Joseph Stiglitz - Problems with GDP as an Economic Barometer

[PrincessTS01]

We should change the system world wide.

[KAAAching1]

I'm not a big Stiglitz fan, but I agree 100% with what he's saying

[mastaace604]

hahaha "unitek stake"?

[wabwab2754]

The reason is that China doesn't invest in the Nobel fund.

For instance, Japan invests about 1.5 billion yen in the Nobel fund every year.

[xadam2dudex]

$300+ billion goes to profits of the insurance companies or 30%

[ericfeinberg28]

lovin it joe. keep the knowledge coming

[LogicalFlawDetector]

Capitalism FTW! Doin it right is what matters...

[stephentsang2000]

Chinese leaders don't care too much about GDP figures, which are simply dead digits on paper for the appetite of those living in the ivory tower of academic arena. Chinese leaders focus on letting all people feed well, all people owning at least one apartment of their own, and everyone having a job. These are much more practical and useful goals than pursuing the growth of GDP.

[jampt1989]

Such a smart man. Too bad no one will listen to him.

[hoodooeconomist80]

@ThoseWhoStayUofM Amen brother, most economist don't know shit about health care statistics, except Hoodoo economist.. read about health care statistics in the new book HoodooNomics.....google HoodooNomics..

[ThoseWhoStayUofM]

Economists clearly don't know much about health care statistics... It's ironic because Stiglitz is talking about how GDP can be a poor statistic for measuring the growth of an economy however all of the GOOD statistics for showing the measure of a health care system blatantly place the U.S.A. as one of the best, if not the best. The only statistics that truly matter in that regard is the amount of time from diagnosis to cure and the percentage of cured illness.

[VividlyContemporary]

@ThoseWhoStayUofM So any benefits from preventative medicine would be ignored?

[ThoseWhoStayUofM]

@VividlyContemporary How do you measure the effectiveness of one country's preventive medicine as opposed to an other's? Cultural habits are huge lurking variables that are almost entirely unavoidable in those types of studies. Preventive medicine is just not something that can be measured effectively in almost all cases. Is there a study that shows the United States has poor preventive medicine? I have never heard that.

[VividlyContemporary]

@ThoseWhoStayUofM I wasn't meaning to suggest anything about being able to measure them with other systems I was just wondering (as you appear to know what you are on about) whether there is a way of incorporating preventative stuff into how you measured it that wasn't mentioned or whether it was deliberately not included because it couldn't be measured. I don't know anything about other ways of measuring healthcare but what you are saying seems reasonable enough.

[lacelin]

I am from Singapore, my leaders base everything on GDP. They ignore the poor.

[beamla]

@AUSM92 It's possible to achieve progress on poverty, without removing the federal reserve. It may be some economists' preference to remove the federal reserve, but other ways are possible.

[tanyamuriyan]

No way out man Asian women lushfmlk.info

[dakid1102]

zZzZzzzZzzzZZZZ

[USCSoundCheck]

Gross Domestic Product (GDP) is the market value of all final goods & services produced within a country in a given period of time. Nothing wrong with this definition.

[kayanathera]

@USCSoundCheck wrong it tells you how much money were spend, but not where those money came from.that definition was correct about 50 years ago

[pdxeddie1111]

i hear all these economists talking and it makes me think that they are trying to figure out how to screw things up worse than ever

[CytherLynx]

@pdxeddie1111 oh they've done a pretty good job already. and the worst is yet to come.

Youtube 'schiff meltdown' for a good overview

[tnguyen318]

You can not calculate gross domestic product when you do not know the numbers of the products to calculate with. (LOL)

[CytherLynx]

A measure economic understanding is evident in, and synonymous with, how much you agree with Austrian economics.

This sounds a bit too absolute, i know. but i guarantee once you understand Austrian economics, you will see it is effectively atheism in the 1800's, shunned but completely correct.

Please read 'Economics in one lesson' by Hazlitt, and you will know what i mean. i only wish someone told me to read it earlier.

[richardvanderpuije]

@CytherLynx just downloaded it. I'll hit you up with feedback when I'm done reading it. Appreciate the reference.

[CytherLynx]

@richardvanderpuije i can't imagine anyone with an interest in economics, not enjoying it.

