"Also, the GDP measure also counts natural disasters, break-ins and traffic accidents as all 'adding' to our prosperity."

That is just wrong as a point of fact. A natural disaster will decrease GDP, and the rebuilding after will increase it again. No surprise there.

Also, break-ins do not contribute to GDP. Home security systems do... as they should because they make people safer (which is surely a good thing).

Giving personal anicdotes does not count as making an argument. The fact is that we have more money now. The fact is that, according to any constant (in real terms) poverty line, poverty has decreased in Australia (and the west in general). Perhaps there are other important measures... but we should not ignore these victories.

Given the current measures of poverty, a doubling of everybody's income would increase poverty and a halving of everybody's income would decrease poverty. That is a patently stupid definition, and Saunders is right to question it.

Dear Peter

Thank you for a thought provoking article. I really enjoyed your definitions re poverty and inequality. Lots to think about on that one. Concrete thinkers will clearly have difficulty with your assertions.

After some months (since May 2005) my husband has been on Newstart Allowance and I began Disability Allowance due to a nursing injury. It has been hell living on such a low income - but we do have "quality". I now grow a lot of our veges and herbs and I make all of our cakes, jams and stuff. It has been a real eye opener. We are better for it. We have little money in the bank - but we do have quality of life re food and leisure (our "tinnie" brings in some good fish!).

My husband underwent a Newstart Program last week. He now has a full time job. I will not change the above but it will be great to go out to dinner about once a month and buy some clothes every now and then.

I think that there is a "welfare" mentality (some might say synonymous with poverty?). One of our neighbours moved to our village about a year ago. They are in their seventies. They sold their farm which was worth a lot. They are on the aged pension - and are not self funded retiries. They went to Vanuatu and Fiji etc on a one month trip last December 2004. Some months ago they inherited $100,000. They are currently on a one month holiday in Canada. Before they left for Cananda they complained that they will lose their Centrelink Rent Assistance!

The thinking and re-thinking of your definitions are important for me.

Thank you
Kay

Digiwigi has given examples of factors which used to contribute to the standard of living, but no longer do, and have not been accounted for in GDP or inflation figures.

Kalweb, you are lucky that you have access to land on which to grow your own veges and herbs and that your husband is able to go fishing. Back in the 1960's these sorts of things were virtually free. Today they are beyond the means of many workers as well as welfare recipients. Again, a factor, which has not been measured by the GDP.

I would suggest that the experience of your neighbours who inherited $100,000, (i.e. enough to maybe buy a garage in outerlying Sydney suburb) are not a typical experience of welfare recipients, so I don't see what relevance it has to the issue.

John Humphreys, you are correct that, in and of themselves, natural disasters do not add to the GDP, however it is incorrect to state that they are subtracted from the GDP (as I think they should be from any sensible measure of our prosperity). In fact the economic activity generated as a result of repairing the destruction, does. Consequently, by GDP measures, Canberrans are more prosperous than they would have been if the bushfires of early 2003 had not occurred. This same absurd methodology is used by the economists that Saunders cites to 'prove' that our real income has more than doubled since the 1960's.

The rest of your contribution well illustrates the flawed thinking of those same economists, whose models have almost no real world basis.

If so much of the additional wealth that we are producing since the 1960's - and I acknowledge that much of it is real in a material sense, although it is largely derived from the destruction of our natural capital - is neccesary to protect ourselves from break-ins, which, somehow, people in the 1960's did not have to do to such an extent, are we truly that much more prosperous?

Many would think not, but you evidently do.

2 Poems from my experience of Manila on business. I've got photo's for these, but can't transmit them here sadly...

ROXAS BOULIVARD
The richest of the rich..and the poorest of the poor
here they are, side by side.. how can we ignore
the babe that should be in arms, is lying in the street
while the man walking by is just waiting to be a cheat
the hotels are truly grande, the way is very wide
but the thought of children suffering is hard to put aside

THE URCHIN. (age approx 8)
She watched me as I ate, the urchin girl outside,
at Shakeys I was sitting, in Manila on the seaside
Through the glass she watched, her hand at times outstretched
the pouty look and smile, made it hard to feel untouched
the outstretched hand would then, point back into the mouth
the plea for food was clear, to this traveller from the south
I saved the extra rice, and didnt clean the chicken,
and gave to her the bundle, that her hunger might be smitten
my reward was just a cheeky smile, across her happy dial
She is full tonight, my heart is warmed but …
what about........................................tomorrow.

Tomorrow came so quickly, I saw her in just a while
she was in the hotel lobby, but the edge was off her smile
she had a small tatoo, and figure hugging jeans
although not more than 12, was 'this' now her means ?
How sad this state of things, that she should miss the chance
to have a life thats full, and even to advance
who will be her answer, the one to stem the flow
to take her life and give it a much much warmer glow?

Mollydukes,
Not being able to buy Nike shoes is not a sign of poverty it is a matter of priority.
I buy Dunlops, they go just fine and spend the remaining $100 or so buying stuff for my kids.
I can't afford to eat caviar and seafood all the time but that doesn't make me poor.
Many in poverty in Australia are there because of the choices they make - they choose to smoke and drink rather than save the money or spend it on the necessities.
Nike shoes are not a necessity, feeding and clothing your children is.

t.u.s.

Peter Saunders has hit the nail on the head again. We probably all know people who will always be "poor" no matter how much money they have. They simply cannot handle money, or their spending priorities put luxury items and "participation" in the fipperies of society before essentials like food, utilities and health. There is also a tendency among such people to believe that they should have the same access to the goodies enjoyed by the wealthy without having to put in the effort or exercise any self-discipline.