Good morning again,

Fascinating discussion. Some responses, briefly:

@Ludwig and Pericles, are you perhaps confusing income and wealth?

Do you agree GDP growth is an income measure – what the nation earns annually – and other variables, such as in Credit Suisse’s global wealth report, measure wealth – what we own?

Would you agree that disasters like bushfires increase earnings, but decrease the value of what we own?

Hence the IAREM formula – to come back to the article – must measure both. Which it does. It has two earnings measures – income and growth – and two ownership measures – wealth and inflation.

@Shadow Minister, re “No one is querying the relative strength of Australia's economy today …”

Excellent! We are progressing.

Re: “under Howard, compared to all major developed countries had the highest growth, the lowest unemployment and the lowest debt.”

That is just incorrect, SM. The IAREM shows transparently its data sources – World Bank, the IMF, Credit Suisse, others. Just follow the links. Not hard.

@Chris Lewis: You are doing it again. Argumentum ad populum is a fallacious argument.

Re: “I will be exposing real bias in academia.”

So why is your fraudulent ministerial sackings paper still online? Doesn’t it concern you that a small number of readers can access your “research” – if they have authorisation or pay – but anyone can read the article which exposes it as false?

@WmTrevor, thanks for that reference.

Still can’t see how they derive a higher score for Canada and Switzerland than for Australia. Perhaps they have a ouija board.

@Rhrosty: No, I think those reports of increased employment relate to the USA. Australia’s job numbers for March are released tomorrow.

It will be surprise if there is an increase, but a welcome one.

Mostly agree re carbon tax changes. No doubt that’s one of several policy areas Labor will be working on in Opposition.

@Matthew S: Welcome to the chat.

Yes, the IAREM only measures economic outcomes, not social or governance issues. Other organisations have rankings for those.

Cheers, AA

<< The Wellbeing Manifesto has nothing whatsoever to do with the calculation of GDP, nor has the fact that I "bag" it. >>

Hahaha. Of course it doesn’t Pericles. And GDP has nothing to do with wellbeing!

<< The Genuine Progress Indicator is… totally irrelevant in the context of GDP >>

YES. And GDP is irrelevant to genuine progress!!

<< The key is whether GDP per capita increases also. >>

Ahh, now this is interesting. It is something new in our discussion.

YES indeed; per-capita GDP is much more significant than gross GDP, especially while we have rapid population growth.

<< That is indeed one scenario… You are.. taking the most pessimistic view. >>

No it is not the most pessimistic possible view. But yes there is a lot of merit in looking at the more pessimistic possible outcomes and planning for their eventuality, or more to the point; to stop them from eventuating.

<< Raw GDP is not the measure I would use, since it sees only one dimension. >>

YES YES YES!! Wuuunderful!! GDP does indeed ‘see only one dimension’. And that makes it a TERRIBLE piece of work!

So… what other sorts of GDP are there? How about cooked GDP?

GDP is absolutely cooked! It is cooking the books in no uncertain manner, by adding negative stuff to the positive side of the ledger!

<< What I would use is per capita GDP, where a decrease could indicate problems looming. >>

Good! That’s certainly MUCH better than raw or cooked GDP!

Now, if we could just get the economic activity that results from bushfires, floods, car accidents, smoking-related disease, etc, etc, to NOT contribute to GDP, then we’d have a pretty good per-capita economic indicator.

<< However, if we are able to keep increasing GDP per capita, at the very least we know that there are the economic resources available to tackle any peripheral issues. >>

Sorry, you’ve lost me there.

<< @Ludwig and Pericles, are you perhaps confusing income and wealth? >>

I don’t think so, Alan.

GDP is very much a measure of economic activity, certainly not wealth. Certainly closer to income.

<< Do you agree GDP growth is an income measure >>

Well, that’s what it should be. But it is very flawed when economic activity resulting from obvious negative things gets added to it, and it includes economic activity generated by population growth which just results in more services and infrastructure for evermore people without improving anything or increasing per-capita GDP.

<< Would you agree that disasters like bushfires increase earnings, but decrease the value of what we own? >>

YES! Disasters obviously reduce our economic wherewithal, quality of life and general wellbeing. But economic activity spurred by them gets added to GDP, which then totally suggests the opposite!