[ThePiratemomma]

I love the fact that he looks at other things that GDP. The fact that natural recourses have an affect on the economy is something I've been saying for years. It's awesome to see that even though I am only a student, I'm not crazy in my ideas and beliefs!!

[MillyVanillification]

IMHO GDP isn't a measure at all. If you leave out the ressources you have destroyed for creating products, GDP is a useless number.

[tvripme]

Not, you are not the only one. :D

[rainzoro]

Summary of the clip:

GDP mis-represents

1. Wealth distribution (GDP goes up while 50% population income goes down)

2. Stability (environmental problems may emerge in the future)

3. Actual wealth (difference between GDP & GNP)

[umayanarosy]

Meet Asian women #lushfmlk.info#

[bakergrl0991]

the only reason i'm even near this video....is for homework...ugh...8 minute video though?!

[jphlfcjphlfc]

what was unsustainable about argentine growth specifically?

[DyeTyme]

overall happiness should be the measure of a country's overall wealth

[psa12]

What Stiglitz means is that although GDP has been rising in the past decades, inequalities and poverty have risen. Wealth has not trickled down enough to society, as hoped. Wealth is now more and more concentrated in the hands of less and less people. Basically it's possible that a country has a high GDP but say 90% of its population are dirt poor. So striving solely for a high GDP is not enough. We need a more sophisticated and more up too date indicator for measuring wealth than GDP.

[MissYoungsta1990]

@psa12 OH MY GOD Thank you for being able to put it in lamin terms. I'm really bad with the fancy talk of GDP, U3, U6. It took me so long to get it. Thank you so so very much.

[richnfamous59]

@MissYoungsta1990 it's "layman's terms", btw

[maruhgar1]

@psa12

You are dead right. It is a result of generation of teaching economics, and our foolishness in accepting as truth.

maruhgar1

[DrWoGermany]

-> Meudaleffekt, Geldmengenwachstum und Konjunktur meudalismus.dr-wo.de/html/konj­unktur.htm

[hitch4645]

now why the hell can't he take geithner's job?

[4DTHINKER]

As a student studying Economics, I greatly appreciate Joseph Stigilitz's lecture here. But I think for developing countries, there needs to be a certain period of time when they need to FIRST concentrate MAINLY on GDP.

[4DTHINKER]

In fact for an economic emerging country, having a high GDP growth is not something of a surprise. Developed countries have small GDP growth because their economies are operating at full capacity. 'Green GDP' comes afterwards. It is difficult to talk about environmental protection in countries like Zimbabwe because they are lacked in basic needs: Clothing, Food, Shelter and Infrastructure.

[4DTHINKER]

Indeed there is a conflict between high productive growth and sustainable development especially when a country is still at the stage of relying heavily on the manufacturing sector rather than the tertiary sector (banking, services…). For the last thirty years, China has grown immensely and for the last 10 years, it has retained an average growth in GDP of 8-10%.

[4DTHINKER]

By applying the EOGs (Export Oriented Growths) strategy, China has experienced a positive multiplier effect in the economy. Having said that, GDP should not be the only indicator that government cares about since it does not include social sustainability measurements. Look into China’s case, GDP was the main aim, but this does not mean other social measurements were neglected. China’s absolute poverty has fallen by 40% according to the 2004 record.

[4DTHINKER]

Coal mining industry does pollute air and damages environment, but by blinding closing them down or reducing funding will only result Hysteresis which Britain has suffered Hysteresis ever since its coal mining industry in the 1980s. Therefore sometimes it is inevitable to damage the environment in the short term, but of course in the long run, a sustainable development is the wiser approach. After all London was quite ‘foggy’ as a result of the Industrial Revolution until the 1950s.

[quat56]

Measurement of GDP of a Country is 1 Mystically far fetched that sometimes it is used as a lemony biased measure to focus on just macroeconomic development regarding Industrial output growth,exchange rate & BOP stability,not focusing much on health index ,Cost of living,purchasing power of people to measure in real aggregate GDP..

[selfrealizedexile]

Late to the game, Stiglitz. Austrians have been laughing at GDP and over-aggregation for decades.  As far as "Green GDP," how about you get the gov't out of subsidizing the pollution industry and restore private property rights? The gov't cannot protect the environment, only destroy it.

