You seem determined to avoid seeing what is plainly obvious, Ludwig.

>>the correlation between GDP and wellbeing is not good. Likewise with genuine progress.<<

So you have ignored the Australia/Eritrea GDP comparison, and the South/North Korea example of progress via GDP.

Is there any particular reason you have chosen to do this?

>> 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.<<

You still choose to pretend there is "good" and "bad" GDP, and that there are two sides to the GDP "ledger".

There aren't.

There is just GDP. It is just adding-up.

Which, regrettably, leads you to make up utterly fanciful stuff like this:

>>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!<<

Sadly, such a risibly impossible proposition only underlines how little you understand about the subject.

I wouldn't dream of lecturing you on plant phyla. I humbly suggest you adopt a similarly cautious and respectful attitude to economics.

>>Could you please reword it in understandable format. Thanks.<<

If you are unable to grasp the stuff I've been explaining to you up to now, the task of making this "understandable" to you would be positively Sisyphean.

"...positively Sisyphean." The power of history to explain a myth take...

Dear Pericles,

Regarding that fifth labour of Hercules - now the little legal issue of the King of Augeas' payroll has been adjudicated - I have already decided that bit of handiwork doesn't count as one of The Labours but since payment was made I was wondering how the Augean accounts should treat the event?

There was environmental damage to two rivers but there was also an organic fertilizer redistribution.

Or should I continue to do the logical (and very Hellenic) thing and follow convention and simply count the payment made for one day's casual labour as a part of the total economic activity since it was both countable and definably economic?

I suppose the people downwind for the last 30 years or those now downstream of the Augean stables have different ideas about whether it was a positive or a negative. Young Phyleas will get himself all tied in knots trying to decide that one.

Regards, Eurystheus (off of Tyrins), Anax

cc. Palamedes and sons Accounting, Ludwig

Pericles and Ludwig,

Leith van Onselen has published a graph showing growth in total and per capita GDP. Growth in the latter has increased very little over the past 8 years

http://www.macrobusiness.com.au/2014/03/gdp-is-rubbish/

van Onselen makes some of the same sorts of criticisms as Ludwig. While Ludwig is a botanist, Leith van Onselen is an economist and has worked for the Treasury, the Victorian Treasury, and Goldman Sachs.

Pericles is also ignoring issues of distribution. While there has been respectable economic growth in the US over the past 20 years, even on a per capita basis, essentially all of the benefit has gone to the folk at the top. Most American men are earning lower real wages than in 1979. Population growth is only attractive because the costs are shared with the entire population, while the benefits go to a relatively few. Yes, a rich coastal city can build desalination plants once it has outgrown its natural water supply, but the cost per unit volume of water will be 4 to 6 times as great as for dam water. Pericles as a business owner gets a bigger market and more competition for the jobs he has to offer if there is population growth, but the higher costs for water are shared with everyone else in the community.

Thanks for that reference, Divergence.

One of the sentences that Ludwig should take to heart is this one:

"The occasional fool even suggests natural disasters are “good for the economy” because GDP…"

It's good to see that I am not alone in rubbishing this line of reasoning, one that Ludwig introduced earlier with this assertion:

>>Bushfires etc increase economic activity, all else being equal.<<

Mr van Onselen undermines his own credibility with a similar statement - suitably vaguely worded, of course, so that he doesn't have to explain it too much...

"A higher divorce rate boosts payments for childcare, lawyers and paid housekeeping, so it helps GDP, as do heatwaves and wars because of their demand on power."

What he fails to point out is that this economic activity is simply a substitute for other spending. Using "wars" is an absolute beauty of an own goal: if you make bombs, you can't use those resources to make saucepans, bicycles, whatever. So the activity of bomb-making, because it is measured as part of GDP in the same way that making bicycles would be, would deliver no "boost" at all, just record a move from one source to another.

If you kept on making bombs, of course, you'd soon run our of money. You would have lost both the ability to make the bicycles themselves, and at the same time the target market of people with money to buy them.

But that is simply common sense.

I will certainly agree that GDP is not the be-all and end-all of economic health measurements. But as I have said before, it one clear virtue is that it is a simple, added-up number. You can surround it with as many nice-to-haves and subjective desirables, but for it to have to have any value at all, you need to accept it as it is.

Deploying the argument that politicians misuse GDP figures is not a reason to distrust the numbers themselves, merely yet another reason to distrust politicians.

<< You seem determined to avoid seeing what is plainly obvious, Ludwig. >>

Sorry Pericles, it is precisely the other way around.

Of course there is a huge difference between Aust and Eritrea, which GDP reflects. Of course there is a correlation between GDP and wellbeing/genuine progress. But it is a poor one, which is corrupted by additions of economic activity which it shouldn’t include.

Why do you not want to acknowledge this?

<< Sadly, such a risibly impossible proposition only underlines how little you understand about the subject. >>

Lovely! You really did get out of the wrong side of bed this morning didn’t you!

I made an eminently sensible suggestion. The manner in which you resoundly condemn it suggests that it does indeed have merit!!
The logic is simple. I’m sure you can see it very clearly…. but of course are loathe to admit it.

You simply want GDP to remain as it is; a very highly flawed economic indicator. You’re not interested in improving it. And you are just going to condemn ANY suggestions as to how we might do that.

Yes? Or am I verballing you?

I wrote:

>> Could you please reword it in understandable format. Thanks. <<

You replied:

<< If you are unable to grasp the stuff I've been explaining to you up to now, the task of making this "understandable" to you would be positively Sisyphean. >>

That really is quite appalling. Why can’t you just clarify the relevant statement??

Hey, you’re a good writer. This is I think the first time that I have encountered a statement of yours that I just couldn’t fathom. So I did the right and sought clarification. And you are lambasting me it. That is of very poor form.

Gee Pericles, some of our correspondence is very good and friendly. Then you fall back into a quite substandard level of address. Come on, you can do better than that.

Can you please clarify your statement if you would be so kind.

And this is very tricky territory, by the way, Divergence.

>>Yes, a rich coastal city can build desalination plants once it has outgrown its natural water supply, but the cost per unit volume of water will be 4 to 6 times as great as for dam water.<<

Who are the people, I wonder, who object most strongly to the creation of a new dam? Why, the same people who believe that cities shouldn't exist in the first place, and everyone would be happier eating wichetty grubs and living in a yurt.

I exaggerate. But only for effect.

And many thanks for this, WmTrevor

>>The power of history to explain a myth take...<<

Love it.