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GDP illusions

As part of the bad news from the epidemic, GDP figures have been falling all over the world. All the talk now is of getting the economy moving again. However, it is worth keeping in mind that GDP is a rotten measure of economic success and GDP growth is a terrible policy aim. The meal cooked and eaten in a restaurant, and the ready-made meal made in a factory, form part of the GDP figure. The better meal cooked from scratch using mostly ingredients grown in one’s own garden would not register.

Policies intended to grow GDP have the damaging effect of driving activities, previously carried out in the domestic and voluntary realm, into the money economy. A secondary consequence is that with additional money incomes coming into households, a lot of it has driven up house prices and had been ending up as mortgage interest payments to fatten the profits of the banks.

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