No matter how good or bad GDP is today as a means of assessing an economy’s performance, if it’s going to be used it should be used as intended. Too many are the grossly uninformed people who, looking at the identity GDP ≡ C+I+G+(X-M) (in which “X” is a symbol for exports and “M” is a symbol for imports), mistakenly conclude that imports reduce gross domestic product and also, if imports are larger than exports, that the resulting trade deficit is a drag on GDP. Such people should learn more economics.
