One of my not so sophisticated jokes is that GDP stands for “Gross Demonic Product”. I have long compared France and the USA in economic matters, as the two republics are highly comparable. Paul Krugman is now of this opinion. As he puts it:
“I think I can usefull [sic] phrase my concerns in terms of my favorite comparison on these matters, which is between the United States and France.
Why this pair? Because we’re talking about two advanced countries that clearly have similar levels of technological competence but have made very different social choices; in particular, France not only does much more redistribution, it has expanded its redistribution over time, limiting the rise in overall inequality, while the United States has not.
So how have the countries’ destinies compared during the New Gilded Age? French growth actually has been somewhat slower, although hardly the catastrophe the country’s incessant bad press might lead you to expect.”
Overall French GDP is about 20% less, per capita than that of the USA.
However, it’s not clear that it means a lesser way of life.
Take medication: the French can buy the exact same drug, from the exact same manufacturer (French, American, or German), and the same package, and pay a fifth the cost. That’s fifth LESS contribution to GDP. The money contributing to GDP ends up, overseas, in some tax haven. How does that help well-being? By helping tax dodging plutocrats?
Take education: there is more than a trillion dollar of student debt in the USA. That’s a trillion dollar of contribution to GDP… of inextinguishable debt. The French GDP is terrible that way, because there is NO contribution to GDP, in France, from over indebted students.
Take transportation. Contemplate an American going around with his car. The car uses much more GDP per mile than the High Speed trains millions of French use every week. So GDP tells us the greater the efficiency of fast, modern transportation, the poorer a nation.
The USA’s economy has much improved since 2007. Thanks to fracking. Now the USA is the greatest fossil combustible producer in the world, even beating Putin’s petro-state. Fracking the planet to death since 2007 is great for the GDP of the USA. However, scientific studies in 2013 show that methane leaks all over much of the USA: that’s not so great for the planet, as CH4 is twenty, or more, times more of a greenhouse gas than CO2. (CO2 itself acts as a trigger for H2O, itself the prime greenhouse gas.)
The French, in vacation all the time and retired, early on, enjoy life outrageously. That brings a lower GDP. OK, so the French GROSS product is lower than it could be. Does that mean that French refined product is low? Of course not, quite the opposite: the grosser, the less refined.
Is a slave working the GDP per capita of his master up, better off?
France has been handicapped in recent years by artifacts related to her refusal of some methods, such as OGMs. The result? France went down from the world’s second food exporter to fifth. France has also outlawed fracking. An efficient crack-down on corruption (by contrast to corruption perception) has led to the loss of many contracts overseas.
What is GDP? The sum of all moneyed transactions. Thus, when a young French retiree works exclusively in a non-profit fashion, no GDP is generated. But that does not mean nothing is produced. Instead what’s produced is too precious to be moneyed.
In general, in an economy, what is the most precious, cannot be bought, or sold. That’s one thing free market naïfs don’t get.
It’s not a coincidence that Doctors Without Borders, Journalists Without Borders and the like got started in France.