Blog visitor Phua Kai Lit points out that the way we calculate GDP is deeply flawed.
The way national wealth and economic growth are calculated needs to be changed e.g. “bads” such as environmental pollution and health hazards need to be deducted from GDP and GNP.
Then we won’t have witness the phenomenon of Mainland Chinese technocrats pursuing high rates of “economic growth” while ignoring environmental devastation and generation of health hazards.
Simon Kuznets (the father of these) originally wanted household production to be added to national wealth calculations. But this did not materialise. So, the wealth of the poorer countries is under-estimated to some degree (household production for own consumption and not for sale on the market).
As it is, GDP calculations in the dominant neoclassical economics tradition do not make complete sense e.g.
(1) If a woman (or househusband) stays home to take care of the baby and do the housework, this is not added to GDP. But if care of the baby is handed over to paid minders or housework/laundry is done by paid workers (part-time maids and laundrettes), then it is added to GDP.
(2) More illogically, if you build a factory to manufature cigarettes, you are adding to the GDP. If you provide medical treatment to the lung cancer victims who arise from smoking the cigarettes, you are also adding to GDP!