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The Forum > General Discussion > Has the Coalition DOUBLED Australia's deficit? Yes, and here's the proof.

Has the Coalition DOUBLED Australia's deficit? Yes, and here's the proof.

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Please read this folks. It proves that under the Coalition, our country now has a deficit that's TWICE as large since they gained government.

http://www.abc.net.au/news/2014-05-06/has-the-government-doubled-the-budget-defecit-/5423392

The claim: "Chris Bowen says Joe Hockey has doubled the defect by changes to government spending and government assumptions".

The verdict: "Since the election the official deficit has doubled. Spending decisions have been made that were not in the previous forecasts, and the economic assumptions are different from those used before the election. Mr Bowen's claim checks out."

The Coalition = economically incompetent. Only 7 months in office and they've DOUBLED our deficit.
Posted by Nhoj, Tuesday, 6 May 2014 3:06:51 PM
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Question: "Mr Abbott, Julie Bishop said on TV that... you would have to do both raising taxes and cutting spending to bring the budget back to black. What taxes do you propose to raise?"
Mr Abbott: "The only party that will raise taxes after the election is the Labor Party."
Posted by 579, Tuesday, 6 May 2014 5:07:47 PM
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Nhoj

do u suggest we go back to those who every year promised with straight faces to produce a surplus? Shameless supporters should really be removing planks from their own eyes before didtorting specs in others.
Posted by runner, Tuesday, 6 May 2014 5:38:46 PM
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Runner, I notice you had nothing whatsoever to say about the *DOUBLED* deficit. Disagree with the findings in the link? If so, produce "your" detailed figures to prove the finding wrong.
Posted by Nhoj, Tuesday, 6 May 2014 5:50:39 PM
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And through all of this analysis, there is not a single thought of the ongoing massive rate of increase in the need for expenditure on basic infrastructure.

Very high immigration demands very high expenditure on infrastructure (and services), just to provide the same standard of living for ever-more people.

This is a HUGE factor in the burgeoning deficit and the desire to balance the books. There are also other huge factors associated with this rate of immigration which affect our budgetary position.

When Abbott/Hockey or Shorten/Bowen come out and say something about this, and suggest that a cut in immigration would be a good idea, then I will start to listen. But for them to talk about the need to reduce the deficit and eventually achieve a surplus, while continuing to facilitate very high population growth, is just the epitome of hypocrisy.

Whether Bowen’s claim is entirely true or true to some extent or not at all, is largely beside the point. The most important fact is that the Libs and Labs are very similar political animals, both utterly devoted to continuous growth and forever in pursuance of higher growth, and both utterly under the thumb of big business, its donations regime and its profit motive.

Until this changes, and one or both of them embraces a paradigm of genuine sustainability, they are not going to get the budget into order.

BTW, good thread Nhoj.
Posted by Ludwig, Tuesday, 6 May 2014 8:31:06 PM
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Ludwig, immigration ADDS to Australia's GPD, not subtracts from it. I'll simplify it --- when over 20 years a $10 investment produces a $15 dollar return, that's not a $10 loss, it's a $5 GAIN. That's how the financial benefits of immigration have worked in our country for centuries. Over time, it doesn't subtract from our GDP, it ADDS to our GDP.

Please don't blame immigrants for Joe Hockey's almost IMMEDIATE DOUBLING of the deficit.
Posted by Nhoj, Tuesday, 6 May 2014 8:45:10 PM
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<< …immigration ADDS to Australia's GPD, not subtracts from it. >>

Nhoj, please take a good close look at GDP. It is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc.

Yes immigration adds to economic turnover and hence GDP.

But what about the other side of the coin - the enormous demands that it exerts on our economy and budget?

<< Please don't blame immigrants for Joe Hockey's almost IMMEDIATE DOUBLING of the deficit. >>

I’m not. It’s got nothing to do with the mooted doubling of the deficit. But immigration sure as hell has EVERYTHING to do with the budget and the government’s ability to rein in the deficit. Hockey and Bowen should be talking about it, very prominently, as a fundamental part of the current banter about the budget.
Posted by Ludwig, Tuesday, 6 May 2014 10:53:28 PM
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Nhoj, I must confess I have not yet read the link, but I will.

What I want to know now is, why do you continue to talk about immigration in the past hundred odd years as being the same as immigration intake today.

Our early immigrants were mostly hard working, highly motivated and highly skilled orpeople who wanted to learn skills and, without their input, Australia would be a different place today, for the worse I might add.

Today, the majority of immigrants, and the illegals are welfare dependent, with many still drawing on our welfare system years after arriving.

Where else in this world could a couple immigrate to, not work a single day, yet bring up ten kids, be paid $5 grand each to have those kids and not lift a finger to contribute.

Immigration today is a drain, and Rudds fiasco that he alone created has cost us billions, will continue costing us billions and will deprive our future generations of many of the luxuries we were lucky enough to have.

Immigration must stop immediately and all 457's must not be renewed and no more issued until we get this country back on track.

Finally, before finger pointing on our position, first step is to find out how much money's being wasted, in servicing the left overs from that incompetent labor/green mob that plunged us into debt in the first place.

Now once that figure is established, if there is still mud to be thrown, then that's fair game.
Posted by rehctub, Wednesday, 7 May 2014 6:33:15 AM
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As soon as I saw the $8 billion to the RBA was included I knew it was
an ABC branch of the ALP fraud.
For Mhoj's information the RBA is part of the government.
For example left pocket and right pocket !
Got it ?
Posted by Bazz, Wednesday, 7 May 2014 9:31:34 AM
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I thought we had cleared this one up, Ludwig, ages ago.

>>Nhoj, please take a good close look at GDP. It is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc.<<

GDP contains neither negative nor positive components. It contains nothing but numbers, and these are just numbers that you add up in a single column. If you want to classify some of those components as "good" or "bad", that is fine, but they have no impact whatsoever on the numbers that you add up to arrive at a total for GDP.

Fires, cyclones, illnesses are not "good" for the country, as they divert resources - and therefore money - from other, more productive roles. But that is no reason to exclude them from the calculation, since the money is employed within our economy, buying groceries for the firefighters, allowing the nurses to pay their rent, builders' labourers to buy clothes etc. etc.

But above all, these factors you cite do not, repeat not, increase economic turnover. It is clear as day (to most people) that if we spent all our time tending the sick, fighting fires and rebuilding after an earthquake or cyclone, very quickly we would have a GDP of zero. So, by definition, the time, energy, resources and money expended on these activities cannot possibly, in any universe, cause "increased economic turnover".

I am frankly astounded that this simple concept still hasn't made it through into your consciousness, Ludwig.
Posted by Pericles, Wednesday, 7 May 2014 10:30:23 AM
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Good morning Nhoj, please take a seat and thank you for coming in to share your thoughts with the new management team.

As you know, since the new management of Australia Pty Ltd took over in November last year, we have been interviewing staff that were here under the previous management in order to get their perspectives. We are pleased that you have raised your concern that, in trying to get back to profitability (surplus), the new management has actually doubled our debt?

We were just wondering if you would clarify your basis for this assertion for us?

Firstly, can you confirm that under the previous management, the finance department prepared the forecasts but the management provided the income and expense “assumptions” upon which those forecasts were based?

Nhoj; Yes of course, that’s how it works.

So, during your previous six years with the firm, the assumptions you used repeatedly “predicted” returns to profit that never eventuated and the then manager of finance Mr. Swann actually reported that the firm “had” delivered a profit when it didn’t?

Nhoj; Well, Err, Yes.

Did the firm ever return a profit?

Nhoj; well, Err, actually, No!

So can you explain why there was no return to profit against the hundreds of claims that you would or indeed had produced a profit?

Nhoj; Well, Err, I guess the revenues and expenses never matched our forecasts.

If I could just take that a little further Nhoj, the revenues and expenses are real and “actual” but the assumptions you provided to finance for the forecasts are yours and were repeatedly wrong?

Nhoj; Well, Err, I guess so.

So if our new managers were to accept your PEFO of August 2013 as the base line for 2014, it would be wrong because your assumptions were self evidently wrong?

Nhoj; Well, Err, I guess so.

Cont’d
Posted by spindoc, Wednesday, 7 May 2014 11:34:58 AM
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Cont’d

So if we were to put in our own more conservative assumptions to finance department for that same plan as announced on December 7, 2013 in the MYEFO, it would look totally different, particularly if we accepted revenue and expense actual figures but added some of our own spending priorities?

Nhoj; Well, Err, I guess so.

You see Nhoj, we have the same base line “actual” results as you had as at December 7, 2013, but we have lowered the assumption thresholds and added our immediate spending priorities.

This has given the new management a realistic but much higher debt target to address in the May budget, does that in anyway resonate as logical to you?

Nhoj; well, Err, actually, No!

Is this because you don’t accept that your failed assumptions actually failed?

Nhoj; well, Err, actually I still don’t even see anything that needs fixing.

Do the repeated failed assumptions need fixing, does the failure to produce a profit need fixing?

Nhoj; well, Err, actually, could you repeat the question?

OK Nhoj, did you ever do any financial analysis work on this yourself or did you outsource that task?

Nhoj; well, Err, we actually outsourced it.

To where?

Nhoj; well, Err, we actually outsourced it to a PR firm.

So you outsourced critical national financial analysis to a PR firm! Which one?

Nhoj; well, Err, we actually outsourced it to the ABC’s Fact Check unit.

I see, thank you Nhoj. I feel this interview has gone some way to defining a career path for you. It’s not with us of course but you can reflect on your opportunities somewhere in the real world.

In the meantime please empty your desk into the cardboard box provided and await escort from the premises by our security staff
Posted by spindoc, Wednesday, 7 May 2014 11:35:38 AM
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Rehctub, immigration has ALWAYS been an initial drain on resources. And it's ALWAYS been an eventual BENEFIT to the wealth, and equally importantly diversity, of Australia.

I'll yet again explain the basic maths involved to you (reduced to its most basic mathematical level to help you understand) --- when over 20 years a $10 investment produces a $15 overall return, that's NOT a $10 loss to Australia's wealth, it's a $5 GAIN. I explained this earlier, obviously maths is not one of your strengths. As long as immigration continues it will draw on our resources, and it will repay that ten times over. There's ALWAYS a minority of bigots and hateful racists who say "this" lot of immigrants are "different" and will bring Australia to it's knees.... They said it in the 50s, they said it again in the 60s, they said it again in the 70s, they said it again in the 80s etc etc etc etc.

For example, in the 60's some people were terrified that those horrible, alien immigrants from Greece and Italy were destroying our economy and dividing our culture. They said the cost was too high, and that these wicked aliens would never, ever assimilate and contribute to the wealth of Australia. Laughable isn't it Rehctub, just as "your" current fear and paranoia will be viewed as equally laughable in 50 years time.
Posted by Nhoj, Wednesday, 7 May 2014 4:21:14 PM
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Spindoc, thanks for acknowledging that the Coalition has DOUBLED the deficit.

I really appreciate your support. That's so nice of you.
Posted by Nhoj, Wednesday, 7 May 2014 4:26:58 PM
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immigration has ALWAYS been an initial drain on resources and it's ALWAYS been an eventual BENEFIT to the wealth, and equally importantly diversity, of Australia.
Nhoj,
That was certainly the case when the trained immigrants came from war torn Europe & Australia's infrastructure program was huge. Could you imagine another Snowy mountains scheme with the support of the Greens ?
Could you imagine the immigrants from the conflict areas around the middle east working like those who built the Snowy scheme ?
Can you honestly see that happening ?
Can you honestly see Australia's deficit going down so soon after so many years of managerial wilderness ?
Then we have to keep the likes of you because judging by your posts I don't think you could ever pull your weight.
Posted by individual, Wednesday, 7 May 2014 6:54:32 PM
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Individual, what you "really" meant to write was, "Can you honestly see Australia's deficit going down, after the DOUBLING of the deficit in a mere 7 months by the COALITION?"

Get it right Individual. Gee, remember it's hard workers like me who'll have to support oldies like you after the Coalition wrecks the economy from DOUBLING the deficit.

Also, you are incredibly ignorant of the VAST and DIVERSE economic contribution migrants have made to Australia, "outside" of one project you can name. Your opposition to your hated migrants (especially DARK SKINNED migrants from "non white" cultures) is based on utter ignorance of the factual reality of Australia's history. You're just an old man longing for a return to "white" Australia.
Posted by Nhoj, Wednesday, 7 May 2014 7:14:21 PM
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N....when over 20 years a $10 investment produces a $15 overall return, that's NOT a $10 loss to Australia's wealth, it's a $5 GAIN

So, our government borrows it's money at I think around 3%. so, that $10 has now cost $18. So if we repay the initial $10 then the interest of $8 we are actually behind.

I can forgive you for thinking we wouldn't have to borrow the money, because that's PRECICELY how it was before one K Rudd came along.
But sorry, I can't forgive you for your lack of math skills, especially given you are a self confessed expert in this area.

What a pity so many decided to take that gamble.
Posted by rehctub, Wednesday, 7 May 2014 7:50:30 PM
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Rehctub has now just told the world that he believes Australia, since the beginning of migration, has only used 100% "borrowed" money on any migration issue.

Oh dear, I can see why poor "old" Rehctub is not Australia's treasurer. I wonder if his wife controls his pension funds? Let's hope so.
Posted by Nhoj, Wednesday, 7 May 2014 8:22:28 PM
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Oh dear Pericles, you and I have indeed gone over this GDP discussion at length just recently. And at the end of it we remained poles apart in our opinions.

For goodness sake it really is as clear as day that all sorts of negative things get added to GDP.

A very big thing, which is +/-neutral in the short term but strongly negative in the long term, appears as a very big plus according to our GDP indicator. This thing is our very high immigration rate.

It boosts GDP enormously, and yet the economic activity generated by it is predominantly the massive duplication of infrastructure and services, which is needed to provide the same standard of living for them as for the established population, with no net gain for established citizenry or for the country… and no net improvement in our current economic wellbeing or future economic outlook.

Fires, cyclones, illnesses, car accidents, droughts, obesity, and a thousand other bad things, have a negative effect on productivity. Of course as a result of these, GDP would be lower than it would otherwise be.

And yet all the economic activity generated by these bad things, which is just countering or repairing the damage and not at all improving the pre-damage economic situation, gets ADDED to GDP and made out to be totally positive in terms of economic prosperity.

It absolutely SHOULDN’T be! It should be left out of the GDP calculation, or perhaps be subtracted from the total.

continued
Posted by Ludwig, Wednesday, 7 May 2014 8:56:29 PM
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longing for a return to "white" Australia.
Nhoj,
So, you're racist as well ? Gawd you're really some specimen, you'd confuse old Charlie Darwin. I wouldn't describe you as the missing link but you for sure are a shackle pin.
Posted by individual, Wednesday, 7 May 2014 8:59:47 PM
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<< GDP contains neither negative nor positive components >>

CORRECT Pericles. Economic activity which genuinely indicates economic advancement, improving prosperity and increasing standard of living and quality of life, gets lumped with stuff which doesn’t indicate anything of the sort…. and it is all held up as being of the same value!! If it is a big total is it positive, or negative if it ain’t so big!!

This is extremely serious stuff. It is economics 101 – only the good stuff should get counted as a positive thing!

Successive Federal treasurers, of both political idiologies (ologies of idiots) completely fail to understand this.

So how can Hockey or Bowen or the Libs or Labs possibly ever get us to a balanced budget, let alone one which will take us progressively out of debt and into surplus, for as long as they believe that ALL economic growth (most significantly that generated by high immigration) is a good thing and only a good thing??

As if their manic pandering to ONLY the supply side of the equation, without ever even bearing a thought for addressing the demand side, wasn’t bad enough, this adding of neutral and negative economic activity to the positive side of the ledger is just the pits!

