GDP: A Brief but Affectionate History Author: Diane Coyle | Language: English | ISBN:
0691156794 | Format: EPUB
GDP: A Brief but Affectionate History Description
Review
"[A] little charmer of a book . . .
GDP: A Brief but Affectionate History is just what the title promises. . . . Cowperthwaite himself would nod in agreement over Ms. Coyle's informed discussion of what the GDP misses and how it misfires. . . . Ms. Coyle--a graceful and witty writer, by the way--recounts familiar problems and adds some new ones. . . . [E]xcellent."--
James Grant, Wall Street Journal"Diane Coyle's new book,
GDP: A Brief But Affectionate History, is a timely contribution to discussions of modern economic performance."--
Arnold Kling, American"[E]xcellent."--
Adam Creighton, The Australian"Diane Coyle's book is as good a simple guide as we are likely to see."--
Samuel Brittan, Financial TimesFrom the Inside Flap
"Diane Coyle renders GDP accessible and introduces a much-needed historical perspective to the discourse of what we measure and why. A must-read for those interested in the far-reaching impact of GDP on the global economy, just as we seek ways to go beyond it."--Angel Gurría, secretary-general of the Organisation for Economic Co-operation and Development
"Countries are judged by their success in producing GDP. But what is it and where do those numbers reported on television come from? Diane Coyle makes GDP come to life--we see its strengths and its fallibilities, and we learn to understand and respect both."--Mervyn King, governor of the Bank of England, 2003-2013
"This is an engaging and witty but also profoundly important book. Diane Coyle clearly and elegantly explains the fundamental difficulties of GDP--and how this headline figure is liable to radical change by apparently simple changes in method. She also provides a nice treatment of alternative proposals such as happiness surveys."--Harold James, author of Making the European Monetary Union
"Well written, interesting, and useful, this book will appeal to many readers. I learned a lot from it."--Robert Hahn, University of Oxford
See all Editorial Reviews
- Hardcover: 168 pages
- Publisher: Princeton University Press (February 23, 2014)
- Language: English
- ISBN-10: 0691156794
- ISBN-13: 978-0691156798
- Product Dimensions: 8.5 x 5.7 x 0.8 inches
- Shipping Weight: 12.6 ounces (View shipping rates and policies)
Gross Domestic Product is a concept so massive, so convoluted, so compromised by rules, exceptions, patches, and qualifications, that only a handful of people in the world fully understand it, and that does not include the commentators and politicians who bandy it about, daily. "There is no such entity out there as GDP in the real world, waiting to be measured by economists. It is an abstract idea." That sets the tone of Diane Coyle's excellent and sympathetic examination of GDP. Then it's on into the impenetrable forest.
Inconsistencies abound. If you care for your child, it doesn't count in GDP. If you take in neighborhood children, it does. If you paint your bedroom, it doesn't count. If you hire the kid next door, it does. Technology and technical improvements don't count much, because we don't know how to measure and incorporate them. Even in the mid 90s, we knew that technology was actually trimming inflation by 1.3%, but that was never acknowledged. This is the black hole of GDP, as tech becomes huge.
A special conundrum comes from the soaring financial sector, which makes money without actually producing anything. Accounting for that has evolved from "Alice and Wonderland" to "statistical mirages" that warp the GDPs of many nations. Financials account for nearly 8% of US GDP, but the way we account for them overstates their heft by 20-50%. For example, both borrowing are lending are considered productive businesses, and their numbers pad GDP both ways, using the same funds.
Coyle stays focused, giving us an overview that is understandable (as well as frustrating). She does it by structuring her book as history, showing how economies and GDP have evolved over eras.
Have you perhaps heard that some people question whether GDP should continue to dominate public policy? Or question whether economic growth should still be a top priority in rich countries? Well, the author of this book (DC) isn't having any of THAT nonsense, thank you very much. She offers here a well-written, very conservative defense of GDP orthodoxy, aside from a few technical criticisms at the margins. Unfortunately, the book omits some important topics, isn't entirely convincing in defending GDP, and may confuse the reader as to several points.
1. DC writes in a clear and engaging style throughout -- no small accomplishment, given the technical nature of the subject. She is especially strong when explaining some of the technicalities in the calculation of GDP, such as hedonic pricing, methods of adjusting for inflation, and purchasing power parity. Her argument about how GDP overstates the contribution of financial services was new to me, and very nicely explained.
2. However, the book's discussion of finance also omits an important fact: GDP does not include capital gains, a category comprising, among other things, profits earned on financial markets. That fact is extremely significant, because it explains how annual volume on financial markets can be many times bigger than global GDP (also unmentioned here). The same point therefore goes a long way to explaining how the wealthiest people make money and drive the world economy. In the US, nearly 50% of all capital gains are earned by the 0.1% of wealthiest people.
Perhaps DC didn't mention the connection between capital gains and GDP because she is simply not so interested in income inequality, especially within countries. (Her few passing references to it are all in an inter-country context.
GDP: A Brief but Affectionate History Preview
Link
Please Wait...