Gross domestic product (GDP) is a monetary measure of the market value of all
the final goods and services produced in a specific time period. - Wikipedia,
GDP

Due to inflation, GDP increases and does not actually reflect the true growth in
an economy. That is why the GDP must be divided by the inflation rate (raised to
the power of units of time in which the rate is measured) to get the growth of
the real GDP. - Wikipedia, Real GDP

The two quotes above reflect how I used to think about real GDP growth: it’s
roughly the growth in economic production (as measured by dollar worth of
outputs), discounted for inflation. This picture turns out to be extremely
misleading, especially when using GDP as a growth measure. Forget complaints
about how GDP doesn’t measure happiness, or leisure time, or household work, or
“the health of our children, the quality of their education or the joy of their
play”. Even if we accept the dollar value of goods as a proxy for whatever
purpose we have in mind, GDP (as we actually calculate it) is still a wildly
misleading measure of growth. In particular, it effectively ignores major
technological breakthroughs.

A PUZZLE
Here’s real GDP of the US for the last ~70 years, from FRED:

According to this graph, real GDP has grown by roughly a factor of 6 since 1960.
That seems… way too low, intuitively. Consider:

* I’m typing this post on my laptop (which conveniently has a backspace button
and everything I type is backed up halfway around the world and I can even
insert images trivially)...
* while listening to spotify…
* through my noise-canceling earbuds…
* and there’s a smartphone on my desk which can give me detailed road maps and
directions anywhere in the US and even most of the world, plus make phone
calls…
* and oh-by-the-way I have an internet connection.

I’d expect the equivalent of any one of these things in 1960 would have cost at
least a hundred times the annual income of an average person if it was even
po