We’ll look back on it in a couple of decades, when we have got our collective headspace entrenched in the imperative of achieving a sustainable society, and wonder how we could have ever been so utterly STERYUUUPID as to have had such a thing as GDP, as it is now calculated, sitting right at the core of our economic system!!
Posted by Ludwig, Wednesday, 7 May 2014 9:02:04 PM
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Ludwig the full quote (which you "conveniently" shortened) was, "You're just an old man longing for a return to "white" Australia". And it was directed at *YOU*.

Yep, Ludwig = a 100% racist, who fears dark skinned people from cultures other than "white" cultures. Ludwig is the classic definition of a racist.
Posted by Nhoj, Wednesday, 7 May 2014 9:29:34 PM
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Oops, I'm so sorry Ludwig. My post was about "Individual".
Posted by Nhoj, Wednesday, 7 May 2014 9:33:11 PM
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OK let's get back on topic. This thread is about the Coalition's doubling of the deficit.

So far, none of the righties here have been able to successfully refute the "fact" that the Coalition, in just 7 short months, has doubled the deficit. They've offered their usual "excuses" and "explanations", but have been 100% unsuccessful in refuting the "fact" that the deficit has DOUBLED.
Posted by Nhoj, Wednesday, 7 May 2014 10:10:55 PM
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none of the righties here have been able to successfully refute the "fact" that the Coalition, in just 7 short months, has doubled the deficit.
Nhoj,
Well, these are ABC figures aren't they ? Can you prove they're correct ?
Posted by individual, Thursday, 8 May 2014 6:29:48 AM
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Bazz,

"As soon as I saw the $8 billion to the RBA was included I knew it was
an ABC branch of the ALP fraud.
For Mhoj's information the RBA is part of the government.
For example left pocket and right pocket !
Got it ?"

Wow!

You do realise that the govt "borrowed" the $8.8 billion to give to the RBA?

It's not just a case of shifting $$$ around.

The RBA neither asked for the money or needed it, being content to build up its own reserves without paying the govt a dividend.

Eleventy Joe funnelled that "borrowed" money to the RBA so that the govt could take a regular dividend...it's a govt revenue raiser.

Got it?
Posted by Poirot, Thursday, 8 May 2014 7:17:17 AM
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I Would just ike it noted
that qld state debt=85 bilion
[owed by 3 million][collectivly]..[30,000/individualy]

and GOVT IS PANICKING...FEDERALLY.BECAUSE WE GOT 30/billion
oweD BY 22 million.. [ie INDIVIDUALly..WE owE a bit over a grand each/federally]

i claim the state debt is federal debt..WHEN HOWARD WANTED ALP
AND ALP WANTED REASON TO SPEND UP EVEN bigger/refused tobe reigned in
THOSE WHO GAINED MUST RETURN THAT//THEY LOBBIED TO BUY..[ASk ME WHY]

and federaly govt simply needs issue bonds TO PAY IT OFF
THESE GET HELD BY THE FED/AND RETURNED.AS CREDIT/THE FED HAS NO RIGHT TO ON-SELL GOVT DEBT INTOM OUR POCKETS[ITS ODIOUDS Debt/thus criminal as well]

but i have other issUES/
but..its time to move on
BUT ITS TIME TO0..TO SUE INDIVIDUALS/..AS THE NEUREMBERG DEFENCE WILL FAIL TOO...IF THEY DONT..begin locking up REAL VIOLENT-criminaLs in jails.[the real crooks]..thieves/bash aRTISTS CON MEN kiddy tapists..and ELITIST SCUM...THEN DREAD THE TIME SHORTLY that is come.
Posted by one under god, Thursday, 8 May 2014 7:47:00 AM
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Nhoj, you are such a toss. How can you claim that I said every imigants in the past 100 years has been funded with borrowed money.

If you are trying to upset me, go right ahead, but please stick to facts, like your problem with the deficit. Are you aware that's a forecast!

Are you also aware that labors last forecast has been proven to be way under estimated.

You are typical of most Internet trolls, as once you get presented with a counter argument to your twisted logic, you try to divert the conversation and turn it around in your favor. Now that's fine, if you relied on facts.

As I said, you are a classic toss.
Posted by rehctub, Thursday, 8 May 2014 8:36:27 AM
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Butch old boy 68.5 billion has been added to the deficit in seven months
It is not in the future it is now.
Posted by 579, Thursday, 8 May 2014 9:04:38 AM
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rehctub,

"Are you also aware that labors last forecast has been proven to be way under estimated."

Proven by whom?

Hockey's MYEFO crock?

That's not an independent Treasury assessment....that's Mr Hockey cooking the books.

"You are typical of most Internet trolls, as once you get presented with a counter argument to your twisted logic, you try to divert the conversation and turn it around in your favor. Now that's fine, if you relied on facts."

Well, Lol!, Lol!, Lol!

When you come up with some "facts" as opposed to Hockey spin - please let us know.
Posted by Poirot, Thursday, 8 May 2014 10:18:45 AM
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Poirot, treasury providing accurate info, now there's a laugh!
Posted by rehctub, Thursday, 8 May 2014 11:23:27 AM
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butcher,

"Poirot, treasury providing accurate info, now there's a laugh!"

There really is no hope with fellas like you abounding.

Hockey tries to pretend he releases official Treasury data...and you holler "PROOF!"

I point out that it was entirely his own fiction and not an official Treasury forecast (Like PEFO) and then you belittle Treasury.

(Hockey also tried to say one of his adviser's papers containing a dodgy graph was an official Treasury document)

So carry on....you appear to be enjoying the charlatan's act.
Posted by Poirot, Thursday, 8 May 2014 1:46:12 PM
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Well, 6 pages now and we still don't have any forum righties who can show that the Coalition has not DOUBLED the deficit.

Doubling the deficit has enabled them to break their MANY and repeated promises that they would not raise tax. It's now "confirmed" by cabinet they are applying a new tax .. the debt tax.

They are lying and calling it just a "levy". It's a TAX, as any economist knows.

Toneliar is an unmitigated liar, untrustworthy and a danger to Australia's economic future and well being.

And the latest news is that the Coalition will also apply another new tax increase in the budget. It's a new tax increase on petrol. The fuel excise (a tax on petrol) will be increased, thus all motorists using petrol will PAY MORE for their petrol. Yet ANOTHER broken promise from the Coalition.

The honesty and credibility of the Coalition is now in utter tatters. It is the most dishonest government in Australia's history.

AND, they have managed to double the deficit.
Posted by Nhoj, Thursday, 8 May 2014 3:04:24 PM
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Nhoj,

Ludwig is right about the costs of immigration. No one disputes that it increases total GDP and makes rich people happy with bigger markets, cheap labour, and opportunities for real estate profiteering, but what matters to most of us is whether it increases per capita GDP. If the population is below the optimum, then it probably would. For example, a little band of pioneers might have enormous natural capital per person, but be too few in number to make effective use of it. This hasn't been the case in Australia for a long time, however. The following link shows growth in GDP and growth in GDP per capita, which has been very sluggish

http://www.macrobusiness.com.au/2014/04/no-alan-population-growth-is-not-an-economic-boom/

The 2006 Productivity Commission report on immigration and their 2010/2011 annual report also say that the per capita economic benefits of immigration are too small to be important and mostly distributed to the owners of capital and the migrants themselves. See p. 6

http://www.pc.gov.au/__data/assets/pdf_file/0016/113407/annual-report-2010-11.pdf

At the same time, the upfront infrastructure costs of our massive 1.8% population growth rate are enormous. The roads, schools, hospitals, etc. are needed right away, but a new resident is likely to take 20 years to contribute enough to pay for his share of them. Jane O'Sullivan estimates $100,000 to $120,000 per person in just the government costs. The economist Ralph Musgrave did a similar estimate for the UK in 2008 and found 30,000 pounds per person for non-housing infrastructure.

http://ideas.repec.org/p/pra/mprapa/6869.html

"Immigrants do eventually pay this back – after about a generation. But by that time interest on the debt (which is not paid back) resembles the debt itself."

Where is your return on investment? We could save perhaps $20 billion by cutting immigration back to 1990s levels, dwarfing all other savings or tax measures, not counting the welfare savings from a tighter labour market.
Posted by Divergence, Thursday, 8 May 2014 3:44:30 PM
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1) Drop your gilded Paid Parental Leave scheme - will save about $5 billion per year
2) Get rid of negative gearing - will save about $13 billion per year
3) Cancel the purchase of the F-35 Joint Striker Lemons - will save $12 billion in total
4) End the diesel fuel subsidy - which is NOT the same as introducing or raising a tax - will save about $2.4 billion a year
5) Forego your egotistical and (from a debt-reduction point of view) counterproductive desire to be an "Infrastructure Prime Minister" - will save $10 billion in total
6) Drop Direct Action - will save $3 billion in total

If we really are in a "budgetary emergency", if debt, government spending and government waste really are our gravest challenges at this time, then surely the above can fall by the wayside until you fulfil your primary election 'mandate' to fix the country's finances?
Posted by 579, Thursday, 8 May 2014 4:12:55 PM
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Nhoj,
Since you seem to have all the criticisms please tell us what the answer is?
Please don't tell us to give it back to Labor
Posted by chrisgaff1000, Thursday, 8 May 2014 6:26:28 PM
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Chrisgaff1000, your question has already been answered. Please read the post by 579, directly above your post. You didn't even read it?
Posted by Nhoj, Thursday, 8 May 2014 7:33:37 PM
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AND, they have managed to double the deficit.
Nhoj,
Where's the evidence for that ? ABC sources I imagine ? Nhoj, Nhoj, wank wank, know what I mean ?
That list by 579 does not include ALP cronie public servants who sabotage the Coalition's every attempt to rectify things.
You gave Labor several years without complaint even after ample proof of mismanagement, so don't jump the gun just yet with the Coalition.
Posted by individual, Thursday, 8 May 2014 8:32:30 PM
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Individual wrote, "Where do you have evidence for that" (regarding the inept Coalition's doubling of the deficit).

Poor individual, he can't read, or even click on links. Individual, please go to the first post and actually click on the link, and make at least "some" effort to ... wait for it ... READ IT. Become educated.

It shows the "proof" (not mere evidence) and the sources are:

(1) The Pre-Election Economic and Fiscal Outlook, PEFO.

(2) Senate Estimates Economics Legislation Committee.

(3) The Mid-Year Economic and Fiscal Outlook, MYEFO.

(4) Parliamentary Budget Office analysis 13th March 2014.

(5) Joe Hockey.

(6) RBA Governor, Glenn Stevens.

(7) Hansard Standing Committee on Economics

(8) Commission of Audit report "Towards Responsible Government"

(9) Treasury secretary Martin Parkinson

There's many more sources Individual, but I'm sure by the time you got to number 2 or 3 on the above list you would have lost interest, as it would all be just way too hard for "you" to comprehend.

Individual's in denial. For ideological reasons He refuses to acknowledge that the Coalition has DOUBLED the deficit.
Posted by Nhoj, Thursday, 8 May 2014 10:13:07 PM
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Facts are only facts Ludwig. Nothing more, nothing less. Measuring "good" GDP and "bad" GDP is a nonsensical concept

>>...all the economic activity generated by these bad things, which is just countering or repairing the damage and not at all improving the pre-damage economic situation, gets ADDED to GDP<<

Not "added to", Ludwig. The correct term is "included in".

>>Economic activity which genuinely indicates economic advancement, improving prosperity and increasing standard of living and quality of life, gets lumped with stuff which doesn’t indicate anything of the sort…. and it is all held up as being of the same value!!<<

That's because it actually does have the same value. It cannot have any other.

The measure of things getting better is of course GDP per capita. Which continues to improve, despite the fires, cyclones and sickness, because production elsewhere in the economy keeps us ahead of the game.

If the fires became big enough, the cyclones destructive enough, and the sickness pervasive enough, GDP would suffer, and GDP per capita would follow suit. This is of course the absolute opposite of your earlier assertion of "increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc."

These events do not increase GDP. However, the economic activity associated with them - the fireman's pay, the nurses pay, the builders pay etc.etc. - are necessarily included in GDP.

How else could it be recorded?

Think of it this way: if there were no cyclones, no disease, no bushfires, would GDP decrease? Because that is what your theory would require, if their presence somehow increases GDP.

Can you see that now? Can you now recognize the fatal flaw in your assertion that "GDP... adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc"

Can you?
Posted by Pericles, Thursday, 8 May 2014 11:14:34 PM
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For ideological reasons He refuses to acknowledge that the Coalition has DOUBLED the deficit.
Nhoj,
If you know how much they have doubled it then what whas is caused by ? What did they spend money on, how did they increase the debt etc etc. Is this a serious impairment to make up for the ALP disaster or can you be on the road to recovery even with a deficit ? Qld for example pays 4 billion a year just in interest for the Labor mess. That's just interest ! Yet the employment rate has gone up. What is the fedeal employment rate, do you know ? Deficit on the world scheme of things is a handy catch phrase for anyone in opposition but what does it really do economically ? Tell us what the deficit does to our everyday life in comparison to paying interest on ALP debt ?
Posted by individual, Friday, 9 May 2014 6:31:52 AM
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FACTS ARE CLEAR
joe hockey gave 9 billion to the fed..THIS IS PRE HIS OWN BUDGET/and the key question then becomes was it in labours buDGET.. if not he spent IT..SIMPLE

john joward cit 20 billion tax cuts revenue
IF ITS BUDGETED IT FAS ON HIM

how is there any debate.qld debt=85 bilion..[intrest =4 billion]
BUT THE FED DEBT-30 BILION?..YET SOME lIB YESTERDAY SAID INTREST 12 BILLION...the numbers dont add up.

HERE WE ARE.with the best house on THE STREET
EVERY OTHER HOME IS MORTGAUGED TO THE HILT..BUT WE FOR SOME REASOn want more..CREDIT..SO WE MUST 'PAY-OFF'..THE DEBt..so we can lend more to buolD MORE TO PRIVATRISE OFF TO OUr mates.at one tenth the cost price

hangon
someobes getting the short ENBD OF THE STICK
[IE THE DEBT..WHO IS GETTING THE PAQYOFF/yet we bail them out/ONY TO BORROW..IT BACK..ONY TO INCREASE THE TAXES/GIVE MORE TO its mates

when will you dear shadow..JOIN US INSTEAD OF DEFENDING THE UNDEFENSABLE/SPEND WITHIN YOUR MEANS/WE WIL ALLOW A BIGGER DEBT
Paying intrest of 4 billion to hold assetS OF 85 BILION THATS A BARGEN

thre big [ionly question]..then bevcomes what are the assets thIS 85 BILION SPENT HAS BOUGHT..[BUT NO WE ARNT GETTING EVEN THE DAMm asset..just the debt/and ever more revenue raiding ideas

qlds latest IS TO SEND OUT BILLS HOPING WE PAY
like 6 may i was in court/fined 300..yet got the bil todaY=403.50

via something called an offender 'levy'
we get the taxation/but no representation..now we get a freaking levy>

BUT THE JUDGE DIDNT ORDER NO LEVY
BUT WHEN I DONT PAY UP THEY TAKE MY LICENCE/my rego my house
FOR 3000 UNPAID FINES THEY put a lien on mY HOME/350.000..home

now tHEY GOING TO Collect. aN offender levy

by what right>?

http://rss.infowars.com/20140507_Wed_Alex.mp3
Posted by one under god, Friday, 9 May 2014 8:02:42 AM
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Poirot, just confirming we are referring to the same useless M Swan, the same useless person who told us in excess of ome hundred times that we would have a surplus.

Use well, if you think his forecasts were accurate, I feel for you as you have been conned.