Most of the people in jail are there because of the unjustified War on Drugs. The health insurance example is a reason to completely privatize it, not socialize it.

[jackdav34]

Just discussing this in my ECO 100 class.

[tnguyen318]

i think the study and teaching of economics is done with. Until we can re-write economics, it should be exposed because it has been causing so many problems.

[selfrealizedexile]

@tnguyen318

You mean its absence of free market application?

...lol

[tnguyen318]

We should send teachers to fields where it matters. Stop wasting time and resources teaching balgony things and begin reforming this country.

[danielz4485]

isnt it funny how Thomas Friedman has significantly more views than Stiglitz...

so much for the future of mankind...

[abuabu41]

what is the point of saying the GDP is wrong and joke about it but not give alternative economic measure. Talke is cheap.

[BloggerMusicMan]

@abuabu41

If you watched the whole video, he actually talks about Green GDP and Green GNP throughout the video.

[BloggerMusicMan]

@BloggerMusicMan

*Green GNP throughout. (Redundant)

[joaoluiz2905]

I'm reading Fair Trade for All and is very very good piece of information.

[robby1303]

This is fantastic.

[ijust1]

Health outcomes in the US aren't lower than other nations because of our health care. They're lower because Americans eat twinkies and big macs all day, and don't exercise one bit.

After controlling for obesity - caused by social problems not medical problems - Americans are healthier and live longer than any other nation's people.

[theone1087]

GDP= Growth Destroys People

[Visfen]

Funny seeing Stiglitz talking about the problems of GDP, and then talking about green gdp and "how people are doing". Kinda tells you where he is coming from. He should talk about the problem of GDP as an indicator of even economic growth. Especially G and Exports, which government stimulate by borrowing and spending money and of course inflation.

He does hit the nail on the head about sustainability. As usual this has already been worked on by Austrian economists.

[aaleyr1]

A GREAT THINKER ...

[imre1000]

Stiglitz, like most economists, is a huge advocate of Government involvement in the economy.

He ignores the huge influence that central banks had in creating the financial crisis, and blames it on the private sector.

He is right in this video about GDP being misguiding, but he ignores the fact that without Government involvement no one would even care what the GDP of a country is.

[tigerone1970]

@imre1000

What you overlook is that it was the Federal Reserve which kept interest rates artificially low. However, the Federal Reserve is not part of the government or the state. It has private shareholders - so ultimately it is a private sector company.

[imre1000]

@tigerone1970 - yes, the fed is a central bank. It originally got it's powers from the Government, even though they are independent.

[danpt2000]

@RandomConcepts: Gross Distorted Publication

[gojujay]

Professor Stiglitz sets up a nice straw man in saying that GDP is not a good indicator of economic health. Economies are much more complex than just GDP, but as a snapshot of "right now" GDP is an adequate measure.

[leemyster2]

^ I guess i'm the only one who watched this for homework... ^

[GaiaGoddessOfEarth]

you're not the only one! :D

[tess1312]

@leemyster2 . I join you...

[mtmassociate]

@leemyster2 No, I watched it as well for my Macroeconomics class. I would not do this for a living though.....

[supersatie]

you are not alone.. but he makes sense :P

[usespanner1]

It's too difficult to measure green GDP..

What's the more valuable?

A national park in France, or a cultivated land(vineyaerd)?

A beautiful grassland in Czech Republic, or a forest instead of that (which was planted to chop down after 50years)?

I don't know the answers..

[vaj99]

He made a catastrophc squeeky sound at around 4:30.

[GaiaGoddessOfEarth]

i dont hear it!

[vaj99]

At 4:24.

[TheHotdoggirl]

GDP is the most common way to measure the economy. fact! As you have heard it is deeply flawed!

[SewellyTV]

cheaz m8 xxx

[tietajajoshua]

Electronic account system,

GDP projection and graphing,

BR-0 com/accounts htm

without .'s or link off my page

[Grealsa]

take ur left hand out of ur cock mate :D

[Entropy137]

Listening to Stiglitz is a lot more enjoyable than listening to Krugman.

[clat1]

Stiglitz is the man

[JackBlair2]

I don't think anyone ever "only looked at GDP."

And Stig's statement about "cutting down forests" is a suspect. In some economies, that action may indeed be detrimental.

