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The Feminist Valuing the Devalued Process

A Feminist Gross Domestic Product: The Genuine Progress Indicator

Introduction:
GDP, or Gross Domestic Product, is the way the health of an economy is traditionally measured; however, from a feminist perspective there are some major flaws in its definition and calculation. For example, would you consider a car crash a positive or negative event? A car crash would be tabulated as a positive under the GDP, because the lawyer, insurance, and repair fees levied boost the expenditures side of the GDP equation. Since GDP is used as a proxy for the well-being of a nation, it should be a true reflection of human values and increased standards of living. Unfortunately, this is not the case. In fact, GDP was never intended to fulfill the task of measuring the progress of human welfare.

GDP versus GPI: Main Differences:
The GDP is an aggregate tally of the goods and services bought and sold during a set time period. It evolved from the GNP (Gross National Product), which was created during World War II in order to estimate wartime production capacity, not the general satisfaction of a population. Instead of separating costs from benefits, welfare increasing productive activities from destructive ones, the GDP counts all monetary transactions as adding to a healthy economy. By definition, GDP adds up total consumption, investment, government expenditures, and the difference between exports and imports, while it leaves out everything outside the realm of monetized exchange. On the contrary, the GPI makes it a point to separate positive and negative costs, adding and subtracting the respective amounts[1].

The Flaws of GDP Measurements: Unpaid work, whether in households or the volunteer sector, is completely ignored by the GDP. A meal bought at a restaurant adds to GDP, but a meal cooked from the vegetables grown in a home garden does not. The distinction between goods and services counted in the GDP and those which are not is arbitrary, and, at times, actually hurts planetary and human health by not distinguishing between good and bad purchases. Why should leukemia treatments, oil spills, cigarettes, and toxic waste storage increase a measurement that proxies human welfare? The GPI, on the other hand, redresses this flawed accounting by tabulating such purchases as negatives, and by subtracting out the harm done to humans and the environment.

GDP ignores environmental damages and pollutions. Picture from freefoto.com

Externalities:
GDP measurements ignore externalities because they are not considered expenses. Externalities include any positive or negative affect not accounted for by a firm or other economic actor monetarily. Byproducts created in process of producing or consuming a good or service, especially those that affect parties not involved in the primary economic transaction are not included in the GDP. For example, the consumption of alcohol by some parties increases the risk of car crashes for everyone on the road - a negative consumption externality. On the other hand, the purchase of a fire extinguisher by one homeowner protects their own house, and also decreases the likelihood that a fire might spread to one of their neighbors' houses - a positive consumptive externality. On the production side, a company may ship products in packages that are not biodegradable. This is considered a negative externality because the company does not pay for the future environmental damage caused by the containers; however, a company creates a positive externality when it takes poison out of groundwater, indirectly helping restore animal populations. Pollution is left out of GDP even though its spread causes global climate change and respiratory problems. GPI subtracts pollution from its measurement and adds positive externalities such reductions in youth crime rates due to innovative after-school programs.

The Contents of the GPI:

1. Crime & Family Breakdown
   • Negatives Subtracted Out:
     Legal Fees
     
     Medical Expenses
     
     Damage to Property
     
2. Household & Volunteer Work
   • Positives Added In:
     Childcare
     
     Home Repairs
     
     Volunteer Work
     
3. Income Distribution
   • Positives Added In:
     When the poor receive a larger percentage of total national income
   • Negatives Substracted Out:
     When the poor receive a smaller percentage of total national income
4. Resource Depletion
   • Negatives Substracted Out:
     Depletion or degradation of wetlands, farmland, and nonrenewable minerals (such as oil)
5. Pollution
   • Negatives Substracted Out:
     Costs of Air and Water Pollution
     Damage to Human Health and Environment
     
6. Long-Term Environmental Damage
   • Negatives Substracted Out:
     Climate Change
     Nuclear Waste Management
     Use of Fossil Fuels
     Atomic Energy
     Depletion of Stratospheric Ozone
     Use of Chlorofluorocarbons
     
7. Changes in Leisure Time
   • Positives Added In:
     Increases in Leisure Time
   • Negatives Substracted Out:
     Decreases in Leisure Time
8. Defensive Expenditures
   • Negatives Substracted Out:
     Medical Bills
     Repair Bills
     Commuting Costs
     Household Expenditures on Control Devices such as water filters
     
9. Lifespan of Consumer Durables & Public Infrastructure
   • Positives Added In:
     Value of service capital items provide every year
   • Negatives Substracted Out:
     Money spent on capital items
10. Dependence on Foreign Assets
    • Positives Added In:
      Net additions to capital stock
    • Negatives Substracted Out:
      Money borrowed from abroad (unless used for investment)

End Notes:

References and Recommended Further Reading(*):

"GPI offers a useful counterpoint to GDP" by Alan T. Seracevic. San Francisco Chronicle, July 27, 2003

"The Growth Consensus Unravels" by Jonathan Rowe. Dollars and Sense, July-August 1999, pp15~18,33.

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