Nojh and 579, I agree with dumping the PPS, in my view it's a joke, always has been. In fact, I think it was a bait to catch gullible voters and they took the bait, hook, line and sinker. I say this because even blind Freddie would have known it was unaffordable. Just like the NDIS and Gonski, they are all pipe dreams.

Negative gearing, here we go again.

May I suggest in order to do away with negative gearing, the first step is to secure affordable accommodation for would be renters, because investors are going to pull out of the property market and invest elsewhere. Sought that out first, then you can have a serious look at NG. Of all those who call for an end to NG, including one lead economist, this appears to be one area none of them will respond to. Are you guys going to join that list?

Diesel subsidy
Mining and agriculture are the too larges beneficiaries of this scheme and, with both showing signs of retraction, do you really think taking this away is going to be a positive move?

The whole problem you people simply won't face up to is that prior to 2007, we had ZERO DEBT and $20 BILLION in the bank.

Look where labor left off after just six years.
Posted by rehctub, Friday, 9 May 2014 9:19:54 AM
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Dear Mr. Nhoj,

It seems you have learned little from your exit interview (Posted by spindoc, Wednesday, 7 May 2014 11:34:58 AM), and you continue to froth about the forecast “doubling” of the ALP deficit by the LNP.

I’m not sure precisely what it is about this forecast that grieves you so much? It is only valid until the budget comes down anyway, at which point we will have the actual expense and revenue figures, so it remains a “so what” until then.

It could be your “Unicorn” of the week in which case it is fast disappearing over the horizon.

Is it the case that you seek to shift the blame for Australia’s debt and deficit to the LNP by pointing to revised forecasts since December 7, 2013, in order to draw attention away from the last six years of ALP economics which got us into this mess in the first place?

If this is the case then you can take comfort from the fact that you are not to blame because it was not your original thought, the ABC and ALP thought of it first, you just borrowed their opinion.

All the answers you seek are in the link to the ABC that you provided.

The difference between the ALP’s August PEFO and the December 7 MYEFO is that the former was based on ALP assumptions of “no policy change” and the MYEFO was based on the economic assumptions given to treasury by the LNP.

The ABC says; “The first, the Pre-Election Economic and Fiscal Outlook (PEFO), was released in August by Treasury. It was based on a "no policy change" scenario, using assumptions and fiscal rules underpinning medium-term projections adopted by the former Labor government”.

“The second, the Mid-Year Economic and Fiscal Outlook (MYEFO) was released in December by the Government. It was based on assumptions adopted by the Coalition, following advice from Treasury”.

Cont’
Posted by spindoc, Friday, 9 May 2014 10:13:00 AM
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We are now nearing 100 billion in the bank but that is not worth mentioning.
Abbott would not give a single cent about renters welfare.
The miners can pay the tax on fuel as well as the mining tax that does not earn any money.
We keep hearing from Joe Hockey we need to "fix the budget". The fact is we left the budget in sound shape. In all of our budgets from 2008-09 onwards, including in the last budget, we faced up to the challenge of finding large savings. Many of our measures designed to protect the strength of the budget – such as means testing the private health rebate which were opposed outright by Mr Abbott and Mr Hockey.
Posted by 579, Friday, 9 May 2014 10:13:32 AM
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Cont’d

It may not be that obvious to you, but there are a number of reasons for this.

Firstly, the LNP is now in government.
Secondly, The ALP failed to get any of their economic projections right.
Thirdly, the ALP repeatedly failed to deliver their promised surplus.
Fourthly, it was every single flawed “assumption” the ALP applied that made the growing deficit look like a surplus,
Fifthly, the ALP used “frozen” single point indicators to avoid scrutiny of their disastrous upward trend lines,
and lastly, not only did the surpluses fail to eventuate, but every single deficit that replaced these “surpluses” was greater than the last.

Therefore it would seem entirely reasonable that anything to do with ALP economic management (sic.) should be tossed out as quickly as possible.

ABC Fact Check April 8, 2014; “Mr. Hockey’s $123 bn deficit figure comes from last year’s MYEFO.. Mr. Hockey’s $667 bn debt figure comes from Treasury projections for 2023-24, which also appeared in last year’s MYEFO”

It might help if you read your own links rather than emotionally “feeling” them.

I realize you are a new troll to this site however, you should be aware that OLO’ers have become increasingly aware of the application of progressive rhetoric, platitudes and narrative theory as a means of changing reality into palatable fiction. Sadly for the progressives, reality has a nasty bite.

So now that we have “agreed” on the material facts, and how each of these has been derived, what precisely is the case that you are trying to make?

If your case is that the “yet to be evidenced sins” of the LNP even before their first budget, are somehow greater than six years of economic tragedy from the ALP/Greens, then you don’t have long to wait do you?

My guess would be that the shear terror being expressed here on OLO by progressives, is that this budget might just turn out to be a “stop the boats” moment
Posted by spindoc, Friday, 9 May 2014 10:13:46 AM
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Alright 579, so if we do all the things that you suggest, we’d save ~45.4billion$ per annum, of which about 25b is a once-off saving and 20b an ongoing annual saving.

Meanwhile, it is costing us in the order of 80b pa to duplicate basic infrastructure for new residents, which mostly come from our absurdly high immigration intake.

As Divergence says:

<< the upfront infrastructure costs of our massive 1.8% population growth rate are enormous. >>

Perhaps now we can appreciate just how enormous.

579, you wrote:

<< If we really are in a "budgetary emergency", if debt, government spending and government waste really are our gravest challenges at this time, then surely the above can fall by the wayside until you fulfil your primary election 'mandate' to fix the country's finances? >>

How about a big reduction in immigration? Halving it would save in the order of 30b pa.

If we really are in a budget emergency, then the MOST IMPORTANT thing that can be done is to significantly reduce immigration and thus greatly reduce the demand for government / taxpayer expenditure.

And the really great thing about it is that it can be done very very easily.... a million times more easily than for anything else of similar magnitude! The tough measures that you mentioned all added together would be of similar magnitude, and just imagine how difficult it would be to get them all implemented!

And what’s more; it would be very well supported by the general community, which really is not in favour of the current immigration policy.
Posted by Ludwig, Friday, 9 May 2014 10:40:35 AM
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Abbott has an agenda, and that does not include saving money, he just wants people to pay for his agenda.
The states are to sell everything they have access to but no money is to go for debt reduction.
QLD is 85 billion in debt, the only state to show a surplus is Victoria.
Abbott's spending is over and above debt, all the budgetary changes will do is make the deficit less. Would be far better to raise the GST, instead of playing around with hospitals and education and taxes which are not taxes. Giving money back to miners is absolute crap.
Abbott loosened the strings on 457 visas, so i don,t think your immigration policy is in the pipeline at all. Are you happy with all that red tape being cut.
Posted by 579, Friday, 9 May 2014 11:01:54 AM
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<< Not "added to", Ludwig. The correct term is "included in". >>

You’re just playing with word Pericles.

YES, economic activity that is generated directly as a result of disasters, accidents, illnesses and immigration certainly does get included in GDP.

I’m so pleased you can see that.

But NO, it does certainly NOT have the same value as the sort of economic growth that genuinely indicates a healthy and improving economy.

Actually, in our Federal government’s wonky world of pseudoeconomics, it does. But it absolutely SHOULDN’T!

Anyway, we’ve been over all of this. No point in doing it again. We both gave it our best shot just recently. We aren’t going to find agreement here.

I do note however that you don’t talk much about the immigration factor, which is probably much bigger than all the disaster/accident/illness type of economic activity that get added to (or including in) GDP.

The amount of economic activity generated directly as a result of immigration is staggering – and yet practically every bit of it is just duplication of what we already have, without it leading to improvements for the pre-existing population.

I keep making this all-important point, and you keep brushing past it.

Immigration = very large part of GDP = very strong indication of economic wellbeing and prosperity.

And yet we are seeing practically no change in per-capita GDP as a result of this immigration-induced economic activity. And we are seeing all sorts of negative aspects steadily worsening as a result of immigration / population growth.
Posted by Ludwig, Friday, 9 May 2014 11:04:51 AM
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On the contrary. They are quite straightforward, unambiguous words, Ludwig.

>>You’re just playing with word Pericles... We aren’t going to find agreement here.<<

So long as you insist on repeating that farcical idea that bushfires, cyclones, earthquakes, disease etc. add to our GDP, I will continue to point out just how ridiculous a concept that is.

I have carefully explained, repeatedly, how bushfires, cyclones, earthquakes, disease etc. can threaten (i.e. reduce) our GDP performance. So when you come back, time and time again, with the mindless mantra that somehow there is "increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol" (I quote verbatim), I can only once again draw attention to your economic illiteracy.

Unfortunately, you then translate this illiteracy into your standard tirade against immigration.

>>The amount of economic activity generated directly as a result of immigration is staggering – and yet practically every bit of it is just duplication of what we already have, without it leading to improvements for the pre-existing population. I keep making this all-important point, and you keep brushing past it.<<

This is the sort of dog-in-the-manger attitude that gives this country such a bad name, when compared to other rich countries. What you are effectively saying is that the "pre-existing population" should not in any way share their good fortune with anyone else, despite the fact that it does them no personal harm. Our population - wherever it is coming from - is performing well, economically, and when this is shared out (as shown in per capita GDP), we keep becoming better off.

Year after year.

The short-sightedness of your vision for fortress Australia will inevitably end in an increasing isolation from the rest of the world, at which point we will realize that we need them, far more than they need us.

And that will really hurt. Even in your privileged corner of far-North Queensland.
Posted by Pericles, Friday, 9 May 2014 11:29:49 AM
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Tax'Em Tony is about to add another great big tax, to his long list of broken tax promises! This time its a 'Petrol Tax' with not one cent of it being made available for the development of renewable sources of energy or for the provision of public transport. This tax will impact once again on the battlers as they are forced into private cars because the conservatives fail to provide public transport.
Posted by Paul1405, Friday, 9 May 2014 12:49:41 PM
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It's now up to page 9, and not even ONE of the radical right whingers on this forum has been able to show that the Coalition has not DOUBLED the deficit.

Yep, Toneliar Abbott (Tax'Em Tony) has DOUBLED Australia's deficit in just 7 months.
Posted by Nhoj, Friday, 9 May 2014 1:20:05 PM
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<< Tax'Em Tony is about to add another great big tax, to his long list of broken tax promises! This time its a 'Petrol Tax' with not one cent of it being made available for the development of renewable sources of energy or for the provision of public transport. >>

Yes Paul, this looks very likely.

Revenue from this GBNT (great big new tax) is mooted to be spent on new roads.

Well! How about that!

And why do we constantly need lots and lots of new roads?

Couldn’t have anything to do with our massive immigration intake, could it?

New roads are just part of the duplication of basic infrastructure that is needed to support immigration. It is one of the things that all the established residents (taxpayers) are paying for, which is really not returning anything positive for them, only for the new residents.

So…. if we were to greatly reduce immigration, we would greatly reduce the need for new roads and thus the need for this new tax.

We should all be telling Abbott, in no uncertain terms, that he should be reducing immigration instead of thinking about introducing new taxes like this.
Posted by Ludwig, Friday, 9 May 2014 1:29:05 PM
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Australia is full of anti migrant bigots. Ludwig wants "them" out and "us" in.

These anti migrant bigots existed in the 1800s (whilst they were willfully murdering thousands of aboriginal people ... yep the white migrants were murdering aboriginal people who got in their way. Oh the irony). The anti migrant bigots were VERY virulent in the first half of the 1900s. In the 1950s/60s/70s and 80s these hate filled bigots detested the presence here of Italian, Greek, Arab, Chinese etc etc migrants... but NEVER "white English" migrants. And so it continues on to this very day; the anti migrant bigots just can't stand migrants being here. They see migration as ONLY a minus, "they take our jobs" "they rape our daughters" "we need to build extra roads for them" "they live forever in luxury on welfare" "they're not of 'white' culture like us".

Luckily, the anti migrant bigots are currently a small minority.
Posted by Nhoj, Friday, 9 May 2014 1:57:48 PM
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Ludwig,
Are you so paranoid about migrants that you equate all government expenditure to immigration.

<<So…. if we were to greatly reduce immigration, we would greatly reduce the need for new roads and thus the need for this new tax.>>

That is simply a ridiculous statement!

When governments raise money from fossil fuels I want to see it committed to sustainable alternatives, including efficient public transport systems.
Posted by Paul1405, Friday, 9 May 2014 3:51:37 PM
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We've now reached page 10, and none of the forum righties have proven that the coalition has not DOUBLED the deficit.

I guess it's a case of *CASE CLOSED*.

Yep, Tax'Em Tony and Joe Cockey have DOUBLED the deficit in just 7 months.
Posted by Nhoj, Friday, 9 May 2014 4:02:52 PM
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The thing is we were all immigrants at one time or another, stagnation would happen without intake.
Hockey has had meetings and Abbott has an agenda, and that is to spend money, It will be interesting to see which way the bucket tips.
Keep an eye on debt levels, like the rest of au, after Abbott's dose of verbal diarrhea before the election, he has lost any credibility he ever had. AU could very well go into a period of negative confidence, if not recession.
Posted by 579, Friday, 9 May 2014 4:41:37 PM
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Paul, what a shocker of a response!

Here I was thinking that you and I weren’t too far apart in our views. But it seems that you are every bit as bad as the worst red-neck and rampantly pro-growth Lib/Labs!

For goodness sake mate, can’t you appreciate the imperative for us to achieve a sustainable society? Surely this sits right at the core of green philosophy and doctrine, doesn’t it?

And can’t you see how totally at odds rapid population growth is with that ideal… or I should say: necessity ?

I wrote:

<< So…. if we were to greatly reduce immigration, we would greatly reduce the need for new roads and thus the need for this new tax. >>

You replied:

<< That is simply a ridiculous statement! >>

Why is it ridiculous Paul? Please, have a good long hard think about it.

<< When governments raise money from fossil fuels I want to see it committed to sustainable alternatives, including efficient public transport systems. >>

Yes yes YES!!

NOT committed to ever-more of the same that we’ve got now. Not committed to the building of ever-more roads, which is made necessary directly because of our very high rate of population growth.

Paul, you being a Green and all, I would have thought that you’d basically be agreeing with me here.
Posted by Ludwig, Friday, 9 May 2014 6:03:56 PM
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Ludwig, there are other factors which come into play when decisions are made to build new roads, other than migration alone, causing population increase. I claim the world is overpopulated at 7.3 billion, not sustainable, we are part of that population explosion even though our 23 million might seem insignificant compared to the total. We have had numerous discussions about this, can Australia simply act in isolation and what would be the consequences of us taking unilateral action to stagnate our population.
I see my own city Sydney as badly needing better planing as far as population is concerned. I am all in favor of decentralisation something that seemed to go into the to hard basket years ago,and now Sydney and Melbourne are paying the penalty for that lack of foresight.
Posted by Paul1405, Friday, 9 May 2014 6:33:01 PM
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Yep, Toneliar Abbott (Tax'Em Tony) has DOUBLED Australia's deficit in just 7 months.
Nhoj,
WHERE is the evidence ?
Posted by individual, Friday, 9 May 2014 7:19:55 PM
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<< …there are other factors which come into play when decisions are made to build new roads, other than migration alone… >>

Of course there are Paul. But you can surely appreciate that our current huge rate of population growth is a huge factor in creating demand for more roads.

<< …can Australia simply act in isolation… >>

We wouldn’t be doing that if we achieved a stable population and a sustainable society. We’d be setting a great example for the rest of the world. And we’d still be giving a lot of international aid, be helping countries to deal with their population and sustainability problems, and exporting food, minerals and all sorts of other stuff.

<< …stagnate our population. >>

You are thinking about this in the wrong way. A stable population does not mean stagnation.

Please Paul; you simply cannot be a real Green if you are going to pander to never-ending population growth, and all the negatives that go with it.

