It is used to scam the people of a country but is just a statistic that should be used correctly
GDP is the sum of all goods and services produced in the country. This is colloquially taken to be proportional to how well its people are doing economically, as opposed to what it actually represents: the value of the output of a country. This is an important distinction, because we could simply boost our GDP by 2x by bumping the price of every good by 2x. This would mean everyone is 1/2 as rich compared to before.
This is one reason why certain services such as medical care can be significantly better in another country and much cheaper, while having a significantly lower GDP. For example, Cuba vs the US
Governments will boast about GDP and stock market gains and say “the economy is doing well,” when that could very well mean that prices have gone up. “The economy” is another useful term which means anything politicians want it to mean, because they can point to measures people dont understand to say things are going well even when purchasing power is down and people feel squeezed
GDP also fails to account for who owns the value of the goods and services. For example, a foreign business run and operated within a country will extract profits to the foreign owners country, so the benefits of money circulating and the value of money gets removed from the economy.
GDP is used by the IMF to determine if loans should be given, and thus has become the default measure of a country’s wealth. This is an issue given the above problems alone
It is used to scam the people of a country but is just a statistic that should be used correctly
GDP is the sum of all goods and services produced in the country. This is colloquially taken to be proportional to how well its people are doing economically, as opposed to what it actually represents: the value of the output of a country. This is an important distinction, because we could simply boost our GDP by 2x by bumping the price of every good by 2x. This would mean everyone is 1/2 as rich compared to before.
This is one reason why certain services such as medical care can be significantly better in another country and much cheaper, while having a significantly lower GDP. For example, Cuba vs the US
Governments will boast about GDP and stock market gains and say “the economy is doing well,” when that could very well mean that prices have gone up. “The economy” is another useful term which means anything politicians want it to mean, because they can point to measures people dont understand to say things are going well even when purchasing power is down and people feel squeezed
GDP also fails to account for who owns the value of the goods and services. For example, a foreign business run and operated within a country will extract profits to the foreign owners country, so the benefits of money circulating and the value of money gets removed from the economy.
GDP is used by the IMF to determine if loans should be given, and thus has become the default measure of a country’s wealth. This is an issue given the above problems alone