RS8: GDP

This blog post is my take on GDP, with the input of "What is GDP" by Planet Money, published on October 27, 2011 and "Why GDP per capita can start a bar fight”, by Planet Money, published on January 10, 2012.

I never knew what GDP was. It was during a class I was required to take last semester, a class which I hated so much I could never even remember the name of it, that I had first heard of this term. At first, I thought the professor was saying "GTP", and since I really didn't know what this meant, i thought to Google it. And obviously, since I had the wrong letters, Google showed me something totally irrelevant. It wasn’t until one fine day in my Macroeconomics class that I finally understood the meaning of the term “GDP”.

GDP, or gross domestic product, refers to the market value of all officially recognized final goods and services produced within a country in a given period. According to what I learned in class, and the video “What is GDP” by Planet Money, I learned that GDP is the output of all things made in the USA, only counting the final sale of goods and services to avoid double counting. The example shown in the video of a box of cornflakes was straight to the point. There are many intermediaries in the process of creating one box of cornflakes; there’s the farmer who planted and grew the corn, the transportation authority who transported the corn to the cornflakes factory, the actual process of making the cereal, and the makers of the box. Payment for goods and services were made along the way, but the final sale of the good, when a consumer buys the cereal from the grocery store is what is counted in the GDP.

According to the article “why GDP per capita can start a bar fight” also by Planet Money. The GDP per capita is sometimes used to measure a countries standard of living. Some may say that the U.S. has a preferable economy compared to Europe, and others disagree saying that the per capita doesn’t measure a person’s happiness. The U.S. may have the higher GDP rate, but so much is spent in the way of things that don’t make much difference. As much as 17% of US spending goes into health care yet our country ranks behind every West European country when it comes to life expectancy. Every country in Western Europe has less inequality than the United States and get as much as 4-6 weeks paid time off. They are much happier, and much healthier than we are.

So who cares if our GDP is larger than theirs?
I'm moving to Italy.