You think the world is overpopulated and you presumably don’t want the global population to get any bigger. Well, why do you think differently about Australia?

You can see that Sydney badly needs better planning as far as population is concerned, but you can’t see that slowing the rate of population growth in Sydney (and the whole country) might just a fundamental part of improved planning.

Anyway, this is off to the side of the main issue.

My point is that as far as the budget is concerned and indeed the overall economy, our population growth rate, which is made up largely by immigration, is a HUGE factor…. yet it is going ENTIRELY unaddressed by Hockey/Abbott... and Bowen/Shorten are not picking them up on this enormous and critical oversight!
Posted by Ludwig, Friday, 9 May 2014 7:46:56 PM
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<< I have carefully explained, repeatedly, how bushfires, cyclones, earthquakes, disease etc. can threaten (i.e. reduce) our GDP performance. >>

Yes you have Pericles. And I have said that of course they do!!

See this post on this very thread: http://forum.onlineopinion.com.au/thread.asp?discussion=6365#188311

I said in that post:

>> Fires, cyclones, illnesses, car accidents, droughts, obesity, and a thousand other bad things, have a negative effect on productivity. Of course as a result of these, GDP would be lower than it would otherwise be. <<

So why then does economic activity that is spurred by these things get added to GDP ?? ?? ??

Come on Pericles, you need to concede that you are just completely off the mark with this particular subissue!

<< What you are effectively saying is that the "pre-existing population" should not in any way share their good fortune with anyone else… >>

No I’m not. You’re getting worked up again. And when you do that you make silly polarised statements like this. At net zero immigration, our immigration program would still be quite significant. And of course established citizens will continue to pay for the up-front for the needs of these new residents.

<< The short-sightedness of your vision for fortress Australia… >>

Pericles, we were having a polite conversation. Seems like you just can’t do that for very long, eh?

You know full well that net zero immigration does not equate to anything like a ‘fortress Australia’ mentality. Shame on you for asserting that I hold this sort of view when you know full well that I don’t.

You live in Sydney, right in the guts of the place. Well, how can you not see the issues with population pressure and continued rapid population growth? It affects Sydney more than anywhere else in the country. How can you not see that a somewhat lower rate of immigration would be a damn good idea, at least until we got the budget back into order?

And how can continue to uphold such a fundamentally flawed economic indicator as GDP??

Your views defy all logic!! !! !!
Posted by Ludwig, Friday, 9 May 2014 8:13:13 PM
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Poor "old" Individual wrote, "where is the evidence?", regarding Tax'Em Tony's doubling of the deficit.

Individual, I told you where it is in my first post. I again told you where it is in my 2nd post on page 7.

Now for the third time I'll tell you where it is .... refer to my 2nd post on page 7, and refer to my opening post.

There ya go Individual. That's where it is. No need to thank me. I'm so happy that I had this chance to direct you towards the empirical "facts", for the third time in this thread. Please try to actually read those facts this time. Believe it or not, education is good for you Individual.
Posted by Nhoj, Friday, 9 May 2014 9:02:57 PM
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This is just such a total beat-up, typical of welded-on socialist hypocrites.

Evidence refuting Nhoj's indictment, quoted directly from the ABC Fact Check article quoted (and linked) by Nhoj in his opening defamatory posting are:

1. "Governor Glenn Stevens told the Standing Committee on Economics in February 2013 that the RBA would have preferred that Mr Swan had not depleted the bank's capital by withdrawing $500 million in dividends ahead of schedule to pay down the government deficit."

(My question: How much in total did Swan and Gillard rip from the RBA?)

2. "The MYEFO said that over the forward estimates a $54.3 billion deterioration in the projected combined deficit since the PEFO was caused by "parameter and other variations" changes.

These included:

. changes to the parameters for determining tax receipts, which will result in the government receiving $37.8 billion less over the forward estimates than forecast in the PEFO;
. a change to the terms of trade methodology, reducing economic growth forecasts, causing a $2 billion hit to the bottom line over the forward estimates;
. a change in the projected unemployment rate, leading to higher benefits payments totaling $3.7 billion extra

Mr Bowen accurately quotes the MYEFO in stating that the economic assumptions have changed, with a resulting negative effect on the budget deficit."

(Former Treasurer Bowen here concurs that the former PEFO forecasts were IN ERROR - to the tune of $43.5 billion.)

(Mostly reduced revenue, not increased spending.)

3. "He (Treasurer Hockey) suggested Labor was to blame for the need for changed assumptions. "The methodology that they [Treasury] have used in MYEFO actually confirms the fact that Labor left the legacy of increasing deficits to $123 billion..."

4. "It remains to be seen how the two sets of forecasts stand the test of time,"

5. " but as of today, Mr Bowen's claim checks out."

(Mr Bowen's claim: that the forecast deficit has doubled. Good boy, he can count. Does he actually explain why? No on your Nelly!)

Beat up, to cover Labor's ineptitude.
Posted by Saltpetre, Friday, 9 May 2014 11:52:52 PM
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Round and round we go, Ludwig.

>>So why then does economic activity that is spurred by these things get added to GDP<<

It doesn't. No matter how many times you say it.

It does not get added to GDP.

It does not increase GDP, as you have argued.

Compare this statement of yours...

>>Fires, cyclones, illnesses, car accidents, droughts, obesity, and a thousand other bad things, have a negative effect on productivity. Of course as a result of these, GDP would be lower than it would otherwise be<<

...with this one:

>>[there is] increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol<<

One of these must be wrong. Yet you are the author of both, are you not?

And you have the sheer chutzpah to tell me...

>>Your views defy all logic!! !! !!<<

If you cannot see that your two statements are entirely contradictory, then you are certainly the wrong person to talk about logic.
Posted by Pericles, Saturday, 10 May 2014 12:51:47 AM
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Saltpetre:

(1) $500 million is a mere pittance. The 4 year deficit is $123 BILLION. So you *FAIL*, as you have not shown that the deficit has not doubled under the coalition.

(2) You've just repeated what's previously been said by me .. "the economic assumptions have changed under the coalition". That's one of the reasons why the coalition has more than DOUBLED the deficit. Thanks for that. So you *FAIL* again, as you have not shown that the deficit has not doubled under the coalition.

(3) Hockey's merely playing politics and "blaming Labor". DUH!! Hockey did NOT deny that under the coalition the deficit has more than DOUBLED. So you *FAIL* once more, as you have not shown that the deficit has not doubled under the coalition.

(4) True. And you *FAIL* again, as this doesn't prove that the deficit has not doubled under the coalition.

(5) True. And you *FAIL* as usual, as this "fact" doesn't prove that the deficit has not doubled under the coalition.

RESULT = Saltpetre has been unable to prove that the deficit has not doubled under the coalition.

FINAL RESULT = Australia's deficit has more than DOUBLED under the coalition.
Posted by Nhoj, Saturday, 10 May 2014 1:11:57 AM
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Assumptions made by the PBO.
Nhoj,
well, that sums it up alright.
Posted by individual, Saturday, 10 May 2014 4:35:29 AM
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digging a hole=economic activity..[if paiD]
FILLING-IN THE SAME HOLE/PAID=ECONOMIC ACTIVITY

http://www.google.com.au/search?q=gdp+economic+activity&

http://countrydata.bvdep.com/version-2012413/EIU/Help/measuringeconomicactivity.htm

The relationship between the three measures is straightforward:GDP (gross domestic product)+ net property income from abroad (rent, interest, profits and dividends)= GNP (gross national product)- capital consumption (depreciation)= NNP (net national product)

Choosing between GDP, GNP and NNPNet national product (NNP) is the most comprehensive measure of economic activity, but it is of little practical value due to the problems of accounting for depreciation.

Gross concepts are more useful.Analysts tend to say that GDP is a better measure than GNP, and that now seems to have been accepted by all the major industrial countries.

EDITED

In the short term a large change in total net property income has only a minor effect on GDP. When reviewing longer-term trends, it is advisable to check net property income to see if it is making GNP grow faster than GDP.

Capital consumption

Capital consumption is not identifiable from a set of transactions; it can only be imputed by a system of conventions.

GDP is measured gross - ie total new investment counts in GDP even though some of it is replacing obsolete plant and equipment. But NNP is a net concept, and so capital consumption is subtracted. But the rate at which investments are depreciated is essentially a decision made by statisticians.

Getting the depreciation rate wrong will affect both figures for NNP and data on the capital stock in an economy.Net material productSome countries, mainly centrally planned economies, have used net material product (NMP) to measure overall economic activity.

EDITED

Some of the exclusions can be identified elsewhere. For example, environmental costs are seen in statistics on pollution and most countries report known oil or coal reserves (although these estimates may be over-optimistic or clouded by genuine ignorance about the size of underground reserves).

One other point to note is that the more advanced government statistical agencies include in GDP an allowance for the imputed rent paid by home owner-occupiers. This avoids an apparent change in national output because of any switch between owner-occupation and renting.Surveys and sampling
Posted by one under god, Saturday, 10 May 2014 6:29:14 AM
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<< Round and round we go, Ludwig. >>

Indeed we do, Pericles.

<< It does not get added to GDP. >>

Yes it does.

No it doesn't. Yes it does. No it doesn't. Yes it does!! Round and round the mulberry bush we go. Oh what fun!!

Disasters, accidents, illness and the like reduce GDP, compared to a paradigm free of these negative influences.

And yet the economic activity spurred by the need to rebuild and get back on track after a cyclone or flood or fire, or that occurs as a result of car accidents or smoking-related illness or a myriad other things, gets added to (or included in) GDP.

But this economic activity is just countering the negative aspects of these things. It is attempting to get us from a negative position back to a neutral one.

And yet its addition to GDP would have us believe that it is activity that is taking the economy forward.

GDP is our baseline economic indicator. The bigger it is at the end of each financial year, the better we are deemed to be travelling economically as a nation. And yet it includes this sort of economic activity, which it so blatantly obviously should NOT include.

And when it comes to the massive economic activity spurred by population growth, which is not taking our economy forward, but rather is just battling to keep the same level of everything up in the face of enormous pressure upon services, infrastructure, environment, etc that is rendered by this pop growth, this is where GDP really gravely falls down as a primary indicator of our economic wellbeing.

You can’t see this Pericles! Or if you can (and I’m sure you can, because it really is very simple and obvious), you for some unknown reason just refuse to acknowledge it! And yet you think you have a handle on the economic analysis! Wow!

Your views on this subject do indeed defy all logic, and right at the most basic level!
Posted by Ludwig, Saturday, 10 May 2014 9:00:37 AM
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Your views on this subject do indeed defy all logic, and right at the most basic level!
Ludwig,
I suppose for people like you, yes.
For those not sucked in by the expert gobbledeegook it is just that, gobbledeegook.
We've been listening to all these financial & economic experts & we even had many of them voted into several layers of Government yet we're still listening to the same gobbledeegook. When will there be some real factual rhetoric backed by hands-on, bird in the hand proof ?
One side says this, the other says that. Meanwhile the basic worker is still being fleeced to no end. Where HAS all the money gone & where IS all the money going. All these fancy acronyms are merely to pull the wool over the publics' eyes which is very easily done because the bulk of the public is more concerned about making ends meet in the lucky country.
Like I quoted from an email in a now disappeared post.

This tells you a lot about our government and our economic/financial
culture:
Seems we constantly hear about how the Australian Old Age Pension
Plan could run out of money. How come we never hear about
welfare running out of money? What's interesting
is the first group "worked for" their money, but
the second group didn't.Think about it.....
Ah yes and the last parliamentarian payrise too.
This is what's important to the average citizen not all this academic waffle by experts who never produce anything let alone proof of the validity of their waffle repeated in parrot fashion by the backyard economic experts.
Posted by individual, Saturday, 10 May 2014 9:45:58 AM
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‘morning Nhoj,

My, My. What a squawker you turned out to be?

OLO’ers have FAILED, FAILED, FAILED!

At least you have confirmed that this thread was never about economics, just another Unicorn to divert attention from ALP/Greens budget disasters.

You have successfully concluded that everyone has failed to disprove that 1 + 1 has doubled the original number?

Congratulations, is that it?

Does 2 + 6 – 4 double the original number or is that beyond you?

Having borrowed opinion of Chris Bowen and the ABC, now you cannot respond to the economics when called out, because you adopted their opinion and failed to think it through.

It’s not long ago that Madame Poirot tried the same thing from the same sources with the IMF comments about MYEFO, she face planted and abandoned her own thread.

http://forum.onlineopinion.com.au/thread.asp?discussion=6330&page=0#186361

It is just possible that under your very thin veneer you are not just another squawking progressive, that you did not offer us just another Unicorn to distract from ALP failures, you did not borrow the opinion of others, you do understand the significance of economic assumptions, that this was not just another beat up and that you do indeed have the facts to back your assertions.

Why was Bowens 2013 PBO forecast based on the economic assumption of 2% spending 2017 to 2024 when expenditure was running at 3.5%?

How did Swan manage to predict so many surpluses but kept delivering deficits?

How much of the “doubling” of MYEFO expenditure is related to funding Gonski for States that did not sign on?

What were the assumption differences between PEFO and MYEFO and why?

Why is so important to restore Reserve Bank funding and why was it taken out in the first place?

I’ll give you a clue otherwise you will never get it. The answer is the same for all questions, can you work it out Einstein?
Posted by spindoc, Saturday, 10 May 2014 10:46:10 AM
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Poor Spindoc. I can see why you call yourself "Spin"doc.

Yep poor ol' "Spin"doc, doing his best to "excuse" and "explain" the DOUBLING of the deficit, all based on his dogma and ideology in defense of his right wing political heroes. If it was Labor that's currently in power, and THEY doubled the deficit in the last 7 months, I bet poor "Spin"doc would be writing lengthy posts of outrage against the hated villains.. Labor.

Drop your right wing political correctness "Spin"doc, and admit that the coalition has DOUBLED the deficit in 7 months.
Posted by Nhoj, Saturday, 10 May 2014 11:33:49 AM
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Indi,

>waffle repeated in parrot fashion by the backyard economic experts.<

Sums up Nhoj - excepting 'dunce' would be a better final descriptor.

Nhoj has provided no 'proof', just a regurgitation of Labor 'spin'.

Sure, 4-year forward estimated deficit (supposedly) of $123 billion, of which $68 billion (approx) is due to Labor PEFO (and earlier MYEFO) mis-calculation and deception (to make them look less fiscally challenged), including a host of UN-FUNDED programs neatly hidden 'under the rug'.
Labor has been the absolute champion of promises it could absolutely NOT deliver.
And there is no way of wriggling out of these FACTS.

In 6 years in government, Labor never got it right once - time after time 'guaranteeing' reduced deficits and a return to budget surplus, 'just over the horizon', until finally forced to admit they got it just so WRONG.
Wayne Swan, champion 'illusionist'.
Why in heaven's name would anyone trust Shorten or Bowen (or Labor in general) when it comes to the real facts or when it comes to fiscal competence?

Name me a Labor government which has produced a surplus - or even a manageable deficit.

Who would YOU trust to get us out of a Labor-generated fiscal 'black hole'?

Nhoj a pragmatist, or a realist? No, just opinionated.
It's just so sad really. Potential promise, misguided, unfulfilled.

As for Luddy, I think he has a point.
Disaster restorations, and 'relief', may add to GNP (through construction activity), but in the end you're back to square-one. The input has not generated an ongoing increase in productivity (just a restoration of the status quo), but has incurred taxpayer expenditure - which will have to be recovered from somewhere, won't it.

Immigration may add to GNP, but does it add to GDP? The 'theory' would say that it does - over the long term, IF it's the right kind of immigration and IF the government(s) can balance the books along the way.
Posted by Saltpetre, Saturday, 10 May 2014 12:19:10 PM
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‘morning Nhoj,

You said << Drop your right wing political correctness "Spin"doc, and admit that the coalition has DOUBLED the deficit in 7 months >>

I think you are going to have to point out where I have denied the doubling of the deficit under Hockey anywhere on this thread. On the contrary I not only used your links to confirm it, I also used your links to show how the new deficit was derived.

To quote you and confirm I have indeed actually agreed with you, you said;

<< Spindoc, thanks for acknowledging that the Coalition has DOUBLED the deficit. >>
Posted by Nhoj, Wednesday, 7 May 2014 4:26:58 PM

It is a traditional courtesy on OLO, that when you mouth off and get it wrong you apologize.

So it would be nice if you started with that apology and then see if you can answer the questions posed. It should be easy for a thinker like you as the same answer fits all questions.

Or are you going to do the dreaded “Poirot”?
Posted by spindoc, Saturday, 10 May 2014 12:23:57 PM
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I can't think of anything except Nhoj Nhoj wank wank know what I mean ?
Fancy citing the ABC & Chris Bowen as reliable sources ?
Posted by individual, Saturday, 10 May 2014 12:41:39 PM
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Good stuff, Spindoc.

You have Nhoj on the ropes. He probably wont come out next round.
Posted by SPQR, Saturday, 10 May 2014 12:42:41 PM
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"Spin"doc, ah at last you finally openly admit you "confirm it" regarding the coalition's DOUBLING of the deficit in a mere 7 months. Now that wasn't too hard to admit was it? No of course not.

So it's congratulations to "Spin"doc for agreeing with "Fact Check" that the coalition has DOUBLED the deficit.

You're the first rightie here who has agreed with the "Fact Check" conclusion. There ya go "Spin"doc, that wasn't too painful for you, the world didn't end and your hero Tax'Em Tony is still alive.
Posted by Nhoj, Saturday, 10 May 2014 12:50:44 PM
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Now, SPQR and Saltpetre it's your turn. Why can't you be good boys (oops I mean old men) like "Spindoc" and openly admit that the coalition has DOUBLED the deficit?

Come on fellas, you can do it.
Posted by Nhoj, Saturday, 10 May 2014 12:54:52 PM
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Ah Nhoj,

What a mendacious, cheating, obfuscating, abusive, vacuous little weasel you turned out to be.

Nobody can force you to apologize of course, but in failing to do so you are forever tarnished on OLO.

You have relinquished any respect or credibility you might have had. Your future posts on OLO will be met with the single response, Ah yes, The gutless jelly back.

How does a man without honor face looking at such a miserable “self” in a mirror each day?

“Honor is like an island, rugged and without shores; once we have left it, we can never return.” Nicolas Boileau.

I guess answering the questions is also off the menu Nhoj?

Thought so.
Posted by spindoc, Saturday, 10 May 2014 2:22:17 PM
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"Spin"doc is really, really annoyed that I finally got him to openly admit that he agrees with the "Fact Check" conclusion ... that the coalition has DOUBLED the deficit in a mere 7 months.

Thanks "Spin"doc for agreeing with the "Fact Check" conclusion.
Posted by Nhoj, Saturday, 10 May 2014 2:34:41 PM
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Wow, Spinner,

Sometimes I just love OLO!

Go for it, bruiser; with you on this one; both barrels.

(But maybe it's a lost cause.)
Posted by Saltpetre, Saturday, 10 May 2014 2:43:20 PM
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Hi Salty,

Yeh, it’s sad that sometimes it comes to this.

I was a bit sus on Nhoj early on, the signs started to emerge of systemic patronizing abuse and bullying. Referring to posters that did not agree or challenged the rhetoric as “poor old individual”, “poor spindoc” and “poor old rehctub”. This soon degenerated into being accused of being racists and bigots for any opinion.

In the end Nhoj just wanted to get off the thread because he had been sprung, but the poor little thing couldn’t find the exit?

Look, I don’t mind the odd troll, we can all get a bit intense at times, but I have to wonder about the mentality of those who derive all their jollies from being such little tossers. They must be terrible unhappy specimens.

I’m sure “it” will be back, perhaps with a name change. I see we are already getting the “action replays” of the same post over and over again, four repeats already. It’s possible that the “thing” has already had a brain snap or developed some serious sociological disorder.

Happy days, enjoy your weekend.
Posted by spindoc, Saturday, 10 May 2014 3:32:53 PM
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Nhoj,

Can you fill me in. Are the Flat Earth Society, aka 'Usual Suspects' still claiming Tax Em' Tony hasn't DOUBLED Australia's deficit in 7 months.
They need not worry, Tax Em' Tony has big plans, mighty big plans. First off its the great big 'Battlers Tax' and a gigantic hike in
'Petrol Tax' all along giving billionaire miners no tax at all, by dumping the 'Mining Tax'. Added to this Tax Em' Tony will ditch the 'Carbon Tax' for the Big Polluters, Soon Tax Em' Tony plans to up the Goods and Services Tax to 15%. Someones got to pay for all those handouts to the Big End of Town! Wow, and it looks like the battlers are going to cop it in the neck!
Posted by Paul1405, Saturday, 10 May 2014 4:27:35 PM
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By putting three cents on fuel they may as well have upped the GST by 3 % That will affect everything we buy. IT'S GST by stealth.
Posted by 579, Saturday, 10 May 2014 4:45:00 PM
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You too, Spinner, have a good one.

I guess there's no hope for some of the welded-on socialist fraternity, they're so deep in their own 'spin' that maybe even a D12 would have trouble digging them out.

So be it; it takes all kinds to make a genuine Christmas Pudding.
Posted by Saltpetre, Saturday, 10 May 2014 5:14:26 PM
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Paul, there's only one of them who's admitted the coalition has doubled the deficit, and that's "Spin"doc. He's admitted that the "Fact Check" conclusion is accurate, despite being in love with Tax'Em Tony (Toneliar).

All the other radical righties here are still in denial about the "Fact Check" conclusion.

These old time forum righties (there's only about 5 or 6 of them on the forum) hate me being here, primarily because on several different threads I have outed them as overt racists and "white Australia" adherents. Hence the strange, immature name calling in the first post on this page from "Spin"doc --- so hilarious and funny.
Posted by Nhoj, Saturday, 10 May 2014 5:15:33 PM
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More obfuscation, Ludwig. Playing silly games like this doesn't change matters one iota:

>>Yes it does. No it doesn't. Yes it does. No it doesn't. Yes it does!! Round and round the mulberry bush we go. Oh what fun!!<<

Aren't you tired of it by now?

>>And yet the economic activity spurred by the need to rebuild and get back on track after a cyclone or flood or fire, or that occurs as a result of car accidents or smoking-related illness or a myriad other things, gets added to (or included in) GDP<<

Included in. Not added to. There is a difference. Let's say you are offered a job that pays $1,000 a week. Would you see a difference in your pocket if your travel expenses were a) included in or b) added to that figure?

You really should try to get your head around this.

The basic problem you have is that on the one hand, you accept the reality...

>>Fires, cyclones, illnesses, car accidents, droughts, obesity, and a thousand other bad things, have a negative effect on productivity. Of course as a result of these, GDP would be lower than it would otherwise be<<

...and on the other, you deny it

>>[there is] increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol<<

And still, you continue to make a spectacle of yourself with comments like this:

>>And yet its addition to GDP would have us believe that it is activity that is taking the economy forward.<<

Once more, let me be quite specific.

These activities you are fixated upon do not of themselves increase GDP.

Just because you are unhappy with the concept of GDP does not mean you can pretend it means something else. If you would like to employ a different measure - like, perhaps, simply measuring the things you deem to be "good" - by all means go ahead and do so.

Unfortunately, you will find that it is utterly valueless as a measure of any economic reality you can identify. Or even imagine.
Posted by Pericles, Saturday, 10 May 2014 6:38:28 PM
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<< As for Luddy, I think he has a point. Disaster restorations, and 'relief', may add to GNP (through construction activity), but in the end you're back to square-one. The input has not generated an ongoing increase in productivity (just a restoration of the status quo)… >>

Thankyou Saltpetre. I am pleased that someone else can see this fundamentally important point and is interested enough to comment on it.
Posted by Ludwig, Saturday, 10 May 2014 7:52:02 PM
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Pericles, let’s look at the definition of GDP:

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

http://www.investopedia.com/terms/g/gdp.asp

When goods gets damaged or destroyed by a fire or flood, they need to be replaced to +/- the same extent that they existed prior to the disaster.

By definition, all of this gets included in GDP, although it is taking us from a negative situation back to a neutral situation, the same that existed prior to the disaster. It is not taking us forward in terms of productivity or economic prosperity. Not at all. It is simply taking us back to the pre-existing situation.

So it absolutely should NOT be added to or included within the GDP total!

Now, how are you going to counter this, Pericles?

Immigration demands ever-more goods and services, all of which get added to GDP, by definition. And yet it is, as with disasters and illnesses, entirely a matter of counteracting the negative aspects of immigration, and is not at all, or at best only just barely, producing any REAL increases in economic prosperity.

So again; immigration results in very large additions to GDP or inclusions in the GDP total. But NONE of it, or at best; practically none, actually does what GDP indicates it does!

GDP indicates that the entire monetary value of all goods and services is GOOD, and is taking us into a better economic position. And yet a great deal of what is added to it, or included in the total, is doing NOTHING OF THE SORT!

I hope that by putting this basic message, which I have expressed to you many times before, in somewhat different words, you will at last see the logic.
Posted by Ludwig, Saturday, 10 May 2014 7:57:10 PM
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It is amusing how Pericles and Nhoj first try to claim that there is a per capita benefit to mass migration and then pull out the race card when their economic argument is shot out of the water. It never occurs to them that we might be concerned about the doubling of our population every 38 years, with all sorts of negative consequences for our environment, our security, and our quality of life, if current growth rates continue, rather than worrying about some migrants with darker skins.

Perhaps Pericles could tell us how the Japanese are getting away with "Fortress Japan", since they have virtually no immigration. I would also be delighted to see Pericles lead the way in repudiating dog-in-the-manger attitudes, by offering to share his house with one or more homeless people.

Pericles and his friends really don't have to worry, though. The politicians will never do anything that might be against the interests of their rich mates. Unfortunately, this also means that they would reject any other ideas, such as 579's suggestions, that don't involve squeezing low and middle income earners until the pips squeak.
Posted by Divergence, Saturday, 10 May 2014 8:44:09 PM
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Nhoj

I have done some 'research' on the 'Usual Suspects' on here. You will be interested to know all of their posts are made on the same computer. Its a steam powered Commodore 64 (early model). On investigation, I have traced the offending machine to the Shangri-La Nursing Home in Peran Victoria. Tonight at Shangri-La the inmates were in for a special treat 'Tapioca Pudding' was on the menu, they all enjoy their tapioca, as they can eat it and leave their teeth in at the same time.
Its now about 10 o'clock and the 'Usual Suspects' will all be tucked up in bed, sanny pads on, Zimmer frames away, Sister has given them their nightly medication, read them 'Goldilocks and the Three Bears', past 7 o'clock and the likely lads are fast asleep!
Posted by Paul1405, Saturday, 10 May 2014 10:13:10 PM
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Yo, Paul,

"Yo-ho-ho, and a bottle of rum!
Fifteen men on the dead man's chest--"

Yet, some of us are still here.

You and Nhoj may be the 'young Turks', but somehow I think we may still outlast you.

Good luck with your hot cocoa.
Posted by Saltpetre, Sunday, 11 May 2014 12:50:47 AM
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Saltpetre,

"I guess there's no hope for some of the welded-on socialist fraternity, they're so deep in their own 'spin' that maybe even a D12 would have trouble digging them out."

That's a laugh....coming from someone who supports a govt whose agenda in no way resembles their pre-election spiel. You really can't see a certain disparity between the bilge they served up before the election and their rogue actions since?

(Boggles the mind)

Spindoc,

"I was a bit sus on Nhoj early on, the signs started to emerge of systemic patronizing abuse and bullying..."

(To Nhoj) "What a mendacious, cheating, obfuscating, abusive, vacuous little weasel you turned out to be."

That's a larf too...(hypocrite)
Posted by Poirot, Sunday, 11 May 2014 1:03:25 AM
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You might as well admit it, Ludwig, Saltpetre has it in a nutshell...

>>The input has not generated an ongoing increase in productivity<<

And even that is slightly inaccurate. While there clearly is no "ongoing" increase in productivity, there is no increase in productivity at any stage in the process. This is because economic resources - people and money - have been diverted from other productive activities.

The economy as a whole is just a magnification of everyday life. Instead of trying to get your head around the big picture, which you are finding most challenging, try to picture something more manageable.

Think of a small village, with two families, one family farms the land, the other digs up gold. The gold-digger sells his stuff to the big city, and buys his food from the farmer, while the farmer lives quite comfortably off his own produce.

The GDP of the village is, as you point out, "the monetary value of all the finished goods and services produced within a country's borders in a specific time period". In this scenario, let's say the gold fetches $50,000 for the gold-diggers, and they use all of it to pay the farmer's family for their produce. I will leave you to work out what the village GDP might be...

But - disaster! A cyclone destroys the farmer's crops, a tornado funnels out all his livestock, leaving him with nothing. What happens to the GDP of the village? (Take your time. That's the tough one)

Alternatively, an earthquake collapses the gold mine, and it takes a year to clear the debris before production can start. What happens to the GDP of the village?

Or perhaps the village suffers an epidemic of SARS, and fifty percent of both families are incapacitated for a period, say, of a year. What happens to the GDP of the village?

You can make any assumptions you like about alternative markets, availability of nursing facilities and so on. But in no case will you find that GDP increases as a result of these occurrences.
Posted by Pericles, Sunday, 11 May 2014 9:09:54 AM
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‘morning Poirot,

Are you the same Poirot that also got “sprung” just like Nhoj and also refused to acknowledge your misleading/false claims?

“Why don’t you stop digging, you’ve already reached rock bottom. Just swallow your omission and move on”.
Posted by spindoc, Sunday, 13 April 2014 7:43:18 AM

“In the end it doesn't really matter because Eleventy Joe is going to do his thing anyway”.
Posted by Poirot, Tuesday, 15 April 2014 10:38:20 AM

http://forum.onlineopinion.com.au/thread.asp?discussion=6330&page=0#186361

So it doesn’t matter that you got it wrong? I guess we can rule out personal integrity then?

There is something disturbing about those who live in glass houses and call out hypocrite.

If you wish to associate yourself with Nhoj’s offence against OLO’ers by refusing to acknowledge your errors, then you have earned the right to live with the same criticism.

Happy Mothers Day.
Posted by spindoc, Sunday, 11 May 2014 9:11:30 AM
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It's good to see that this thread is continuing on under "different" subject matter, like migration and the definition of GDP.

Why is this good?

Because the original subject matter (the coalition's doubling of the deficit) is fully concluded, and a final conclusion on OLO has been reach that the coalition has indeed DOUBLED THE DEFICIT.

I would like to thank "Spin"doc for his support and his conclusion, that he agrees with the "Fact Check" conclusion, that the coalition has DOUBLED THE DEFICIT.

So thanks so much for your support "Spin"doc.

Yes, the coalition has DOUBLED THE DEFICIT in just 7 months
Posted by Nhoj, Sunday, 11 May 2014 11:51:16 AM
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Sorry, Ludwig

Pericles appears to be right about the GDP. Spending on repairs after disasters does raise GDP in the short run, but ultimately will decrease GDP below what it would have been otherwise because of resources that are diverted from increasing production of new things that we want to repairing damage so that we are no worse off. There is a better example, though. Suppose that crime has increased in Pericles' neighbourhood. To protect himself, he installs a burglar alarm system and security gates on his windows. These expenditures count as part of GDP, but they are only defensive spending and don't make Pericles any better off than he would have been without them before the crime spree. This just means that even GDP per capita is an imperfect measure of human welfare.
Posted by Divergence, Sunday, 11 May 2014 1:02:53 PM
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There's something that we can agree on, Divergence.

