Why GDP Sucks as a Measure of a Nation’s Success

by Jonathan Mena

Ya know, I’ve always had a problem with GDP. Gross Domestic Product. Every time it grows, the world rejoices. But I wonder … who is actually growing? When you look at it, GDP doesn’t measure the well-being of people. It measures the output of a system. Is that really the defining factor of a successful country?

Put simply, GDP is a measure of how much money moves. It’s one big, fat receipt. If more things are bought, sold, or financed, the number rises. If fewer things are, it falls. That’s it. GDP is less about the health of citizens and more about the health of transactions. It’s a measure of corporate success, not human success.

When everyone’s favorite cerveza hit the masses, it sent millions of Americans home. And when Americans are home, they can’t spend ,especially when the certainty of their financial future is in question. So what did our government do? It gave us free money to keep the economy afloat. And for the most part, it worked. But that was the first time I questioned the implications of an economy that relies so heavily on consumer spending. What if, kind reader, we all decided to channel our inner Dave Ramsey and be as frugal as possible? I don’t know exactly what would happen, but it wouldn’t be pretty.

If a hurricane destroys a city and we spend billions rebuilding it, GDP goes up. If we go to war and spend on weapons, GDP goes up (which is a topic for another day). If rent rises or people eat out because they’re too tired to cook, GDP goes up. But if a family cooks dinner at home, shares the meal, and spends less, GDP goes down. So by that logic, stress, destruction, war, and dependency are counted as “progress,” while stability, sustainability, and self-sufficiency are invisible.

The largest share of GDP is consumer spending , roughly two-thirds of it. That means our “national success” depends on people spending as much as possible, all the time. But here’s the catch, kind reader: not everyone can afford to keep spending. So we make it easier to borrow. Credit cards. Personal loans. Klarna. Afterpay. We invent new ways to help people spend money they don’t freaking have …to buy things they can’t afford … just so we can say the economy is “strong.”

It’s a vicious, self-serving cycle. GDP goes up because debt goes up. Politicians point to the number and say things are improving. But are they? And for who?

If the measure of success for a nation is defined by the consumption of its citizens, is that really success?

The truth is, GDP was never designed to track a nation’s success. It was invented during the Great Depression to measure production. It was a tool for industrial planning, not human thriving.

So, kind reader, here we are again. What do we measure instead?

The stability of folks …whether they could handle a thousand-dollar emergency without borrowing? Maybe we measure access … how many families can own or save for a home? Maybe we measure mobility … not how fast the economy grows, but how far its people do.

Or maybe we stop pretending one number can define something so abstract.

GDP was built to measure the machine. But we the people are not the machine.

So, kind reader, the next time someone says the economy grew by X percent, ask … who grew? Because success is much more than the delta between sales and debt. Until we change what we measure, growth will keep looking like progress while quietly eroding the very things it’s supposed to serve.