The problem is that most government goods and services are provided free, so they do not have market prices like, say, mouthwash or financial planning.
So, government services are "provided free"? I don't suspect many TAXpayers would agree.
Beyond that, he points out that much of what we believe to be the domain of the private sector has in reality been funded by the public sector. And that our obliviousness---our lack of giving credit where credit's due---leaves us ignorant of the value of public investment in our economy, and
"unable to craft effective policies for a better economic future. If we ignore the economic contribution of regulation, we are less likely to want more of it, exposing our children to greater social risks and costs."
If you're at all sympathetic to Mr. Daly's position, I'd like to remind you that there is no free lunch. There are no free government programs. They are all, one way or another, funded by taxpayers. To suggest that we should somehow include some new measure of government-provided "benefits" in the GDP calculation, without counterfactualizing, without somehow estimating the gains that might have occurred had all those resources been left in the private sector to begin with---left in the hands of those who have the greatest stake in the efficacy of their allocation---is ludicrous. Think of a government program, any program: Is it efficiently run? Is it profitable? Is it paid for? Could it survive in the real world?
I do agree with Mr. Daly that we should not ignore the economic impact of regulation, in fact I wish we would aggressively explore it. Performed objectively, I strongly suspect---I'd bet my life on it in fact---that such exploration, were its findings honestly presented to the American public, would make us far less likely to want more of it.
Fortunately, there are organizations who are objectively exploring it. Here's the opening to the Mercatus Center's excellent piece The Unintended Consequences of Federal Regulatory Accumulation:
Federal regulators often have good intentions when proposing new rules, such as increasing worker safety or protecting the environment. However, policymakers typically view each regulation on its own, paying little attention to the rapid buildup of rules—many of them outdated and ineffective—and how that regulatory accumulation hurts economic growth.
The continuous accumulation of rules over the last several decades has not only slowed economic growth but has also reduced employment opportunities and disproportionately harmed low-income households. Unless Congress and agencies address this growing backlog, it will continue to stifle innovation and entrepreneurship.