Does GDP accurately reflect our nation's productivity?
Answer:
If the Entropy Law were fully acknowledged, society would have to face up to the notion that every time we use part of the stock of available matter and energy it means two things: first, that one way or another, the individual, the institutions, the community, or the society ends up paying more for the disorder created in making the product than the value derived from the use of the product; second, less energy is available to be used by other people and creatures sometime in the future. This reality flies in the face of the way we have viewed the world for the past several hundred years. The entire 'Enlightenment' world view is inspired by the principles of Newtonian mechanics, Cartesian mathematics and Baconian scientific methodology. Capitalist and socialist systems attempt to organize the physical world on the basis of these basic conceptualizations. Central to all three ideas is the notion of absolute repeatability of observation (the scientific method) and the absolute reversibility of all processes (universal mathematics and mechanical processes). In the real world, however, nothing is observable in the same manner twice and no occurrence is reversible. The Entropy Law tells us that all physical reality unfolds in only one direction and that while there must be a negative X for every positive X in math, there is no such reversibility in the physical sojourn of the world around us. It is bewildering that we have been attempting to organize the world for these past few centuries on the basis of mechanics, mathematics and the scientific method, when the real world simply does not conform to the central assumptions of reversibility and absolute repeatability. The reality is that when we leave this world, we leave it less well endowed as a result of our presence. When we glorify high energy production, then, what we are really promoting is an ever greater consumption of the finite store of resources of the planet. Seen in this way, the Gross National Product is more accurately the Gross National Cost, since every time resources are consumed they become unavailable for future use.
There are many things GDP fails to account for:
Depreciation of capital
Environmental Damage
Technological Advancement
Ommitted activities in the market which cannot be measured, i.e. the labor and opportunity cost of housewives, and also underground transactions
Notice that depreciation of capital and technological advancement are key to long-run economic progress, and this may serve as the serious problem for economists in failing to forecast growth in the economy.
No - nor is it intended to.
GDP measures the amount of wealth a nation produces domestically in a year.
Productivity looks at how much wealth per labor hour a nation produces.
Hopefully these help
Industrial output too
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