Tuesday, December 21, 2010

Post 12

Mr. Campbell asked us to write a letter to the editor explaining why GDP is a faulty indicator.

Dear Editor,
Gross domestic product, the leading economic measurement, is outdated and misleading.” CNN agrees with my opinion that the USA should adopt a new economic gauge. GDP is the sum of products and services bought and sold, with no distinctions between transactions that add to well-being, and those that diminish it. Instead of separating costs from benefits, and productive activities from destructive ones, the GDP assumes that every monetary transaction adds to well-being. This is why the GDP is a faulty indicator of the economy. The USA should consider using a method that takes depreciation into account, like NNP or NDP.

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