Part of it is inflation. As long as you measure wealth in money, you’re going to have an artificially increasing amount of wealth, even if you’re not as really wealthy as you were in terms of actual standard of living.
For example, let’s say that your GDP is 10 trillion dollars. Let’s say rampant inflation pushes it up to 15 trillion dollars, but also eats at the ability of producers to hire and to produce and sell product. So you really only have 8 or 9 trillion in power, compared to teh 10 trillion you had earlier. but it’s listed as 15 trillion because they produced more of the commodity called dollars and thus reduced their value.
The thing to measure is real wealth, but measuring by dollars is quicker and easier — and more advantageous for teh political class.
“As long as you measure wealth in money, you’re going to have an artificially increasing amount of wealth”
Don’t confuse wealth with inflation.
Inflation, as economic policy, is important: done right, it maintains a consistent representation of wealth - even though more wealth is produced.
Currency divvies up national wealth into manageable representations.
(total wealth) / (total currency) = (value of $1).
As total wealth increases (more people doing & making more), you want the total currency to increase, keeping the recognized value of $1 consistent.
Some argue over benefits of more or less inflation than that; primary point is people expect $1 now holds roughly same value as $1 later (historically wrong, but that’s the idea).
GDP tries to measure the growth of total wealth in the only measure we have: number of $1 units available.
“The thing to measure is real wealth”
If you’ve got a way other than dollar-based currency units, speak up.
Good point. For example, the price of gold has just about tripled in the last 30 years, which I think is a pretty good quick and dirty measure of “real inflation” (under most circumstances). On the other hand, GDP hasn’t quite doubled in that period.
So if you have twice the income nowadays, but each dollar buys only 1/3 of what it did, then your income is actually only 2/3 of what it was 30 years ago, all else being equal.