But in others, it would not.

[AndroidPolitician]

Does anyone seriously look at GDP as a barometer of "the economy at large"?

Like from the leftist hippie to the most right-wing neocon I don't recall ever meeting anyone and having them cite GDP for success.

[justnotcricket]

yeah, its an old truism as far as even my dad can remember; when some gets cancer, the gdp goes up etc etc.

[iDaljeTako]

Little by little, the look of the country changes with the men we choose to admire. . .

(This quote describes both our recent decline -and- our current attempt to restructure our leadership.)

First we restructure the House - then -

the Senate.

Search & Watch from12/20/09

Tim Cox Founder GOOOH Get Out Of Our House - Fox And Friends

GOOOH (Get Out Of Our House!!)

[namekuji]

We should subtract gov. spending on entitlement programs from the GDP calculation.

[hoodoo961]

Stiglitz is the greatest economists of the present day, and everyone should read his stuff, Making Globalization Work and Globalization and its discontents are both very good.

[34Illmatic]

@hoodoo961 : So is Freefall; I'm reading it for the second time.

[hoodoo961]

@34Illmatic Indeed, I have also purchased Freefall yet but have yet to read the whole thing.

[Bellantoni]

@hoodoo961 What about Ha-Joon Chang? He's a close friend of Stiglitz. If you haven't seen his stuff on youtube, do so now.

[edschaeffer]

Stiglitz wisely points out that the median person is an important factor to take in regard. One of the first causes of the recession was that the cost of living was going up, but median income was staying the same.

All in all GDP was still an untelling indicator at that point.

[libertyeconomics]

I agree that the GDP doesn't measure economic growth at all. As an Austrian Schooler, I would have a disagreement with him on his rationale, however. I would redact it slightly. If the GDP truly measured economic growth, this would have to be a good thing for the median person. The problem, then, is that the GDP doesn't really measure economic growth. It can go up, but we can be getting poorer.

[masflojo]

Until the majority of people in the U.S. even know what the Austrian School is.. it wont get better.

[taroconti]

@masflojo

couldn't agree more, mises and hayek are some of the most under appreciated economists.

[lxmoya11]

What a hack.

[phonedial9]

Stiglitz rulz

[Piscivorus]

watch?v=zPkTItOXuN0

[texans1806]

the guy next to him laughs when his Stiglitz voice squeeks. haha

[mwells219]

it's good to see economists like stiglitz counter the straight neo-classical economists. It's people like him and Krugman who will get us out of the glut of the reagan/friedman era.

[buzwazfuz]

stiglitz is the man

[pooledayan]

This is brilliant and about time. war ("good for growth") is another example of how the desire to measure economic activity leads to absurd conclusions. It is value-free criticism to show that the mantra of economists and politicians is based on false measure of well-being and value creation. It is lie looking for something you lost under a lamppost just because it is easy. But it isn't there! One unemployed person is not the same as 365 people taking a day off. Yet it is for most economists!

[borocks84]

No it's not. Basic microeconomics theory exactly tells u this. Utility is a positive function of consumption and leisure: U(C(I),L) Marginal utility is positive but decreasing in income: dU/dI>0 and dU/d^2I. That is, an additional unit of income, and thus consumption, has a much higher value for a poor (or unemployed) person and it has for a rich person. Only really stupid economists with no regard for microeconomic foundations would tell you otherwise.

[pooledayan]

Granted the desirability / utility of the free time is very different - that is my point. But does that come into effect in GDP calculations? "Growth" is measured in production, and people taking time off (willingly or due to furloughs) may reduce production in a similar way (only difference is how they may lower consumption due to lost income - which is a different matter).

[mockingbird83]

this guy is my new god. Committing career suicide as chief economist of the world bank for bringing to truth to the table about social issues of globalisation and economics because it was the right thing to do. The man deserves a medal. Oh wait, he got one XD

[borocks84]

Stiglitz says government have to spend lots of money on prisons which boosts GDP. However, he doesn't mention that incarcerating people prevents them from working and earning (legally or illegally!) in the economy and thus adding to output.

Second, government have to finance prisons with taxes. These taxes decrease income that would otherwise be available for consumption and investment. I therefore doubt that prisons have any significant and positive net effect GDP.

