Why Does the GDP Go Up when the World Burns?

Gross Domestic Product tracks how much stuff we produce—but does it tell us how well we’re doing? In this episode of American Socrates, we question the dominance of GDP as our society’s main scoreboard. Through a powerful personal story and a clear-eyed breakdown of alternative metrics—from the Human Development Index to Gross National Happiness—we expose how GDP hides inequality, erases care work, and confuses growth with well-being. What if success meant more than just making more? Discover why it's time to rethink what we measure—and what matters.

Keywords: GDP, economic growth, well-being, Human Development Index, Gross National Happiness, inequality, care work, economics and ethics, American Socrates podcast

Transcript

Did you ever hear about the oil spill that boosted the economy? In 2010, an oil rig called Deepwater Horizon exploded in the Gulf of Mexico. Eleven workers died. Hundreds of millions of gallons of crude oil gushed into the ocean. The coastline was devastated. Dead wildlife, fisheries ruined. Families had to be displaced. It was a major headache for BP, who owned and operated the rig. It remains one of the worst environmental disasters in American history.

But what's really twisted is that the economy improved because of this. Wasting oil into the ocean was somehow a good thing for the economy, at least according to the people who measure it. You see, after the explosion, something strange happened. The gross domestic product, or GDP, the number that we use to measure the economic success of our country, went up. Why did it go up? Because suddenly there was this surge of economic activity. Crews had to be hired to clean the beaches. New boats had to be built. Lawsuits had to be filed. News networks had to send out reporters. Hotels then filled with contractors and helicopters that buzzed over the spill. Money changed hands. And in all of these myriad ways, services were rendered and goods were utilized. The economy, at least on paper, blossomed.

But here's the question. If the system that caused the disaster is the same one that counts the cleanup as progress, what exactly is it we are measuring? Because it's not just oil spills. When people get cancer, the GDP goes up. When wildfires burn homes to the ground and insurers pay out billions, the GDP goes up. And don't get me started on how war can increase the GDP. As long as we're buying enough missiles and body bags, war is like steroids for the economy.

This is not a mistake. This is the system. We've built an entire model of economic success that rewards activity no matter what the human cost actually is. It doesn't ask if the work is healing or if it's harming, just whether it's transactional. And what counts here as transactional is whatever we can price. That's the world we live in—a world where money gets counted but care or love or happiness don’t. Where the economy can thrive while people inside it are breaking down in despair. An economy where contentment and happiness don't count, but fear and misery kinda do.

So today we're going to ask: why does the GDP still define a healthy economy? Where did it come from? What does it miss? And how has it helped the powerful people around us sell us a version of economic success? This episode isn't just about bad statistics. It's about the moral cost of measuring the wrong things and thinking that they're the right things. Because if we aren't the ones asking what the economy is for, someone else will be all too happy to supply the answer to that question for all of us.

Welcome back to American Socrates. I'm your host, Charles M. Rupert.

It probably wouldn't surprise many of you to learn that the GDP was never meant to measure human flourishing. It wasn't created by philosophers, or by social planners, or even by ethicists who wanted to build a just society. It was built by bean counters in a time of crisis, because the U.S. government needed to figure out how many tanks, how many bullets, and how many planes it could produce before it sent its troops off into World War Two. The GDP was designed to answer one simple question: how much economic activity can we track in a war economy?

The man who designed it, Simon Kuznets, was no fool. In 1934, when he presented it to Congress, he included a warning. He said—and this is a direct quote—“the welfare of a nation can scarcely be inferred from a measure of national income.” He knew that just because money was moving around didn't mean life was getting better, or that people were flourishing. Kuznets knew that value and costs were not the same thing.

But policymakers didn’t seem to care about that, because after the war, the GDP proved to be a perfect propaganda tool. America could say things like, “Look at our GDP. It's higher than the Soviet Union's. So we're richer. We must be doing better. We're happier. We're winning the Cold War.” And just like that, a wartime tool turned into a peacetime scoreboard. The number became the goal, the measure of how well we are doing as a nation—how happy we are, how successful we are.

And like any bad religion, it started shaping reality into its own image, promoting itself, creating an economic system that looked to it for all of its answers. The GDP became the metric of success, not because it was moral, not because it was even accurate, but because it was simple. There was one number, a bottom line, and the strong faith in the assumption that as long as that number was going up, everyone everywhere was simply doing better. “A rising tide lifts all boats,” or at least so the economists say. Of course, a rising tide often looks more like a tsunami, and the people in the yachts get to enjoy the water a lot more than those clinging to driftwood just trying to stay alive.

So what really is the core problem with the GDP? Well, it's mostly that it only counts what has a price tag. If something gets bought or sold or monetized, then it gets counted. However, if something gets cared for or if something is protected, or if something is given freely, then it doesn't get counted. That means unpaid labor that keeps our society running—including when parents care for their children, when they care for their elderly, when they care for the sick. Most of the cooking we do for ourselves, the cleaning of our houses, emotional support for a friend, volunteering at the local little league, hanging out with friends, talking, playing, and much more—none of that shows up in the GDP.

