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Wealth uncounted

May 4, 2016

The Economist this week focuses on how GDP fails as a measure of a nation’s economic output. Part of that lies in the fact that GDP does not measure at all goods with no cost to the consumer, such as Google maps or Facebook. “By global convention, zero-priced goods are excluded from GDP. So are all voluntary forms of digital production, such as Wikipedia and open-source computer programs.”

One free service they don’t mention are the consumer reviews on Amazon and other retail sites. Few consumers today are sold a badly made washing machine or over-priced watch by a retail salesman. Instead, they peruse reviews to make sure their expectations mostly are met. And the web tells them instanter the price they should pay. The brown economy has gotten smaller in some ways. Alas, it hasn’t disappeared. We still need a way to subtract from GDP the cost of pyramid schemes and other scams.

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