In our globalized world, increasing a country’s Gross Domestic Product (GDP) is increasingly considered to be imperative. Whether we should be basing humanity’s progress on abstract monetary values is highly contestable, but GDP is the monetary value which our world leaders rely on when they debate and compete for public office.

There are a lot of problems with this, one of which is that money is not natural and is therefore unconnected to what the economy in many ways represents.

How so you may ask? Well, because the economy is based primarily on human beings, who are far more complicated than a coldly calculated equation.

GDP measures how much growth consumer spending generates; in other words, GDP measures the increase in consumer spending. But even if this was the proper way to measure economic prosperity, GDP lumps a lot of different spending habits together.

For example, whether a consumer goes to Wal-Mart and spends $50 on products imported from factories in China, or goes to a local organic food market and buys the same amount in supporting a local environmentally sustainable farm, they are still considered equally beneficial to the economy. As long as the money is being recycled back into the economy and the demand for production and consumption increases, GDP will grow. That’s considered economically healthy.

However, GDP does not take into account many variables that have profound effects on the economy. These include socioeconomic impacts such as crime rates, divorce rates and unpaid domestic labour – ranging from volunteer hours to stay-at-home parents who dedicate their lives to raising healthy and (economically) productive children. Also, as hinted to above, it doesn’t include the impact consumerism has on the environment.

As one academic put it, “When you’re feeling a little chilly in your living room, you don’t hold a match to a thermometer and then claim that the room has gotten warmer. But that’s what we do when we seek to improve economic well-being by prodding GDP.”

To put it even more accurately, we can fill up our trucks at a Shell station and that will bump up GDP. But we’re also supporting the tarsands, which are a primary source of Canada’s greenhouse gas emissions. Moreover, it’s degrading the immediate habitat around it by poisoning lakes and rivers and causing huge declines in vegetation and wildlife. GDP does not consider these effects. It only considers dollars and cents. In its books, consumerism is king, regardless of costs outside monetary realities.

This should partially explain why our federal government is so hesitant to commit to climate change initiatives. If people spend less on oil, it means we’re compromising fiscal growth. However, it also has a long string of benefits, such as cleaner air, which would lower health-care costs, as well as improving aboriginal relations and our international reputation by not destroying indigenous people’s lives through environmental destruction, to name a few.

Environment minister Jim Prentice has said that to commit to a carbon tax would be economic suicide. To his mind, it would lower the GDP of the country. Unfortunately, what he doesn’t realize is that it would also contribute towards saving the environment, which is essential for humanity’s survival.

What we’ve landed ourselves in is a sense of economic paralysis. We can’t solve capitalism’s flaws because we don’t include many crucial variables when we measure the state of the economy. We need to overhaul these measurements if there’s going to be any possibility for change.

Matt Austman is a University of Winnipeg politics student. Check out his next comments piece for an alternative to using GDP as an economic indicator.

Published in Volume 64, Number 10 of The Uniter (November 5, 2009)