Any thoughts on this?

[mockingbird83]

borocks - im not an expert but my interpretation: those are in jail, are in jail for committing crimes... crimes which probably lower GDP through various forms of fraud and unlawful acquisitions. People in jails are often not the most upstanding, contributing members of society in any other case.

2nd: the other problem with GDP is that it doesn't reflect the benefits of savings. Taxes WILL be spent, translating to instant GDP increase. Ppl may have otherwised saved that money, meaning no GDP inc

[technosnob303]

whats so wrong with this comment that it got thumbs down? are these unsound arguements?

[neddy05]

The neoclassical view of the world is about simple efficiency and people as numbers. The real world is complex and people aren't a predictable unit. The world never has operated the way neoclassical economists believe. Their models arn't tested, they assume create maths to justify them. When you have lots of people being locked up something is wrong with your society. The neoclassical world view says, everything is ok as long as GDP is rising. Bollocks.

[HiramBinghamIII]

It is an additional irony that a Keynesian (Stiglitz) mentions sustainability as a central premise of his proposal, because even Lord Keynes himself admitted his econ. model was unsustainable long term but as he put it that did not matter because he would be dead.

[HiramBinghamIII]

No serious economist would propose a Green GDP as Mr. Stiglitz has presented it here because of the exceptionally problematic premise (it would leave out significantly more intervening variables than the current model). Lord Keynes, and his school of imposing subjective perceptions of social justice upon others over economic efficiency. What a joke.

[neddy05]

"subjective perceptions of social justice upon others over economic efficiency."

And economics is without subjectivity?

[Shadyhunter04]

Wow, I never though of GNP that way since most GDP cited is U.S. GDP and the difference between the two is very, very small.

I can now see how this might make a huge difference in those countries.

[coltsfancolts]

good vid 5 stars

[bfq3000]

he's right about statistics affecting behavior. for example, look at what happened when they started keeping track of saves in baseball

[Stormwern]

Another matter is the number of transactions. In a socialist state, the government pays doctors for example. In america it's employer -> (employee ->) HMO -> hospital -> doctor. Four times the transactions means four times the GDP. The military industrial complex is structured the same way.

[aitbfo]

Not true. GDP is a measure of production, not transactions.

[rhino015]

yeah true aitbfo

[Shadyhunter04]

FAIL.

[Zeldovich]

He could have added that sometimes building houses that no one can afford with cheap money that puts an upward pressure on asset prices is counted as economic growth in GDP, when it is in fact the opposite. It's all just wasted money. GDP hid our phony economy, in which liabiities and waste were considered assets resulting from increased productivity.

[golfprobro4eagles]

Some day when 3/4 of the world is dust they will find Michael Hudson, Jim Rogers, Joseph Stiglitz, Marc Faber, Peter Schiff and ask how we were so misled by our leaders. Maybe they will listen? God Help us

[archdeaconj]

If you take an index based on 'desirable goods and services', instead of GDP, you find that since about the mid eighties it has been in decline. This is puzzling. Why, when more of us are working longer, harder, and more efficiently, and when new technology has replaced much drudge, is the average standard of living going down?

[peterfdrucker]

There's a pretty interesting article from about 14 years ago, that, I think, sums up a lot of the problems w/ GDP quite well. It also provides a few words on the history of GDP, and the transition from GNP to GDP mentioned by Stiglitz. Check it out, "If the GDP is Up, Why is America Down?" by Clifford Cobb, Ted Halstead, and Jonathan Rowe. It's available at the Atlantic Online.

[krigath]

decent video on the economy and development, although the guy does stumble a bit. Of course development does not wholly depend on the growth in GDP though

[Cruciblious]

Excellent video.

[infokemp]

The problem with the US is that the anti gun laws mean there are only criminals with guns on the streets, there are too many armed young men at home or in prison and too few in the armed forces. If you have 2 million wasted lives in prison thats a symptom of failed education and social policy.

The US will need 5 million service men if Pakistan goes up, (does the US army want to recruit prisoners no, they are ill suited to military life but they may have to recruit prisoners) where's man power

[chaniwie]

yeah!

[bajawind]

the US spends more on prisons than on education--well done. fall out from the drug war--great for thugs with guns (here and abroad, Columbia, Mexico Afghanistan) bad for everyone else.

