Friday, January 3, 2014

Gross Domestic Product Turns 80 Today

First formulated during the American Great Depression, does the Gross Domestic Product or GDP truly is the measure of human progress? 

By: Ringo Bones 

Our global economic system today is forever thankful of famed economist Simon Kuznets for formulating the term Gross Domestic Product or GDP (almost quite but not to be confused with Gross National Product or GNP) back in January 3, 1934 - so today is the GDP's 80th Birthday or 80th Anniversary - as a mathematical quantifiable measurement of human progress of a nation-state via its economic health. Thanks to Kuznets’ monumental work in economics during his tenure at the Johns Hopkins University during the 1930s and the 1940s, his GDP has since been widely recognized as the keystone – both conceptually and statistically – of modern gross national income measurement; By the way, Simon Kuznets was born on April 30, 1901 and then won the 1971 Nobel Economics Prize (which was first established in 1968 and awarded its first Economics Prize in 1969). Luckily, Kuznets’ monumental work in economics during the 1930s that lead to the GDP had him awarded a Nobel in 1971 before he passed away in July 8, 1985 – which is fortunate since the Nobel Committee decided not to give away their Prizes posthumously around the start of the 1970s. Although there are detractors to the reliability of Kuznets’ GDP measurement as the true benchmark of human progress of a certain nation-state?

Back in 1972, the King of Bhutan adopted the concept of Gross National Happiness as the true benchmark of human progress – at least it more or less still holds true in the remote corner of his kingdom. And back in 1990, the United Nations formulated the UN Human Development Index where gender equality factors serve as the primary benchmark for human progress. Is Kuznets’ GDP in its current incarnation just too “inefficient” to be used as a true and reliable benchmark for human progress?

No comments: