GDP of a country or state or per capita is measured in USD. But Is USD a good measure of Gross Domestic product of a state? Does it really capture total “value” created in a set time in a society? 1 dollar today does not have the same value it had 50 years ago. And A single dollar gets you way more in Namibia than in Liechtenstein.
We have tried to solve the geographical disparity in value of dollar by adjusting GDP for purchasing power parity. But that really doesn’t solve for the change in value of a dollar over time. The Fed keeps printing money, other countries keep printing their money. Other geopolitical aspects affect the value of Dollar which practically doesn’t matter while measuring the gdp of a small village in India. So the question is, is there a better metric to measure GDP?
If we have to consider a more objective metric, Can use total energy consumption? Today, energy consumption is correlated with the nominal GDP per capita. Its not a perfect correlation but can we really infer, You are creating more value if you are consuming more energy? Sure there are edge cases but I think it is a good macro indicator?
Another fundamental concept that can be used is actually entropy (extropy actually which is -ve of entropy). If entropy really measures the randomness in a system, then isn’t reduction in entropy; creation of order at a fundamental level a real measure of value creation? Entropy can also take into account the productivity in the world of bits and information along with the physical world, although this might not be as straightforward to measure than one might think.
In any case I need to do more research on this.