[kakelly17]

He makes some very valid points, however, the forest example is flawed. When someone chops down a forest it does not leave "nothing there". The land where the forest was is a scarce resource which has an alternative use. That alternative use could be: to grow crops, to graze cattle, to build a ski slope, to build a home, to build a school, to build a hospital, to build a park, and hundreds of other alternatives which make the people of the country better off.

[floopy312]

The land where the forest was has not such a value, because it is not within a city or near a city, it is only valuable for farms but not for schools, homes etc. because u dont want to have ur home in the middle of the jungle, u want ur home near services and jobs that only a city can provide you, that is why your house land cost more than a bigger land within a farm.

The big question here is: what do we need more, FOOD or WOOD? Then we could choose between a farm or a forest.

[kieronj]

Over emphasis on materialism, too much social-comparing, increased disatisfaction all cause declining happiness in the west. Time for a paradigm shift.

[pervezak]

You have to visit a supposedly underdeveloped country like Pakistan to appreciate what he is saying.

[fakeshani]

I couldnt agree with him, anymore. i think it is very risky to focus on only GDP increase. that is because GDP does not include the environmental issues. It is true that America has the highest GDP in the world, but they release a lot of bad effects on the environment. say, the environment is very susceptible to carbon dioxide released gas usage and stuff and even so gas usage is included in GDP, so Green GDP should be the main measurement for economic development for good environment.

[cliffovski]

google the happy planet index. novel economic measure which takes into account sustainability measures.

[jampt1989]

Genius. Period

[rosewood223]

he is a conspiracy theorist.

[fedroger]

Inflation accounts for the bulk of GDP

[o0xst]

Good stuff. Reminds me of why I like facts and hate ideologies.

[jessebickeldotcom]

Why do you hate ideologies?

[o0xst]

Because of their freedom.

[jessebickeldotcom]

I honestly don't understand what you mean.

[o0xst]

oh gads, just noticed you're a paulbot. I wont bother.

[jessebickeldotcom]

Yeah it doesn't make sense to argue with people who prefer reason to ad hominem attacks.

[jampt1989]

This man is my hero

[psikeyhackr]

When consumers buy cars they get added to GDP. But cars wear out and must eventually be replaced. When consumers buy replacements they get added to GDP. But the cars that wore out never got subtracted from anywhere.

Economists don't mention NDP much but only CAPITAL goods get depreciated.

Economists can't do algebra.

They don't mention the planned obsolescence of automobiles either.

[gbm322]

But the GDP growth would be 0% wouldnt it?

[psikeyhackr]

GDP would be unaffected but NDP would be significantly different. But since they don't tell us what NDP is anyway...

They should talk about NDP but maybe they don't want to emphasize what consumers lose. The system depends on consumers being DUMB.

[vivanicola]

in fact, automobiles that get dismantled for obslescence ADD some point to the GDP because the process generates salaries and more expenses to get rid of the debris.

[grinis25]

We can't do this, because it would mean that GPD equals 0. When you buy something it'll inevitably disappear because you buy it for consumption!

[psikeyhackr]

I bought an Accuphsae E-202 integrated amplifier in 1977. I am still using it. Has it been consumed yet? I saw someone selling one on ebay that was still sealed in the box for $3000. That is 5 times what I payed for mine.

GDP and NDP are two different things. Planned obsolescence is a way to avoid market saturation. Create work for people to run around in circles and the rich get to profit from the running.  Who suggests mandatory accounting in the schools?

[grinis25]

a product cannot be counted twice in a country's GDP. Even if you sell it three times on ebay.

[psikeyhackr]

I didn't say it could or should be. But increasing GDP is not necessarily increasing wealth and our economists don't talk about depreciation of durable consumer goods.

[UncleRico13]

Asking 3k and getting 3k are two different things.

[psikeyhackr]

True, but you don't know that he didn't get it.

[calvinjones]

If deforestation eqaulling income seems odd to you then Beyond Growth has in covered, a great book by Herman Daly.

[anderg03]

global government interference problem, blurs the value of GDP as a concept it is intended to be

[cinepie]

global dept program =gdp

cocaine import agency =cia

do you have one ?

[westphalianprinz]

Cocaine import agency or capitalism's international army?