A growth measure that is really Gross

In tweets, blogs and in our book New Normal Radical Shift, we make the case that a change in Gross Domestic Product does not measure growth: it does not take debt bubbles into account, records much wasteful activity as a positive, and doesn’t distinguish between effective and ineffective investment.

In the week that the UK GDP figures come out, it’s useful to have supporting voices in The Atlantic magazine. Here’s what its recent article said:

There’s bipartisan incentive to fix GDP.  The indicator fails economic conservatives (by failing to properly account for debt), progressives (by failing to account for inequality), environmentalists (by failing to account for pollution), businesspeople (by failing to account for entrepreneurship), and social conservatives (by failing to account for time spent with family).  Nearly all players have a stake in seeing some improvement to the system.

We argue that the ‘New Normal’ ‘is the recognition that the emphasis upon short-term returns and measurement by accountancy or GDP growth is unsustainable. The “Radical Shift” is the new philosophy that shows how to combine sustainability with business success, and the very different politics that flow from this approach.’