Zachary Turcotte

ECON 222

1st Analytical Essay

Monday, February 5, 2018

Economists measure the annual produce of the society, which is a country’s

gross domestic product. GDP measures the market value of goods and services

produced in the country. However, it only captures market activity and is not

designed to be a measure of economic welfare. GDP has its benefits, but it also has

its negatives and has some think it should not exist at all. In the following essay,

we will discuss both sides of the argument.

For many reasons, GDP is a good way to measure wealth in a country. It

makes sense to use it because it is basically a measure of how much buying power

a nation has over a certain period of time. GDP is not just to measure buying power

of a nation though. GDP is also used to indicate a nations overall standard of

living. Generally, a nations standard of living will increase, if the GDP increases.

GDP is very important to us. It is as important to us as the satellite in space

is to weather associations. GDP allows policymakers and banks to judge whether

the economy is contracting or expanding. It can tell if the economy needs a boost
or not, and if there is any threats such as recession or inflation looming. GDP is

used all around the world, so it is easy to compare two countries wealth. That is

why it is great. It is universal.

A country can have a very high total income, even if the average income is

low, just because it has a high population. An example is China, China has the

highest income in the world. Its average income, is only about one-sixth that of the

United States. That is one drawback of using GDP to measure a nations wealth.

The distributional critique is a problem with GDP. The income is spread

very uneven especially here in the United States. Average income can be

misleading. Most people don’t get the average income, in fact, most get less than

average. A slim percentage of our population holds the most wealth. In Brazil,

more than two-thirds of the population have incomes below the country’s income,

many of them far below it. So when you measure with GDP it only shows part of

the story.

The Feminist critique is also a flaw with GDP. GDP only includes the value

of goods that are produced for sale in markets, ignoring goods and services that

people produce for their own consumption. So what that means, is GDP only

counts things that are sold on record. For example, if we have jobs and salaries, we

can afford to buy our food and buy our clothes and pay for our survival. Other

families, some not as wealthy. Even some middle class and even down to the poor.
They have to provide for their families themselves. Lets say someone owns a farm

and has his/her own animals and crops. The owner makes his own food and crops

and provides for their friends and family. That is not calculated in the GDP

The last critique is the environmental one. GDP does not include changes in

the natural environment. Recently, economic measurement has almost completely

ignored natural services. The environment is critical for our well being. A forest

absorbs carbon dioxide, provides shelter for the wild, flood control, ect… The

value of services provided by a forest are not taken into consideration when

calculating GDP

Overall, I think GDP should stay the measurement we use, but there could

be a few tweaks to it to make it better.

WORKS CITED

Lena Graber & John Miller, “Wages for Housework” (July/August 2002)

Alejando Reuss, “GDP and its Discontents” (April 2013)

www.bea.gov/.

www.imf.org/external/pubs/ft/fandd/basics/gdp.htm.