Gross Domestic Product (GDP), since its introduction during World War II as a measure of wartime production capacity, has become the nation’s foremost indicator of economic progress. It is currently widely used by policymakers, economists, and the media as the primary scorecard of a nation’s economic health and well-being. However, GDP was never intended for this role. It is merely a gross tally of products and services bought and sold, with no distinctions between transactions that add to well-being, and those that diminish it.
Therefore, in the case of if a nuclear power plant disaster occurs, it will be seen to be good for GDP due to large-scale reconstruction, but it is certainly not good for individuals as destruction has taken its toll. Thus, if one measures the economic performance and well-being from the lens of GDP in this situation, it is unlikely that he can get the accurate result due to the limitation of the GDP, which in turn implies that GDP could be a ‘false beacon’. In this paper, we shall examine the reasons.
Firstly, those who think that explosion of nuclear plants is good for the economy will have fallen into the broken-window fallacy; if a kid hits a baseball through a window, it creates a job for the repairman. It sounds superficially appealing as new employment has been added and GDP rises. However, it is clearly a fallacy. It is the same situation with the aftermath of nuclear power plants disaster. As destructions such as severely damaged roads, highways, commercial buildings, houses, and other infrastructure take place, construction will be a boom industry instantly.
This will by all means creates millions of jobs and thus boost GDP. Better still, the workers will spend their wages and stimulate the rest of the economy, too. The country will be better off for having endured such a disaster. If this were really the case, then the best possible way to a country economy would be to level the entire country. Every building should be destroyed, brick by brick. The number of jobs that policy would create would dwarf any disaster stimulus. Then, in a few years, when the rebuilding is finished, workers can destroy their entire infrastructure again.
Even more jobs will be created! The GDP will boost even higher! Will this be good for the whole economy as according to the GDP indicator, the higher the GDP, the better the economy of a country economy? The answer is certainty no. If the power plant disaster had never happened, people would still have all the buildings and cars that they had in the first place. They would be able to spend their money on other, additional goods that they want. People who were construction workers to begin with could be building new factories or new homes, in addition to the ones they already have.
Instead, they will be working overtime just to get back what they already had. This is not stimulus, even if it does show up in GDP. It is better to build than to rebuild. Moreover, a nuclear plant disaster is more than just destruction of building and property. The leakage of radiation has much long term and deeper effect to the ecosystem and human health. Exposure to high levels of radiation can cause acute radiation syndrome, or radiation poisoning, resulting in substantial damage to human body tissues, premature aging and possibly death.
Prolonged exposure to lower levels is also associated with increased risk of ill health. Also, contamination of water by radiation will affect the aquatic lives and influence the lives of both farmers who need water for their plant and fisherman. The situation turns from bad to worse when food from contaminated places is getting into food chain as more death would be involved. However, if one measures economy well-being from the GDP perspective, it is a good sign. The rationale is that the GDP only includes positive values. Firstly, it counts pollution as a double gain.
Since the GDP first added the economic activity that generated that waste, it creates the illusion that pollution is a double benefit for the economy. Therefore, GDP has overstated national well-being in this aspect since costs of cleaning up the environment are included in the GDP negative externalities are ignored. Also, billions of money will go into few related sectors such as health cares, resettling people to safer places, sealing of the reactor of nuclear plants, disposal of radioactive waste and the opportunity cost of removing farm land and forests from use.
As a result, the GDP rises sharply but none these activities contribute largely to the human and economy well-being. Although GDP can measure economic growth, it is not a good indicator of other aspects of sustainable development. After all, the reality about the aftermath of nuclear plants disaster should remind us of the limitations of GDP as a measure; it tells us what happens to output, to economic activity, but tells us nothing about welfare and happiness. What we really need is an indicator which measures progress, wealth and well-being to incorporate social and environmental costs and benefits.