Holistic local sustainability; food, water, energy, money, people

Per-capita GDP

Alliance-building toward a better measure of national well-being.

“People at an open air concert” by oatsy40 is licensed under CC BY 2.0. To view a copy of this license, visit https://creativecommons.org/licenses/by/2.0/?ref=openverse.

What is wrong with national GDP growth as a measure of success?

  • It doesn’t capture everything that adds value to the economy. One example is that caring for children is not included in GDP if carried out by their parents.
  • It doesn’t capture broader aspects of economic welfare of the nation’s population. For example, if GDP rose by 2 per cent one year, but the population grew by 4 per cent, then average GDP per person would have decreased.
  • It doesn’t tell us anything about how evenly national income is split across the population. Income may have increased for everyone, or may have been concentrated in certain groups.
  • There are things that raise GDP but don’t make the country better off. One example is the initial spending to replace buildings and infrastructure after a natural disaster, which boosts measures of economic growth.
  • It compares the size of countries’ economies which is used to fuel unhealthy geopolitical competition.

Why per-capita GDP is a step in the right direction:

  • Although it tells us nothing about inequality, it at least takes population size into consideration.
  • It is calculated by dividing the GDP of a nation by its population.
  • It is the most universal way to analyze a country’s wealth and prosperity because its components are regularly tracked on a global scale, providing ease of calculation and usage.
  • Income per capita is another measure for prosperity analysis, though it is less broadly used.
  • Countries with higher GDP per capita tend to be those that are industrial, developed countries.
  • It segways [sic] to the Genuine Progress Indicator (GPI), “which takes everything the GDP uses into account but adds other figures that represent the cost of the negative effects related to economic activity, such as the cost of crime, cost of ozone depletion, and cost of resource depletion, among others. The GPI nets the positive and negative results of economic growth to examine whether or not it has benefited people overall.” (Source: Investopedia) The Australia GPI was published in 1997.

What needs to be done:

  • Treasury and Federal Cabinet must stop using GDP growth as a measure of success and selling it to the public as such.
  • GDP growth is consistently higher on the graphs than per capita GDP growth. For example, in 2009, we had a per capita GDP recession, but not a GDP recession. (Source: The World Bank.) Focusing on it is political expediency.
  • Per capita GDP and the GPI must take its place in decision-making and general parlance.
  • A broad alliance inside and outside parliament must bring this about, setting aside differences and special interests.
  • To do this, organizations and individuals can sign the PER CAPITA GDP POSITION and display their name and logo (link under construction).

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This entry was posted on April 29, 2023 by .
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