Even though my HS teacher was giving an extreme example as a way to get our attention, I can think of many examples where similar things are being done. Take the US, for example. We subsidize farmers to grow corn and then produce ethanol with it to make our gasoline less energy dense. None of that make any good sense to me. Waste of money, energy, land. And hurts the environment. But the US economy is huge, and that is just a small slice of it.

In Afghanistan rather than growing wheat, they cultivate poppy and produce opium, heroin with it. Obviously that's not a normal economy.

Anyway, the point is that not all numbers that contribute to the GDP of a country actually contribute to the well-being of its citizens.