<< …the IAREM formula… has two earnings measures – income and growth – and two ownership measures – wealth and inflation.

Yes. But it still doesn’t take into account the negative effects of rapid population growth. It still suggests that rapid growth is good and rapider growth is gooder, regardless of the bad and worsening issues with water or the massive effort needed to build new infrastructure and duplicate services just to keep up with population growth without creating real improvements, to name just a couple of the negative things associated with pop growth.

I sense that you are still a little confused, Ludwig.

>>GDP has nothing to do with wellbeing!<<

There is most certainly a connection, Ludwig. Surely you must agree that life in Australia, with a per capita GDP around the $40,000 mark, is substantially more attractive than in Eritrea, where the same measure is around $700. So you couldn't in all conscience claim that it has "nothing to do with wellbeing", could you.

>>GDP is irrelevant to genuine progress!!<<

Oh, I think it is. If you track the rise in GDP of South Korea against that of North Korea, it is not difficult to spot its correlation with progress. I can assure you that South Koreans do.

>>per-capita GDP is much more significant than gross GDP, especially while we have rapid population growth.<<

On this, we can agree. And we are doing fairly well on that front too, don't you think.

>>GDP does indeed ‘see only one dimension’. And that makes it a TERRIBLE piece of work!<<

Not necessarily. It is just a measurement. It has no other qualitative properties, true, but that doesn't mean it is not in itself a useful number.

>>GDP is absolutely cooked! It is cooking the books in no uncertain manner, by adding negative stuff to the positive side of the ledger!<<

Once again, for the umpteenth time, there is no "good" GDP or "bad" GDP. There is only GDP. I thought we had agreed that.

>>if we could just get the economic activity that results from bushfires, floods, car accidents, smoking-related disease, etc, etc, to NOT contribute to GDP, then we’d have a pretty good per-capita economic indicator.<<

How would you achieve that, specifically? What would be Ludwig's version of GDP, if you couldn't include the groceries that were purchased by the wives of firefighters, ambulance drivers or cancer-ward nurses?

Bizarre.

>>Sorry, you’ve lost me there.<<

Clearly.

<< So you couldn't in all conscience claim that it has "nothing to do with wellbeing", could you. >>

No Pericles. I was speaking with tongue in half planted in cheek there. But only half, as the correlation between GDP and wellbeing is not good. Likewise with genuine progress.

I wrote:

>> per-capita GDP is much more significant than gross GDP, especially while we have rapid population growth. <<

You replied:

<< On this, we can agree >>

Yahoo!

<< And we are doing fairly well on that front too, don't you think. >>

No. If GDP didn’t put economic activity that resulted from negative events on the positive side of the ledger, and didn’t include economic activity generated by population growth, which is neutral at best, then per-capita GDP would look a whole lot different.

<< It [GDP] is just a measurement. It has no other qualitative properties, true, but that doesn't mean it is not in itself a useful number.

Yes: just a measurement, yes: no qualitative properties, but no: not of much real use. It is of a very highly misleading nature.

<< There is only GDP. I thought we had agreed that. >>

We did! But it is made up of stuff which should contribute to it and stuff which absolutely shouldn’t!

I wrote:

>> if we could just get the economic activity that results from bushfires… to NOT contribute to GDP… >>

You replied:

<< How would you achieve that, specifically? >>

Well perhaps we could look at all the economic activity in an area before it suffers a disaster, and compare it to the activity in the cleanup and re-establishment phase after the disaster, and everything that is new or increased compared to what it was like beforehand would not be added to GDP! Yes? How about that? Not too difficult.

continued

<< Bizarre >>

What is bizarre Pericles is that you somehow can’t appreciate that economic activity generated by a bushfire, flood, or any manner of other negative things can be added to GDP, and how WRONG that is!

This whole discussion is bizarre. I could never have imagined having it, because I could never have imagined anyone holding the views that you do in this regard!

I wrote:

>> Sorry, you’ve lost me there. <<

You replied:

<< Clearly. >>

Well gee thanks. That really helps. I thought you would be only too happy to clarify what you were trying to say in the relevant statement. I found it uninterpretable:

<< However, if we are able to keep increasing GDP per capita, at the very least we know that there are the economic resources available to tackle any peripheral issues. >>

Could you please reword it in understandable format. Thanks.