Issue #33 - The GDP Myth! Why Growth Doesn’t Equal Progress

Welcome to the latest issue of The Qi of Self-Sovereignty. The newsletter exploring what it means to be free in an increasingly not-so-free world.

Whether you're looking to locate your authentic self or investigate sovereignty, you're in the right place! In each punchy issue, I share a powerful quote alongside thought-provoking content that makes you go hmm...

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Thought-Provoking Quote:

"The more clearly we see the reality of the world, the better equipped we are to deal with the world. The less clearly we see the reality of the world—the more our minds are befuddled by falsehood, misperceptions and illusions—the less able we will be to determine correct courses of action and make wise decisions." - Scott Peck, The Road Less Traveled

Schools are judged by students' test scores, a practice called standardized testing. On the surface, it seems reasonable—we want kids to hit certain academic milestones. Fair enough, right?

But here's the kicker: when test scores become the ultimate goal, we lose sight of what matters.

Interestingly, this phenomenon has a name: Goodhart's Law, which states that "when a measure becomes a target, it ceases to be a good measure."

In the case of standardized testing, teachers start "teaching to the test," zeroing in on material that's likely to show up on exams. The big picture—the actual learning—gets blurry. Creativity, critical thinking, and well-rounded education take a backseat.

So, what does this have to do with GDP? ...thought you'd never ask!

Gross Domestic Product (GDP) measures the monetary value of all goods and services produced within a country's borders.

Today, nations globally optimize for GDP growth because it is seen as the gold standard for measuring a nation's value creation. Politicians, businesses, and institutions focus on GDP because it's a simple, widely accepted metric that "seemingly" signals progress.

However, although GDP may have once been a useful measure of value creation in society, when it became a target, it ceased to be a good measure. Now, leaders chase GDP growth at all costs, sacrificing the very thing it was supposed to measure.

The result? Economies look great on paper, with shiny GDP growth stats to boast about. But on the ground, it's a different story—soaring living costs, rising mental health struggles, growing societal unrest, and life is just harder. This begs the question:

If the economy is "growing," why does it feel like we're falling behind? What is GDP really measuring?

Let's take a look...

For an activity to count toward GDP, it needs a price tag—a monetary transaction. If there's no money changing hands, it's invisible in the GDP framework.

Take this hypothetical: imagine I develop a free, at-home method to turn water into gasoline and share the blueprint with the world for free. Think about the sheer value that would create—free gasoline would revolutionize life as we know it! But guess what? This immense value wouldn't show up in GDP at all.

In fact, GDP would most likely drop because people would stop buying gasoline, and those transactions would no longer occur. On paper, the economy would look like it's shrinking, even as humanity experiences a massive leap forward in quality of life.

For my groundbreaking invention to show up in GDP, I'd have to slap a price tag on it—reducing its true impact on society. Backwards, right? To create "value" on paper, we have to diminish the real value we're offering. Well, that's GDP for you.

In our ever-burgeoning world, the relentless pursuit of GDP growth and the need to service mounting debt has led to the monetization of virtually everything around us, from tangible assets to intangible experiences. We must drive monetary growth in areas where monetary exchange previously did not exist. In the words of climate writer and entrepreneur Brianna Lee Welsh:

"Community and social services are disqualified as irrelevant. Gifts of reciprocity deemed wasteful, if they cannot be converted for a fee. This logic motivates the conversion of forests into timber, water into bottles, ideas into intellectual property, social good-will into paid services."

On top of this, as we prioritize GDP growth, those in power are pushed to boost economic activity—the quickest way being currency devaluation. As prices rise, it creates the illusion of greater economic activity. But in reality, no additional value has been created; life has simply become harder. Plus, as our cost of living continues to climb and life grows tougher, contributing to society from a philanthropic standpoint becomes a luxury few can afford— we're increasingly pressured to monetize what we might have once shared for free.

Essentially, targeting GDP growth creates a vicious cycle of monetization. Beyond bolstering government talking points, GDP fails to capture the reality of what we're experiencing on the ground.

To put one last nail in the GDP coffin...

Even if we could measure value creation, I'd argue money isn't the right avenue to do it. Stay with me for a second. We all know that technology is constantly improving efficiency and productivity, which typically drives prices down over time. So, logically, as society advances, things should get cheaper.

But here's where it gets interesting: immense value could be created while GDP still shows a decline. Let's break it down. Imagine prices fall by 10% a year, but GDP drops by 5%*. At first glance, it looks like the economy is shrinking, right? But in reality, the economy could be growing by 5%—it's just that the falling prices mask that growth.

*Disclaimer: I recognize that GDP is adjusted for inflation. However, it's important to note that the methods used to measure inflation have been subject to significant manipulation over time and greatly understate actual inflation.

In other words, while the real value of goods and services is increasing (thanks to technology and innovation), GDP fails to reflect this because it doesn't account for falling prices. Instead, it counts money transactions, making it seem like things are getting worse when, in fact, they're getting better.

Once again, this just highlights how GDP is a poor measure of true value creation.

To bring it full circle to the opening quote, we lose sight of what truly matters when we try to reduce our complex, lived experience to a single metric for measuring progress. As Alfred Korzybski wisely said, "The map is not the territory." GDP will never capture the full scope of value creation in society. Until we step back and reassess what we as individuals truly value, trying to boil down the world to a single data point will only distort our reality and leave us more confused. The key to reclaiming control of our lives and our value lies in self-sovereignty—the ability to define and measure our own worth, independent of flawed systems that don't reflect the richness of our lived experiences.

If you're interested in exploring this topic further, I go deeper in my book, The Hidden Cost of Money, and I highly recommend Charles Eisenstein's book Sacred Economics. It's a thoughtful and inspiring read from an individual who challenges conventional thinking in powerful ways.

Thanks for taking the time to read this issue of The Qi of Self-Sovereignty. I hope you found it insightful.

I always welcome feedback and thoughts. So, do not hesitate to respond to the newsletter email, comment on the article or reach out via Twitter.

Seb