More on GDP debate

It looks like the Financial Times is not going to publish my letter in response to its editorial on “de-fetishing GDP” and its earlier feature on the same subject (see 28 January post). For those interested my response is reproduced below. Admittedly it is a bit assertive but that is hard to avoid in such a small amount of words:

Sir, Much of the discussion on the weaknesses of GDP as a measure of social
progress (“De-fetishising GDP”, January 30) misses the point. It is largely
an attack on economic growth masquerading as a technical discussion of
economics.

Whatever the shortcoming of GDP it should not be forgotten that economic
growth is the foundation for our prosperity. It has brought huge benefits to
humanity over the long term including a massive increase in longevity,
spectacular declines in infant mortality, sharp decreases in working hours
and much else besides. No doubt it also has the potential to allow us to see
off future challenges such as the scourge of poverty in the developing world
and climate change.

If anything there is a strong case that GDP underestimates the benefits of
material advance. The most famous example is that of Nathan Rothschild, one
of richest men in the world in the early nineteenth century, who died in
1836 of an infected abscess. Nowadays such a routine infection could easily
be cured by antibiotics. Yet GDP does not measure the huge welfare benefits
of such quality improvements.