>>This just means that even GDP per capita is an imperfect measure of human welfare.<<

Absolutely.

GDP and per-capita GDP are just numbers. They are not intended to measure individual human welfare. A GDP per capita of $100,000, in an economy where the assets are all owned by Ludwig and the rest of us slave 80 hours a week in his factories, for peanuts, provides not one single clue as to "human welfare". Nor is it supposed to.

The role of government is to ensure that there is a modicum of fairness in the laws that govern business and companies, so that the situation where Ludwig owns everything and pays us peanuts does not arise. If it manages this in a reasonable manner, then we can all share in the increased prosperity that rising GDP numbers indicate.

All we can say with any certainty is that on the whole, when the two numbers are rising, we become better off, and when they decline, we become worse off.

And while per-capita GDP continues to rise, we can be reassured that the influx of new people is not undermining our prosperity, or threatening our comfortable existence.

But your example does puzzle me a little, Divergence.

>>Suppose that crime has increased in Pericles' neighbourhood. To protect himself, he installs a burglar alarm system and security gates on his windows. These expenditures count as part of GDP, but they are only defensive spending and don't make Pericles any better off than he would have been without them before the crime spree.<<

It doesn't matter whether I am personally better off, that's not what GDP is about. It's about the economy as a whole.

What has happened is that some of the income from my own business now provides employment for a number of other people, who become better off as a direct result of my purchases.

But don't forget that a) I had to earn that money in the first place, and b) I can't spend it twice.
Posted by Pericles, Sunday, 11 May 2014 5:47:01 PM
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<< Spending on repairs after disasters does raise GDP in the short run… >>

Yes Divergence, spending on repairs raises (or gets added to or included in) GDP. But it shouldn’t, because it is NOT taking the economy forward, it is taking us from a negative position rendered by the disaster in question back to a neutral position.

<< …but ultimately will decrease GDP below what it would have been otherwise because of resources that are diverted from increasing production of new things that we want to repairing damage so that we are no worse off.

Why do you assume that resources are diverted? Some might be while others would get drawn from stockpiles or from increased production. I don’t think you can assume that increased activity in a recovery program displaces activity elsewhere to the same extent. My feeling is that it would do to some extent, but that the increase in the recovery effort would well and truly outweigh any decrease elsewhere that has resulted from reallocated resources and labour.

We get all the economic activity that is generated by the rebuilding effort after disaster added to GDP. ALL of it. No exceptions. But we get reduced economic activity as a result of the disaster, due to the loss of damage of homes, businesses and crops and/or the loss/injury of economically productive people.

The effect of these losses of economic activity and hence GDP is much less tangible than the clear gains to GDP rendered by the recovery effort.

continued
Posted by Ludwig, Sunday, 11 May 2014 8:02:51 PM
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So I wonder how these losses compare to the recovery activity that is added straight to GDP.

I strongly suspect that in the GDP calculations they don’t appear as big as the recovery effort. And the net effect would be that GDP indicates that a disaster produces a net gain for the economy... and for our quality of life and future wellbeing!!

But of course it shouldn’t be a matter of comparing the economic activity that gets added to GDP due to the recovery effort with the various reductions caused by the disaster, because the recovery effort economic activity should just totally NOT be added to GDP in the first place!!

Anyway, whichever way you look at it, GDP is fundamentally flawed, and needs to be discarded entirely as an economic indicator.

And of course with GDP being so profoundly flawed and misleading, per-capita GDP is also a very highly misleading measure.
Posted by Ludwig, Sunday, 11 May 2014 8:05:33 PM
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Ah, Poirot, dear Poirot,

>You really can't see a certain disparity between the bilge they served up before the election and their rogue actions since?<

Pray tell, what particular 'rogue actions' (actually enacted) might these be?

Or are you merely hypothesizing?

(Surely you're not sucked-in by Nhoj's ranting about this entirely fictitious 7month 'doubling of the deficit'? And, if you were, wouldn't this surely mean extra expenditure incurred on some of your own pet policy interests?)

And, if the so-called 'bilge' (your assessment) served up before the election was really all that bad or indigestible, how come the thrashing the electorate served up to Labor? (And to a lesser extent to the Greens.)

I know, from your usual exhibition of integrity on other matters, that this anti-Lib attitude is not merely 'sour grapes', but must has a deeper origin, and I wonder if you may be willing to share any specific area(s) of dissatisfaction you may have with the 'conservative' political approach.
(Or can it really just come down to a case of stereotypical 'big end of town' vs 'the battler'?) (Or, shades of 'eureka'?)
Posted by Saltpetre, Sunday, 11 May 2014 8:36:13 PM
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The only possible conclusion, Ludwig, is that you haven't the faintest idea what you are saying any more.

>>...spending on repairs raises (or gets added to or included in) GDP. But it shouldn’t, because it is NOT taking the economy forward, it is taking us from a negative position rendered by the disaster in question back to a neutral position.<<

There is absolutely nothing in the definition of GDP that requires it to only include activity that, in your quaint phraseology, is "taking the economy forward". In fact, the definition of GDP - as you yourself have acknowledged earlier - is that it is...

"...the monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory."

No mention of including only that which "takes the economy forward". Or backwards, for that matter.

I notice that you only use damaged property in your example. How would you fit bushfires and lung cancer, which were two of your earlier illustrations of "bad" GDP, into this warped theory of yours?

>>We get all the economic activity that is generated by the rebuilding effort after disaster added to GDP. ALL of it. No exceptions. But we get reduced economic activity as a result of the disaster, due to the loss of damage of homes, businesses and crops and/or the loss/injury of economically productive people.<<

Poppycock. Bluster. Desperate efforts to hide the fact that you know you have talked yourself into a corner.

The only thing left is to admit it. But we all know that ain't gonna happen, don't we.
Posted by Pericles, Sunday, 11 May 2014 10:38:34 PM
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<< There is absolutely nothing in the definition of GDP that requires it to only include activity that, in your quaint phraseology, is "taking the economy forward". >>

You don’t say Pericles!

And therein lies the great flaw in GDP!

It includes ALL economic activity, even that generated by disasters, completely regardless of whether it is taking us forward or producing an improvement for the nation in economic terms... or however you would like to say it.

What are you doing here Pericles?

Where have I stated that the definition of GDP only includes activity that is taking the economy forward… or anything of the sort?

You know that my argument is just the opposite!

You’re being very devious. You are attributing things to me that you know are not part of my arguments.

So….. who’s feeling backed into a corner here?

Go to bed. You obviously need a good night’s sleep!
Posted by Ludwig, Sunday, 11 May 2014 11:11:46 PM
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Saltpetre

You may be happy with a govt that universally misrepresented its intentions prior to the election - there are a growing cohort of people who are not. As I''ve said before I could abide a "Liberal" govt.....but I protest when confronted with an Oz version of the US Tea Party.

It's interesting that you can't see a problem at all with the LNP backward somersaulting on 99 percent of their election commitments......." We will keep the commitments we made - not the ones people thought we made." Excellent ethics in that sentiment from Mr Abbott, I'm sure you'll agree, Saltpetre, since you seem to be enamoured of your elected representatives bald-faced lying to you and your countrymen.

Never mind, you'll find some excuse, such the diddums govt had no idea of such and such, Or so and so.....ad nauseam.....despite the Costello instituted PEFO

So if you believe that I have integrity on other matters, why would you assume that I don't have any regarding my criticism of the Abbott govt? I resent a fraudulent govt of this degree......if they were a product, we'd be able to return them under the trade descriptions act.

Oh, and, yes..... The Abbott govt have just topped $70 billion in 8 months in borrowings - way ahead of the rate Labor were borrowing......( rather a strange way to carry on when we're so hard up.)
Posted by Poirot, Monday, 12 May 2014 7:32:37 AM
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When I read this I despair for the country. How much of a pinhead do you have to be to post drivel like this?

The deficit under the coalition has not doubled, the realistic projection of deficit in 4 years has doubled from the pre-election estimate based on Labor's wildly optimistic figures, to the more realistic figures a few months later.

As nearly all the expenditure is based on Labor legislation, and will be so until the next financial year all the the blame for the expenditure rests on Labor's shoulders.

The replacement of the funding for the RBA is not expenditure, but simply fixing the stupid fiddling of the books by Labor.
Posted by Shadow Minister, Monday, 12 May 2014 10:52:55 AM
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Still squirming I see, Ludwig.

>>Where have I stated that the definition of GDP only includes activity that is taking the economy forward… or anything of the sort?<<

You have stated that it should. On numerous occasions. Like here, for example:

>>...all the economic activity generated by these bad things, which is just countering or repairing the damage and not at all improving the pre-damage economic situation, gets ADDED to GDP... It absolutely SHOULDN’T be! It should be left out of the GDP calculation, or perhaps be subtracted from the total.<<

So you might like to retract this:

>>You know that my argument is just the opposite! You’re being very devious. You are attributing things to me that you know are not part of my arguments.<<

Which part of your argument is this not part of?
Posted by Pericles, Monday, 12 May 2014 11:04:11 AM
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This morning they said on Sunrise that the deficit is at 24 billion. I suppose at the budget speech we'll be told differently again.
Posted by individual, Monday, 12 May 2014 11:43:49 AM
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Salpetre,

I've been up in the big smoke for Mother's day..but just noticed your spray earlier in the thread.

"This is just such a total beat-up, typical of welded-on socialist hypocrites."

"The first, the Pre-Election Economic and Fiscal Outlook (PEFO), was released in August by Treasury. It was based on a "no policy change" scenario, using assumptions and fiscal rules underpinning medium-term projections adopted by the former Labor government."

"The second, the Mid-Year Economic and Fiscal Outlook (MYEFO) was released in December by the Government. It was based on assumptions adopted by the Coalition, following advice from Treasury."

Note key words:

1. PEFO was delivered by "Treasury"

2. MYEFO was delivered by the "Government".

Here you go. Instead of distorting Chris Bowen's points, here's the actual document.

http://www.chrisbowen.net/media-centre/media-releases.do?newsId=6789

"Labor commissioned the Parliamentary Budget Office (PBO) to independently cost the medium term budget figures had the Coalition not committed to nearly $14 billion in new spending and if Labor’s medium-term fiscal strategy been maintained.

We have understood for some time that the government’s first budget update included a number of cynical decisions that painted a distorted picture about the future state of the budget. But the scale of the dodgy accounting is breath-taking."

"The PBO report shows that:

· Net debt would be a whopping $260 billion less than the $370 billion projected in MYEFO.

· Gross debt would be $270 billion lower by 2023-24 – a huge 40 per cent decline on the $667 billion figure in MYEFO.

· The budget would be in surplus by $34 billion by 2023-24 – a $46 billion swing from the $12 billion deficit in MYEFO."

"This analysis confirms that the government’s secret decision to drop Labor’s fiscal rules dramatically inflated the current debt situation, painting a doomsday picture to build support for its ideological drive to deliver massive cuts in the upcoming budget.

Labor will not stand idly by as the Abbott government sets out to deliberately mislead the Australian community about the true state of the Budget."

Your acidy little narrative is a beat up to cover Hockey's MYEFO crock.
Posted by Poirot, Monday, 12 May 2014 2:39:21 PM
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Here's a little something by a welded on LNP supporter - Paul Sheehan.

Lovingly titled "Has Tony Abbott Gone Mad?"

http://www.smh.com.au/comment/has-tony-abbott-gone-mad-20140511-zr9io.html

"A strong case can be made for Abbott’s political insanity, as distinct from any petulant speculation about his clinical sanity, a game which has already worn thin. A strong case can also be made for his political bravery."

"The latitude for hypocrisy contained in this simple moral message was zero. Now, nine months after the 2013 federal election campaign, the Abbott government, based on multiple clues, will introduce a tax increase on fuel, a new tax on every visit to the doctor, higher costs for university, an increase in the income tax for the 650,000 people earning in excess of $150,000 – or perhaps the threshold will be higher (the agony over this broken promise ebbed and flowed and wobbled, right to the end)."

"So there goes the no new taxes. There goes no unpleasant surprises. The other dishonesty from the Coalition was to pretend the increase in budget deficits was caused by profligate spending, not by a combination of stimulus spending and a fall in receipts from the resources boom and a hit to confidence caused by the global financial crisis in 2008-09.

Add to broken promises a big dash of political bravado: increasing the eligibility age for the pension to 70, phased in by 2035, plus increasing the cost of university, and the cost of health care, plus increasing the eligibility threshold for family benefits and disability support payments and the age pension. Plenty of potential for electoral blowback in all that."

Etc...

Looks like the usual cheer squad journos are beginning to shake their heads.
Posted by Poirot, Monday, 12 May 2014 2:56:15 PM
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The Coalition was doubtless aware of the true economic situation before the election. Wouldn't it be wonderful if our consumer protection laws on false and misleading advertising could be applied to politicians? "Impeachment with honour." We could have provisions for a citizens' jury to look at cases where politicians believe that they really must break a promise because circumstances have changed. If the citizens' jury accepted that breaking the promise was justified, then the politicians could go ahead and do it without repercussions. The effects on honesty in politics would be magical, and our leaders might start treating us as adults.

Note that I am not just criticizing the Coalition. Labour lied too, and on some very serious matters. In this case, though, Tony Abbott et al. didn't have to lie to win. So why did they do it?
Posted by Divergence, Monday, 12 May 2014 3:14:48 PM
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Poirot,

You forgot the final statement of Paul Sheehan's piece:

> Like all prime ministers who introduce an austerity budget he is betting that a majority of the electorate will see that hard decisions on the economy, with its ageing population, need to be made, and made now, and to act otherwise is the greater hypocrisy.<

I have no problem with this, or with most of what Paul Sheehan covered in his piece.
I think he provided a generally fair coverage of the situation, but I disagree that the Coalition has been dishonest in its assessment of the basis of the identified/projected budget blowout.

Some profligate Labor spending (per various spending 'programs' - both funded and unfunded - inherited from the former Labor government), as well as a downturn in revenues have been highlighted as the underlying causes of the blowout, but the extent of the blowout has been largely assigned to unreliable projections employed by Treasury and the PBO.

(Mind you, I have substantial reservations about the Coalition's proposed changes to Paid Parental Leave, even as most recently 'watered-down'.)

And as for shadow Bowen's assessment, what else might one reasonably expect?

And, as for whether Labor's, the Treasury's, the PBO's or the Coalition's projections prove to be the more accurate, we will have to wait and see.
But, when faced with a potential fire it is wise to act, rather than wait around to see if the roof is going to fall in.

24 hours to wonder, many generations to evaluate the 'wisdom'.
Posted by Saltpetre, Monday, 12 May 2014 5:51:10 PM
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Lol!...Yes, Saltpetre, I almost included Sheehan's paragraph in my spiel (except I was over my word limit)

One has to ask, is it "brave" to lie "so fulsomely" to get oneself elected...or is it merely dishonourable and stupid?

These and other questions will be...

Btw, Hockey only sent the pollie pay cut initiative to the Remuneration Tribunal late last Friday....obviously a last minute brain storm to deflect criticism - especially after he and Cormann were filmed smoking celebratory cigars behind a hedge.

"A last-minute request to freeze the pay of federal politicians and senior bureaucrats was only sent to the Remuneration Tribunal late on Friday."

http://www.smh.com.au/federal-politics/political-news/budget-2014-politicians-pay-freeze-a-lastminute-measure-20140511-zr9kz.html#ixzz31UJ2Yegl

They make it up as they go along.
Posted by Poirot, Monday, 12 May 2014 6:31:04 PM
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When people are too insipid to comprehend they resort to calling names. Liar is the description now used to deny that the bandwagon has to slow down.
Posted by individual, Monday, 12 May 2014 6:43:05 PM
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So Pericles, oh squirmy one…. you squirmed right past the key issue in my post of 11 May 2014 8:02:51 PM.

