3/3/11

But how do we spend GDP then?

These days it is written that the GDP will increase by relatively high numbers on an annual basis. It sounds like things are going well for Sweden and the Swedes and that everything is better than ever.

But there are some problems that are forgotten in the general euphoria.
First of GDP as a measure: GDP measures the sum of goods and services consumed in Sweden, plus exports and less imports. One question you should ask yourself is what is the quality of consumption? A couple of quick examples: Your car breaks down - you get it fixed, merger affects GDP positively, but if the car has not broken (better quality car, better road conditions) had been lower GDP. IS it better with inferior products! Example two is even more clear: You get sick because you have no mortgage and therefore ill-treated, the care you receive is positive for GDP, so the GDP measure is positive that you suffer. Both are clear examples of how imprecise measure of GDP is but because of quality-based measures are very difficult to get used the simple GDP measured on a daily basis. The danger, however, if one interprets the GDP as a measure of absolute improvement and success - then you are absolutely wrong.

The second problem we must not forget is the division of the profit from the growing GDP. If it had been allocated "fairly" would have probably resulted in a greater improvement in living standards and life-value than with the unequal distribution we have in Sweden and many other countries today. It's probably pretty obvious that the raising of the lowest paid from revenues of SEK 1,000 per month represents a major lyckohöjare than one of the Vallenberg clan add a billion to the bank account.

This is not to imply that GDP growth would be negative on the contrary - but the contents of it and how it is distributed should also be discussed.