Opinion: GDP is no longer a reliable compass

[nitpicker]

http://www.dw.com/en/opinion-gdp-is-no-longer-a-reliable-compass/a-42613387

Opinion: GDP is no longer a reliable compass

23.02.2018

Unfortunately it is not a joke, but the frightening truth. gross domestic product (GDP) has a list as long as your arm of shortcomings in how it captures, calculates and interprets growth, but it still remains the only serious yardstick for measuring macroeconomic activity. As if the measure were based on entirely sound data, every publication of distinction in the science and business field will produce quarterly or annual forecasts of how GDP will move in the short and medium term, and those data are reported with all seriousness by the media.

Focusing purely on GDP and its movement is a bigger delusion than ever, and that's not because of the classic leftist critique, which insists that GDP only reflects prosperity as a whole but says nothing about its distribution, and that is why it can not be an indicator of the wealth of a society. The new re-evaluation is far more rudimentary. It centers on the fact that the GDP measurement has completely lost touch with reality.
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New technologies have shifted an increasing share of value creation into virtual domains beyond the physical reality of goods. For many, the innovations of the digital world have become detached from space and material, so therefore several key macroeconomic metrics are simply missing. These digital goods and services provided online are best only partially captured.

If modern apps or platforms, such as Uber, Car2Go, or Airbnb, enable a sharing economy, and thus far more efficient use of existing goods, cars, or housing, then GDP will, if anything, only be based on rudimentary approximations.
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So, if Wikipedia allows access to an online encyclopedia and YouTube permits users to play videos and films, or if nerds upload their self-created games, software, music videos or photos, then the end-user gets something for nothing. So while consumer satisfaction or well-being rises as a result of the purchases, GDP falls because fewer dictionaries or DVDs are being bought.

The same applies if the traditional print media is replaced by freely accessible electronic news portals. Although consumers receive free, fast and easier access to information, GDP drops, because newspapers and magazines lose advertising revenue, resulting in layoffs and lower added value to the economy.
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