I wrote:

>> Why do you assume that resources are diverted? Some might be while others would get drawn from stockpiles or from increased production. I don’t think you can assume that increased activity in a recovery program displaces activity elsewhere to the same extent. My feeling is that it would do to some extent, but that the increase in the recovery effort would well and truly outweigh any decrease elsewhere that has resulted from reallocated resources and labour. <<

Come on, one of your much-emphasised points is that resources are simply diverted and that therefore economic activity due to recovery efforts after disasters does not lead to an overall increase in GDP.

Well, wotta ya gotta say about that now, eh squirmy?
Posted by Ludwig, Monday, 12 May 2014 8:26:23 PM
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indiviual,

If someone repeatedly states categorically before the election that there will be "no cuts to education, no cuts to health, no changes to the pension, no cuts to the ABC and SBS" (verbatim Tony Abbott in an interview)

...and then "promptly" - as soon as his goal is achieved, announces cuts to education, cuts to health, changes to pensions and cuts the ABC and SBS...what would you call them?

If someone reassures the electorate "ad nauseam" that there will be no nasty surprises, no new taxes...then "promptly" announces nasty surprises and new taxes, - then what would you call them.

It's the sheer nerve and scale of Abbott's deception that is the talking point here.

So, yes, I will call him a liar...because that's what he is.
Posted by Poirot, Monday, 12 May 2014 8:32:06 PM
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Poirot,
Get it into you, there are no cuts, what you call cuts in your panic is nothing more than less waste. Why spend $10.- on some inferior article when you can get better quality for $ 8.- ?
Posted by individual, Monday, 12 May 2014 8:43:24 PM
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individual,

"Get it into you, there are no cuts..."

Lol!...waste no time, mate...get yourself to federal LNP headquarters pronto.

With rhetoric like that, I'm sure they'd offer you a position!
Posted by Poirot, Monday, 12 May 2014 9:23:18 PM
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Watching Q&A right now I simply cannot believe the bias & idiocy displayed by this moron David Maher, Tony Jones & the Labor women. Is my tax dollar paying for these idiots ?
Posted by individual, Monday, 12 May 2014 10:10:35 PM
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individual,

The only pertinent point is that if the Abbott govt had taken its present policies to the election - it would not have won.
Posted by Poirot, Monday, 12 May 2014 10:19:09 PM
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"Watching Q&A right now I simply cannot believe the bias & idiocy displayed by this moron David Maher, Tony Jones & the Labor women. Is my tax dollar paying for these idiots ?"

individual may well ask which "idiots' his taxpayer dollars are paying for...

Perhaps it's these idiots?

(Dated: May 12)

https://au.news.yahoo.com/nsw/a/23452289/mps-board-taxpayer-funded-flight/

"At a time when the Treasurer says everyone will share the burden of a tough budget 7News can reveal some MPs are getting an expensive free ride.

Four Coalition members used a taxpayer-funded jet to fly from Perth to Canberra today, costing more than $140,000.

The RAAF VIP jet flew empty to Perth to carry four Government MPs and eight staff back to Canberra, including Justice Minister Michael Keenan.

The estimated cost to taxpayers is $140,483.

One MP said the price was ‘actually cheaper than flying Qantas’.

A quick search found a Qantas flight for $334 and a Virgin flight for $291.

In taxpayer class? That works out at around $12,000 a head.

One WA member did find a flight at the same time, with Dr Dennis Jenson saying: “I did take a commercial flight, thanks.”"

Nice to know our deceptive hypocritical Govt is sharing "the burden"...
Posted by Poirot, Tuesday, 13 May 2014 12:54:35 AM
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There's no point in trying to pretend you know what you are talking about, Ludwig. You lost all credibility a long time ago.

You wrote:

>>Why do you assume that resources are diverted?<<

It is not an assumption. It is a measurable fact.

>>Some might be while others would get drawn from stockpiles or from increased production. I don’t think you can assume that increased activity in a recovery program displaces activity elsewhere to the same extent.<<

"Drawn from stockpiles", Ludwig?

You don't draw firefighters from a stockpile, Ludwig. You pay some of them, and the rest are volunteers who are diverted from their day job to perform their work on behalf of the community.

You don't draw brickies from stockpiles. They are diverted from other projects in order to rebuild after the cyclone, or the fire has razed the town.

You don't draw nurses from stockpiles. They are trained over a number of years, and when there is an epidemic, they just have more patients. Who, by the way, cannot be counted among the country's productive resources while they are under the nurses' care.

>>My feeling is that it would do to some extent, but that the increase in the recovery effort would well and truly outweigh any decrease elsewhere that has resulted from reallocated resources and labour.<<

Your feelings aren't part of the calculation, Ludwig. You are simply blustering on, hoping to have the last word, even though the words are actually empty of any factual relevance whatsoever.

>>Come on, one of your much-emphasised points is that resources are simply diverted and that therefore economic activity due to recovery efforts after disasters does not lead to an overall increase in GDP.<<

I know that to be the case, because the facts tell me so. Much more reliable than your "feelings".
Posted by Pericles, Tuesday, 13 May 2014 12:55:06 AM
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Nice to know our deceptive hypocritical Govt is sharing "the burden"...
Poirot,
I cannot recall ever supporting such waste & I have on numerous occasions stated my disgust at that. Because Coalition members are nearly as bad as ALP members does not automatically excuse any of it. The point I'm constantly making is a point that you et al constantly miss is the fact that the ALP stuffed up totally whereas the Coalition is stuffing up not quite as bad & under the Coalition we have a chance to recover. Recovery under an ALP government is simply not possible.
Why not ask the federal opposition now if they'd support a salary level reduced to 2007 ? As a matter of fact I'll ask it right now right here. So, if any pollies read this please post your views on this right here. As the Liberal member on Q&A stated last night Australia's minimum wage is too high to compete. It needs to come down as need to ALL other salaries. This moron Maher was like a randy ferret when he waffled on oncessantly about the minimum wage. He clearly has absolutely no idea about economics. Whoever made the decision to employ him & even pay him needs to be castrated.
Posted by individual, Tuesday, 13 May 2014 6:08:00 AM
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<< There's no point in trying to pretend you know what you are talking about, Ludwig. You lost all credibility a long time ago. >>

Hahahaaa!

So then Pericles, oh squirmy one, why do you bother with me then? Why do you spend so much time responding to me??

Hahaha, your actions completely contradict your assertion! ( :>)

<< You don't draw firefighters from a stockpile, Ludwig. >> << You don't draw brickies from stockpiles. >> << You don't draw nurses from stockpiles. >>

So…. what about material resources? You’ve conveniently failed to mention those. Could it be because you do realise that some of them could indeed be drawn from stockpiles or be made available by an increased rate of manufacture?

And as for the human resources; where there is a big urgent job to be done, new employees are found as well as those diverted from other jobs. It is NOT a one-for-one trade-off.

You realise full well that I am right on the money with this point – that work done in response to disasters and the material and human resources used therein, is certainly NOT entirely diverted from other jobs, and therefore is NOT neutral in terms of economic productivity or contribution to GDP.

Hey, if there is even a slightly improved economic turnover as a result of disasters, that is: even a slight amount of material and/or human resource that is additional to that diverted from elsewhere, then there will a net economic gain registered in the GDP calculation, yes? And in any large-scale urgent job, there is definitely going more activity than just that diverted from elsewhere. There is always going to be additional employees and additional material resources.

Sorry Squirmicles, you’re busted on this particular point!
Posted by Ludwig, Tuesday, 13 May 2014 8:31:37 AM
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"...The point I'm constantly making is a point that you et al constantly miss is the fact that the ALP stuffed up totally whereas the Coalition is stuffing up not quite as bad & under the Coalition we have a chance to recover. Recovery under an ALP government is simply not possible."

And the point you consistently ignore, individual, is that we did have a GFC, and that's why we went into debt. If we'd had an austerity govt, we'd probably have had a sizable debt in any case....except we wouldn't have had a robust economy with an AAA credit rating, low unemployment etc.

Other developed countries went with austerity...many of them are on this graph showing a debt to GDP ratio of between 50 and 100%....ours is under 15%

http://www.abc.net.au/news/linkableblob/3727694/data/possum-graph-8-government-debt-as-gdp-data.jpg

I mean look at it...that's our debt to GDP ratio. It's very low compared to other OECD countries. Australia's economy was kept ticking along. You do understand that - don't you?

If that's "stuffing up totally" then I'm living in Bizarro world!

Just a little something else you might be interested in:

http://www.smh.com.au/comment/budget-pain-not-for-millionaires-who-pay-no-tax-20140512-zr9o3.html

"The latest tax statistics show 75 ultra-high earning Australians paid no tax at all in 2011-12. Zero. Zip."
Posted by Poirot, Tuesday, 13 May 2014 9:03:31 AM
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Poirot,

Considering that Rudd and Juliar (now accused of knowingly taking bribes) used the jet almost continuously incl one trip for Labor party fund raising, (over which your silence was deafening), the Labor party does not have a leg to stand on this.

Secondly, considering that Bowen has already been caught out lying before the election, presenting figures done "independently" by treasury, when they were based on farcical assumptions by Labor. This is no better.

PEFO and MYEFO are both based on treasury projections which are heavy influenced by assumptions from the government of the day. (Garbage in = garbage out similar to a computer.) The proof of the pudding is that every single Labor budget or MYEFO has been wildly out with vastly increased spending.

Either Treasury under Labor suddenly became incompetent, or Labor lied to them as they lied to everyone else.
Posted by Shadow Minister, Tuesday, 13 May 2014 9:52:20 AM
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Only in the strange, convoluted logic of your own mind, Ludwig.

>>Sorry Squirmicles, you’re busted on this particular point!<<

The fact that you haven't been able to disprove any single point that I have made, and instead rely totally on your "feelings", demonstrates perfectly the quicksand upon which you base your arguments.

>>So then Pericles, oh squirmy one, why do you bother with me then? Why do you spend so much time responding to me??<<

When you post arrant nonsense on economic matters of which you understand diddly-squat, in the guise of situational analysis, then I force myself to respond, just in case there are any gullible folk out there who allow themselves to be misled by your ramblings.

Here's what we are discussing:

>>GDP... is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc.<<

We have already been able to discard this one. In your own words:

>>Fires, cyclones, illnesses, car accidents, droughts, obesity, and a thousand other bad things, have a negative effect on productivity. Of course as a result of these, GDP would be lower than it would otherwise be<<

Recognizing the inconsistency, you have now chosen to fight your battles in the area of trivia - such as whether "material" might be used up in the reconstruction after a cyclone.

You cannot seem to get it into your head that these events are destructive of GDP. By their very nature, they reduce our capacity, and lower our collective output. Every single example I have presented to you illustrates this point precisely, yet you still wander off into a world of "if" this and "maybe" that.

If this is too difficult for you to understand, then simply accept it and move on.

But please be aware that if you continue to promote this ridiculous concept as being an economic truism, I shall continue to illustrate how wrong you are.
Posted by Pericles, Tuesday, 13 May 2014 11:18:52 AM
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..ours is under 15%
Poirot,
If the ALP government did such a fantastic job to pull us through the GFC why then why is ALL the future fund gone as well ?
I tell you why, because no ALP run Government will ever be able to manage, full stop. Just think where we'd be now if the future fund hadn't been there ?
THe uselss ALP government didn't get us through the GFC, the money in the future fund did & now we're paying dearly for it whilst that useless pile of crap is living it up with his millionaire missus. True labor value people I suppose.
Posted by individual, Tuesday, 13 May 2014 12:29:41 PM
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indi There is close on 100 billion in the futures fund.
Posted by 579, Tuesday, 13 May 2014 2:45:52 PM
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Tony Abbott and Joe Hockey duet:

"To dream ... the impossible dream ...
To fight ... the unbeatable foe ...
To bear ... with unbearable sorrow ...
To run ... where the brave dare not go ...
To right ... the unrightable wrong ...
To love ... pure and chaste from afar ...
To try ... when your arms are too weary ...
To reach ... the unreachable star ...
This is my quest, to follow that star ...
No matter how hopeless, no matter how far ...
To fight for the right, without question or pause ...
To be willing to march into Hell, for a Heavenly cause ...
And I know if I'll only be true, to this glorious quest,
That my heart will lie peaceful and calm,
when I'm laid to my rest ...
And the world will be better for this:
That one man, scorned and covered with scars,
Still strove, with his last ounce of courage,
To reach ... the unreachable star ..."
(lyrics by Joe Darion and music by Mitch Leigh)
(vocals:Abbott/Hockey)

Are the 'windmills' real or illusion? We shall see in due course.

(The Moving Finger writes; and, having writ,
Moves on: nor all your Piety nor Wit
Shall lure it back to cancel half a Line,
Nor all your Tears wash out a Word of it

-- Omar Khayyam)
Posted by Saltpetre, Tuesday, 13 May 2014 4:00:11 PM
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individual,

"THe uselss ALP government didn't get us through the GFC, the money in the future fund did...."

I realise that in addressing the above comment, I may as well talk to my cat...but nevertheless.

Here's what a Nobel laureate in economics has to say on this subject:

"While other countries fell into the global recession, Australia maintained strong economic growth, low government debt and a triple-A credit rating. With this record, you might expect the federal election to be focused on how to convert the strength of today's economy into resilience for the future. But instead the political spotlight has fallen on the perceived problem of government debt, with alarming proposals to bring austerity ''down under''.

For an American, Australia's anxiety about deficit and debt is a little amusing. Australia's budget deficit is less than half that of the US and its net debt is less than an eighth of the country's gross domestic product.

Most countries would envy Australia's economy. During the global recession, Kevin Rudd's government implemented one of the strongest Keynesian stimulus packages in the world. That package was delivered early, with cash grants that could be spent quickly followed by longer-term investments that buoyed confidence and activity over time. In many other countries, stimulus was too small and arrived too late, after jobs and confidence were already lost."

http://www.smh.com.au/comment/australia-you-dont-know-how-good-youve-got-it-20130901-2sytb.html#ixzz31Zf2dcO1

(My cat get's it...don't know about poor old individual)

Here's a bit more sleight of hand from the Govt on the the pollie pay freeze:
http://www.news.com.au/finance/economy/remuneration-tribunal-decided-in-april-against-wage-increases-for-mps-and-top-public-servants/story-fn84fgcm-1226914847040

"IT was sold as a last-minute decision by the Government to freeze wages of its Federal MPs to ensure they were hit by their own chunk of Budget pain. But that wasn’t quite right.

As it turns out, the body which sets those wages had already decided pay rates would be untouched."

Such honest and trustworthy charlatans in our govt.
Posted by Poirot, Tuesday, 13 May 2014 4:28:15 PM
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a Nobel laureate in economics
Poirot,
before you let yourself get sucked in too far can you please check if this expert is making his own revenue or if he, as I suspect, is a public servant ?
Posted by individual, Tuesday, 13 May 2014 6:37:26 PM
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Pericles, you have just squirmed straight past the issue…. as you do, very frequently.

You’ve completely failed to address the nuts n bolts of my last post.

So I’ll put it to you again:

>> …work done in response to disasters and the material and human resources used therein, is certainly NOT entirely diverted from other jobs, and therefore is NOT neutral in terms of economic productivity or contribution to GDP. <<

>> …if there is even a slightly improved economic turnover as a result of disasters, that is: even a slight amount of material and/or human resource that is additional to that diverted from elsewhere, then there will be a net economic gain registered in the GDP calculation, yes? And in any large-scale urgent job, there is definitely going more activity than just that diverted from elsewhere. There are always going to be additional employees and additional material resources. <<

You can’t counter this can you.

