Is there a way to divide GDP into Productive activity or Overheads activity ?
That seems to be the crux of Pericles & Ludwig's argument.

Who said anything about insurance cost being part of GDP? Although bank interest may be a ‘product’ from finance.

If a country has to pay workers to rebuild a city then those workers have income to buy their own rice and rice farmers receive some of that money to grow more rice, adding to GDP.
The doctors and nurses do not eat imported cars or plasma panels so why refer to such?

The roofing repair business welcomes big wind and rain. Tile and roofing iron manufacturing adds to GDP, so does a great deal of worker expenditure on domestic product such as a new locally made/produced car,house,food.
Some countries welcome a war (somewhere else) to increase GDP via arms manufacturing.

Are you an economist Pericles?

<Is there a way to divide GDP into Productive activity or Overheads activity ?
That seems to be the crux of Pericles & Ludwig's argument.>

Good question and point Bazz.

I have often wondered if excise tax on petrol is included in the GDP total.
Does anybody on OLO know about that for sure?

<< Is there a way to divide GDP into Productive activity or Overheads activity ?
That seems to be the crux of Pericles & Ludwig's argument. >>

Well, yes and no, Bazz.

It is more difficult than that. All the various negative things like illness and disasters can lead to increases in what we would normally consider productive activity. And this is very much the case with population growth.

Pop growth generates enormous productive activity…. except that it is by and large geared towards production that the new residents need, and not towards improving the lot for pre-existing residents.

It would indeed be very hard to sort out just what to include and exclude in order to make GDP the best possible indicator of economic wellbeing and more importantly of improvements in quality of life.

It's not hard to figure that loss of oil refinery production in Australia being replaced by fuel imported from overseas, will cause a significant decrease in Australian GDP.

If ever war cuts sea transport and fuel supply for domestic food production and transportation, I guess at least undertakers might significantly add to GDP.

The talk need to be walked forward. Quickly.

Look, if we are going to have a conversation about GDP, it would probably be a good idea to learn something about it before shooting posts in all directions. JF Aus, for a start.

>>Who said anything about insurance cost being part of GDP?<<

This might help:

"GDP is a measure of all the goods and services produced domestically. Therefore, to calculate the GDP, one only needs to add together the various components of the economy that are a measure of all the goods and services produced. Many of the goods and services produced are purchased by consumers. So, what consumers spend on them is a measure of that component."

http://www.mindtools.net/GlobCourse/formula.shtml

So yes, if you pay an insurance premium, it is counted as part of GDP. If you instead spend the same money on a plasma TV, it is counted as part of GDP. In each instance, the measured GDP will be identical.

If you would like to understand where savings fit into the equation, here's a cheat-sheet.

http://www.ssag.sk/SSAG%20study/EKO/RELATIONSHIP%20BETWEEN%20GDP.pdf

You are persistent, Ludwig, I'll give you that..

>>All the various negative things like illness and disasters can lead to increases in what we would normally consider productive activity.<<

That is a complete and utter fallacy, as I have tried very hard to point out to you.

Let me ask a couple of questions, to see if you can answer them without disturbing your theory.

Which part of GDP increases when disease increases? Where does the money come from, to pay the doctors and nurses? If everyone becomes sick, what happens to GDP - does it increase, stay the same, or decrease?

>>Are you an economist Pericles?<<

No, JF Aus, I am a businessman. Are you by any chance a public servant? Or perhaps a teacher?

Having opinions on stuff is fine, highly laudable, and makes the world go round. Being ignorant of factual matters is no shame either, but it is polite to actually learn the facts behind a topic, before issuing an opinion on them.