From the point of view of the GDP, we could lose all of that, and it wouldn’t hurt our economy at all. In fact, it might improve it. If a parent stays home to take care of a sick kid, the GDP stays flat. But if they pay someone else to come in and care for their kid, boom—the economy grows. In short, if you care for your own children, that's bad for the economy. But if you hire someone to do it in your stead, that's good for the economy.

Imagine a forest standing quietly, filtering carbon, sustaining life. Worthless. But a forest chopped down and sold for timber? Productivity. That’s the GDP’s answer. When an oil spill poisons a coastline, the GDP sees cleanup contracts. When a community floods due to deregulation or climate neglect, the GDP sees rebuilding but not the trauma of the displaced. Imagine you lost your family photos—that’s not a loss to the GDP. But if your fence blew down and your insurance paid to replace it, that’s a boost.

Climate change is good for the GDP. It gets worse: when a billionaire builds six mansions, the GDP counts it as better for the economy than building affordable housing for six families, because more money changed hands. There’s no distinction between luxuries and necessities, life-saving things and profit-making things. Every transaction is treated neutrally as progress. The GDP is not just blind—it’s indifferent. It doesn’t care who benefits or who gets crushed. It doesn’t care whether the growth it celebrates is creating a better world or enslaving one. You can have a few trillionaires amassing wealth while two-thirds of the country can’t pay rent despite working full-time, and the GDP calls it success.

But the scariest part is that because GDP measures activity, not value, it can grow even when life gets worse—through war, cancer, divorce, wildfires. So we’re left with this haunting truth: we are counting what’s easy to count, not what matters most. And what we count becomes what we chase. What we chase becomes what we protect. What we protect becomes who we are. GDP makes us more materialistic, more petty, more consumerist. We measure success in life by the goods we command, not the friends we have or the times we’ve smiled.

Okay, so if the GDP is a broken scoreboard, what’s the alternative? What would it look like to measure an economy by what actually makes life good? One answer is Gross National Happiness, the official policy of Bhutan. Since the 1970s, they’ve asked whether laws and budgets improve spiritual, mental, and physical well-being, protect the environment, and strengthen communities. They track things like psychological wellness, ecological resilience, and cultural diversity. It’s not perfect, but they redefined the goal. They chose well-being over expansion.

Another alternative comes from Amartya Sen, the economist-philosopher who created the “capabilities approach.” He asked: What good is growth if people can’t live the lives they value? Instead of income, he focused on freedom—not abstract market choice, but real freedom to function: to work meaningfully, care for children, participate civically, live with dignity. Numbers should serve human goals, not the other way around.

Then there’s Kate Raworth’s “doughnut economics.” Picture a doughnut with two boundaries: an inner ring of human necessities (food, water, housing, healthcare, education, equality) and an outer ring of ecological limits (carbon emissions, biodiversity, deforestation). The sweet spot in between is where humanity thrives without overshooting the planet’s capacity. Growth isn’t the goal—balance is. The economy is healthy when people thrive and the planet endures.

These models aren’t utopian; they’re already being used in Bhutan, UN reports, and city planning. The point isn’t whether we can measure differently, but whether we want to. You wouldn’t measure your child’s success by how much money they spend. You’d ask if they’re healthy, safe, happy, and able to thrive. Why should a nation be different?

So why are we still using GDP? Because it’s convenient for governments, economists, and the rich. It was born as a wartime tool, became a Cold War scoreboard, and turned into a gift for corporate power. GDP hides inequality, masks exploitation, and erases harm. It serves billionaires, hedge funds, and fossil fuel giants who never challenge it because it justifies everything they do. It makes their gains look like a moral good. It’s not neutral—it’s a political weapon.

So where does that leave us? In a world where profits rise when ecosystems collapse. Where families are displaced, and money moves faster than ever, but rarely to those who need it most. Yet we’re told to be grateful because GDP is up. An economy is a set of relationships between people, labor and land, work and worth, humans and the world that cradles us. If those relationships are broken, the economy breaks, no matter what the numbers say.

It’s time to stop measuring motion and start measuring meaning—not just how much we produce, but what and why. Not just money spent, but who spends it and who gets to live well. We need an economy that sees care, healing, justice, and restoration that values families spending an evening together, not spending money. To build that economy, we have to ask: what do we really want it to do?

The rich have already answered: make them richer. If that’s not your answer, you need to decide what is. So here’s your reflective prompt for the week: if you were in charge of measuring economic health, what would you measure? Freedom? Time? Rest? Safety? Mental health? Community? Ecological resilience? How many people go to bed without fear? Whatever your answer, it will be better than GDP, because at least it will be human.

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