Then there is also the fact that GDP takes no account of how income is distributed. There could be complete income equality with everyone's purchasing power growing equally. Or the society may be divided between a small minority of the extremely affluent and a majority of the extremely destitute---or anything in between. GDP gives no clue one way or the other. Growth in the incomes of a few billionaires can produce impressive growth in GDP even as a majority of people starve.
Underlying all these deficiencies is the simple fact that GDP is based on market transactions, which means GDP is a measure of the rate at which money is flowing through the economy. Anything that increases the flow is therefore treated as a positive, even if it is clearly a negative for the society. Furthermore, because money metrics make no distinction between phantom wealth and real wealth, activities that generate profits from purely financial transactions unrelated to the creation of anything of real value count as additions to GDP and presumably to national well-being.
That is why restructuring the economy to shrink the manufacturing sector and grow the financial sector could appear to make us richer as a nation, when in fact it reduced our capacity to produce real things in favor of giving priority to generating profits from the exchange of worthless financial assets.
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