This is the Cato Daily Podcast for Thursday, June 2, 2016.

I'm Caleb Brown.

What do we lose when we measure economic productivity with gross domestic product?

We actually fail to appreciate a lot about how the

economy works. So says Mark Skousin, author of the book The Structure of Production,

his idea is to emphasize gross output, which includes more economic transactions than GDP.

It seems like you can pull a broad range of economists, and all of them have substantial problems with the current dominant measure of economic

output GDP.

So some people have criticized it for not including work that is not done specifically for money, like work in the home.

You criticize it for undervaluing the productivity of business, of production.

So what are your chief criticisms of GDP broadly?

I actually don't criticize it for the one criticism that's often done about unpaid work

and the underground economy and so forth.

We all know that GDP is not a perfect measure,

but as long as it's consistently defective, then you can compare it from one quarter to another and so forth.

So, and also I should say that it's always supposed to have been a measure of actual transactions

where money exchanges hands.

So on that basis, unpaid work by the maid and so forth never should have, never

should be covered because it doesn't involve the exchange of money even though it involves productive work.

So the idea is that GDP is a measure of economic transactions make sense.

Now, the Bureau of Economic Analysis, the government agency with the Commerce Department that measures this sort of thing has moved

further and further away from the transaction approach by including research and development.

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