This morning’s Observer column.
Deciding that the health of a nation’s economy can be measured by a single number is as daft as thinking that a single measure of “intelligence” (the IQ) can sum up an individual’s capability and potential. As Howard Gardner pointed out many years ago, there are many different kinds of intelligence, and each person occupies a different point in that multi-dimensional space. Similarly, the health of an economy needs to be measured along several axes. But we seem to be stuck with GDP because that’s the only thing economists know how to calibrate.
To the measure’s age-old contradictions, the internet has now added a really puzzling one. The world of traditional “production”, in which industries and businesses produced goods and services and in the process created value that could be measured and included in GDP, has been augmented by a parallel universe in which there is a great deal of activity, most of which is invisible to the bean-counters who compute GDP.