GDP as a ‘false beacon’

In case of a nuclear disaster, it would be argued that an increased economic activity would be the results due to a large-scale reconstruction that would have to be undertaken. As a good measure of economic output, GDP would increase to a great extent. In this situation, a power plant disaster would lead to a severe damage to commercial buildings, roads and other major infrastructures which would result to boom in the construction industry. This will in turn lead to creation of many jobs and thus a big boost to the GDP since the wages salaries and wages paid to workers will be spent and thus stimulating the economy.  In fact, all the major recovery efforts will involve increased financial expenditure, including the cleaning up after the damages and the expenses on health care for those individuals who will get ill as a result. This will just be fallacy, where damages, lost resources and human lives will be measured in terms of resulting growth in GDP and that the situation will be better if the country endures this disaster.

However, if the economic performance is measured by the use of GDP from this perspective, it is not possible to obtain accurate results due to the various limitation of GDP. This implies that GDP will be a false beacon. GDP is just a gross calculation of bought or sold products and services, and does not give a distinction between economic activities that offer well being and those which do not. Furthermore, there is no consideration of the environmental damages that would result from such a disaster and whose results will affect people’s lives in the long-run.