You can’t assert that work done as part of the recovery effort after fires, floods, cyclones, earthquakes, etc is 100% diverted from elsewhere. You can’t assert that some of the work and hence contribution to GDP isn't over and above that which gets diverted from other sources.

You can’t assert that there isn’t a net gain to GDP as a result of economic activity following disasters, compared to the economic activity that would have occurred involving to the resources that get diverted into it, because there are always going to be additional resources (material and human) involved in a recovery effort.

Yes of course a disaster results in less economic return (contribution to GDP) than what would have happened in the absence of that disaster. But the amount of economic activity spurred by that disaster is always going to be greater than that generated by the economic activity that is diverted from other jobs into the recovery effort.

I hope you can get your head around that Pericles.

continued
Posted by Ludwig, Tuesday, 13 May 2014 7:38:25 PM
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You wrote:

<< You cannot seem to get it into your head that these events are destructive of GDP >>

You keep saying this, and I keep agreeing. When have I not agreed with this?

The underlying issue here is that economic growth generated by the recovery effort gets added to GDP when it absolutely shouldn’t, because it is simply taking us from a degraded position back to a neutral position. It is not taking us forward economically. But GDP indicates that it IS doing precisely this, as all contributions to it are treated equally - as though they are good positive economic growth that is good for the country, and is improving our economy and standard of living.

Surely this is not too difficult for you to understand Pericles?
Posted by Ludwig, Tuesday, 13 May 2014 7:39:42 PM
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I’m a huge Andy Williams fan.

To dream the impossible dream: http://www.youtube.com/watch?v=SbDDE1Y0FZY

Well... Tony and Joe are making some badly needed refinements to our budgetary status.

That's got to be a good thing, although I would certainly not be in favour of some of the things they are slashing.

But by far their biggest fault is their complete lack of any mention or even a passing thought for the role that immigration plays in this issue.

Abbott said tonight words to the effect: we are spending big on infrastructure, and don't we ever need it.

Well, it would be nice if he told us why we need it. That is: what generates the demand for ever-more infrastructure, and why we haven't kept up with it, despite us always having put a massive effort into building this infrastructure.

Yes... it is very much connected to our massive immigration rate.

Massive numbers of new residents requires massive infrastructure spending.

We are paying through the nose to set up massive numbers of new residents!

In this time of budgetary problems, if not crisis, we absolutely need to slash the immigration rate.

That single move would be as big as everything else put together in terms of cuts and new taxes.
Posted by Ludwig, Tuesday, 13 May 2014 9:33:43 PM
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Ahhhh poor old Ludwig, he ALWAYS manages to blame his dreaded *MIGRANTS*, regardless of the subject matter.

His fear and hatred of migration is a result of ideological brainwashing that he's accepted without question. Dogma gone crazy.

Thankfully, he's a part of a very tiny minority of uneducated Australians who are filled with such fear and hate. Ludwig is not a racist, and his reasons for his anti migrant stance are not race/culture .... *BUT* .... Ludwig still stands with these racists as a brother in arms against migration. Their reasons are different, but their hatred and fear is the same.
Posted by Nhoj, Tuesday, 13 May 2014 9:58:17 PM
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That explains everything, Ludwig.

>>I’m a huge Andy Williams fan.<<

'Nuff said.

(Incidentally, for the record, simply repeating the same rubbish over and over is never going to improve its credibility)
Posted by Pericles, Tuesday, 13 May 2014 10:57:58 PM
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I'm a huge Andy Williams fan
I'm a huge Andy Williams fan
I'm a huge Andy Williams fan
I'm a huge Andy Williams fan
I'm a huge Andy Williams fan
I'm a huge Andy Williams fan

Hey Pericles, you're correct.
Posted by Nhoj, Tuesday, 13 May 2014 11:36:58 PM
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Haaaaa hahahaaaa!

Pericles, you’re the funniest bugger on OLO.

Apparently in mentioning Andy Williams, I gave you the perfect opportunity to side-step our debate and opt out of the discussion!!

That is weeeird!!

But funny!

Haaahahahaaa!

Well… if that’s what works for you, then so be it.

But from my position, it amounts a complete cop-out.

I put to you a very discrete point in my last post, which you would have addressed if you could have. You simply can’t, because you know I am right on that particular point.

And the same applies for the whole subject. You’re off the rails with it.

Oh well… til next time… toodles.

PS. I’m sure you’re chuffed to have Nhojjie supporting you! Haaa ahahahaa ( :>)
Posted by Ludwig, Wednesday, 14 May 2014 9:01:04 AM
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Reinventing history again, I see Ludwig.

>>I put to you a very discrete point in my last post, which you would have addressed if you could have. You simply can’t, because you know I am right on that particular point. And the same applies for the whole subject. You’re off the rails with it.<<

You, I suppose, get a free pass when it comes to addressing any of the points that I make. Typical.

Get back to me on the factual basis of the following.

Ludwig says:

>>GDP... is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc.<<

Then Ludwig says:

>>Fires, cyclones, illnesses, car accidents, droughts, obesity, and a thousand other bad things, have a negative effect on productivity. Of course as a result of these, GDP would be lower than it would otherwise be<<

Explain to me how both of these statements of yours can be simultaneously true, and perhaps I will indulge you with a little more education as to what actually happens to GDP in, and after, a disaster.

In the meantime, be aware that it is a little premature to crow, when you have clearly lost every argument, and are forced to resort to Ludwig's Law.

Which states that he who has the last word in a discussion must, by definition, be correct, despite the complete vacuity of the point he is making.
Posted by Pericles, Wednesday, 14 May 2014 3:26:49 PM
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Pericles, you still ‘ere?

I thought you signed off with your last post!

Apparently when you said << Nuff said >>, you didn’t mean nuff said at all. Typical!

Alright let’s make a deal….

I will fully address the points you put to me in your last post if you fully address the points I put to you in my post of Tuesday, 13 May 2014 7:38:25 PM.

Deal?

Hey, I’ll throw in a sweetener – I’ll address your post first, even though my unaddressed post pre-dates it.

Whadda ya say?
Posted by Ludwig, Wednesday, 14 May 2014 7:25:27 PM
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I think you missed the point, Ludwig.

>>Apparently when you said << Nuff said >>, you didn’t mean nuff said at all. Typical!<<

That was an Andy-Williams-related comment. Nothing to do with serious discussions at all. Except as a pointer to possible cerebral limitations.

>>I will fully address the points you put to me in your last post if you fully address the points I put to you in my post of Tuesday, 13 May 2014 7:38:25 PM.<<

Eh? You mean this nonsense?

>>You can’t assert that work done as part of the recovery effort after fires, floods, cyclones, earthquakes, etc is 100% diverted from elsewhere. You can’t assert that some of the work and hence contribution to GDP isn't over and above that which gets diverted from other sources.<<

These are precisely the same issues that I settled, once and for all, on Wednesday, 7 May 2014 at 10:30:23 AM, seven and a half days before.

>>Fires, cyclones, illnesses are not "good" for the country, as they divert resources - and therefore money - from other, more productive roles. But that is no reason to exclude them from the calculation, since the money is employed within our economy, buying groceries for the firefighters, allowing the nurses to pay their rent, builders' labourers to buy clothes etc. etc. But above all, these factors you cite do not, repeat not, increase economic turnover. It is clear as day (to most people) that if we spent all our time tending the sick, fighting fires and rebuilding after an earthquake or cyclone, very quickly we would have a GDP of zero. So, by definition, the time, energy, resources and money expended on these activities cannot possibly, in any universe, cause "increased economic turnover". I am frankly astounded that this simple concept still hasn't made it through into your consciousness, Ludwig.<<

Until you accept the pure, simple, crystal-clear logic of this, there is no point whatsoever in responding to your menu of tenuous bluff and bluster.

I am actually surprised that you believe a single word that you say here. If indeed you do.
Posted by Pericles, Wednesday, 14 May 2014 11:21:01 PM
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<< That was an Andy-Williams-related comment. Nothing to do with serious discussions at all. Except as a pointer to possible cerebral limitations. >>

Ohww! Really! Nothing to do with serious discussions eh?

As if to say that I have some mental problem because I’m an Andy Williams fan?!?

Pericles, you took a very cheap opportunity to launch another insult. Every bit as cheap, unintelligent and mentally corrupt as that Nhoj character.

You ought to be ashamed of that.

NO you haven’t addressed my query. Your quote above, which pre-dates the statement of mine that you have repeatedly avoided addressing, does NOT address my statement.

My point economic activity is not entirely diverted – there are always going to be extra material resources, human resources and economic activity on top of that diverted from elsewhere, and therefore recovery-effort activity does add to GDP. You said that it is entirely diverted, and Divergence agreed.

You haven’t addressed this point. You have again sidestepped an issue that you know you can’t counter.

I was looking forward to addressing your post of Wednesday, 14 May 2014 3:26:49 PM. But I won’t until you address this point…. or admit that I am right.

Come on, simply admit that yes there is or at least could be some material and human resources that are not just diverted from other jobs, and that recovery-effort economic activity is or at least could be greater than the sum of diversions into it or economic activity foregone elsewhere as a result of this activity.

Just admit that, so that we can move on….please.

Really, I do look forward to addressing your mooted contradiction in my statements. But fair’s fair! You do mine and I’ll do yours.
Posted by Ludwig, Thursday, 15 May 2014 8:46:31 AM
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If you insist, Ludwig. Anything for a quiet life.

>>My point economic activity is not entirely diverted – there are always going to be extra material resources, human resources and economic activity on top of that diverted from elsewhere, and therefore recovery-effort activity does add to GDP. You said that it is entirely diverted, and Divergence agreed.<<

There are indeed circumstances where this is entirely possible, although not guaranteed.

For example, if business simultaneously becomes more efficient, and can produce more without the resources that have been diverted, than yes, growth will occur. Similarly, if government decides to invest some of our taxes into those "extra material resources", then it is likely to increase economic activity. Much as the pink batts, and the investment in new school buildings, were part of the government's response to the dangers of the GFC to our economy. Without the injection of a heap of borrowed money, we might have entered a recession that would benefit no-one. Borrowing more money therefore allowed our economy to continue moving forward.

The actual medium-to-long-term impact of this process is keeping economists busy with a whole lot theories. But most seem to agree that as a mechanism to boost GDP, it is at best a blunt weapon, and at worst, a store of future dangers.

http://noahpinionblog.blogspot.com.au/2012/03/how-can-debt-affect-potential-gdp.html

If you are interested in the technicalities, this is a good starting point.

http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1237.pdf

In all of this, one aspect stands out. Without some form of stimulus, GDP does not grow. Businesses do this by investing their profits to create more output, thereby increasing GDP. Governments invest our taxes to achieve similar results. But in neither case is growth guaranteed.

So your post-disaster scenario remains entirely speculative, for exactly the same reasons. And, incidentally, is only one of the scenarios that you proposed will "add to GDP". It is difficult to see, for example, how a SARS epidemic that filled our hospitals for six months would respond to the same opportunity for overall GDP growth.

And yes, the Andy Williams thing was a cheap shot. But you shouldn't lead with your chin...
Posted by Pericles, Thursday, 15 May 2014 11:05:11 AM
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<< There are indeed circumstances where this is entirely possible, although not guaranteed. >>

Wahoo!!

Thankyou so much for that, Pericles.

<< And yes, the Andy Williams thing was a cheap shot. >>

Thankyou again.

Wow, I’m so happy now. I’m going to have a really great afternoon…. despite the wet weather here in Cairns, which is no good for my new profession of beachbumology!

More later.

Oh, and thankyou again… again! ( :>)
Posted by Ludwig, Thursday, 15 May 2014 12:48:45 PM
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Alright Pericles, you reckon that these two statements of mine are contradictory:

>> GDP... is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc. <<

and

>> Fires, cyclones, illnesses, car accidents, droughts, obesity, and a thousand other bad things, have a negative effect on productivity. Of course as a result of these, GDP would be lower than it would otherwise be <<

Hmmmm….

Yep…

They are totally contradictory.

You win this argument.

I’m outta here.

Bye.
Posted by Ludwig, Thursday, 15 May 2014 7:45:43 PM
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Ahhhh… you WISH!!

No they are not at all contradictory.

We have thoroughly been over this, so I’m only repeating myself here:

The economic activity that results from the recovery effort from fires, floods, cyclones, etc and from car accidents and smoking, alcohol and obesity-related illnesses etc does indeed get included in the GDP total. It all makes GDP bigger than it would otherwise be. And it certainly isn’t just activity that gets diverted from elsewhere, which you have finally conceded to be the case.

But of course none of this activity should be added to GDP, as it is all taking us from a negative position back to a neutral position. It is not advancing our economy. It is just getting us back on track. Or in the case of car accidents and illnesses, just ongoingly trying to counteract or reduce the magnitude of the negative economic impacts of those things.

So to my second statement:

Of course disasters, accidents and illnesses lower our economic productivity. GDP would be lower than it would otherwise be. But if GDP didn’t include economic activity undertaken as part of recovery efforts or ongoing combatant efforts against illnesses, it would be lower still… and would more accurately reflect the negative impacts of these things.

A lot of activity that registers positively with GDP is a direct result of negative impacts on our economy. This is just bonkers! ALL that sort of economic activity should be seen as neutral….as being outside of the parameters of the GDP calculation!

Yes it would be hard to sort out just what should or should not be included in this calculation. But I’m sure we could do it if we tried. We could certainly implement a much better economic indicator than what we’ve currently got. It wouldn’t be perfect, but it would still be about a thousand times better than the GDP indicator as currently defined.

So I hope now Pericles that you can see that there is no contradiction between these two statements.
Posted by Ludwig, Thursday, 15 May 2014 8:00:41 PM
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You still don't get it, do you Ludwig.

>>The economic activity that results from the recovery effort from fires, floods, cyclones, etc and from car accidents and smoking, alcohol and obesity-related illnesses etc does indeed get included in the GDP total.<<

Yes, it does.

>>It all makes GDP bigger than it would otherwise be.<<

Not necessarily. It depends whether additional money is injected into the economy in order to combat the problem. If it isn't, then the economy does not increase in size, and is therefore not "bigger than it would otherwise be". In fact, it would become smaller, as unproductive activity within the economy increased in relation to the productive part.

>>But of course none of this activity should be added to GDP<<

It isn't added. It is included.

>>Yes it would be hard to sort out just what should or should not be included in this calculation. But I’m sure we could do it if we tried.<<

But it would not make sense to anyone except you.
Posted by Pericles, Monday, 19 May 2014 8:01:50 AM
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pre-ridicules..<<..smoking, alcohol and obesity-related illnesses etc does indeed get included in the GDP total.<<

Yes, it does.>>

no it dont..its economic activity..does.
i home brew..i home grow..i home heal..there is no economic benifit/from me..

>>It all makes GDP bigger than it would otherwise be.<<
[no im not spening a cent/if i was to double my smoking..it dont showup/in extra sales..fertiliser/water..are minute..but if i use chook poo/rain water..nix nadda

<<Not necessarily..[bigger..gdp..'..It depends whether additional money is injected into the economy in order to combat the problem.>>

how come suddenly its a problem[no extra money was expendid[thus there is no problem/govt spendinf a bigger precentage/of nuthin.

<<If it isn't,..then the economy..does not increase in size,>>

sure/but what about barter?

no increase..<<..and is therefore not "bigger..than it would otherwise be".>>

that grates/on me..ok i got my crop/if disaster breaks..instead of free/i need raise the money or the value/in barter[its new eco activity]

more not less..<<....In fact,..it would become smaller,
as unproductive activity>>
[that seems the root of the error..
the disaster..isnt non productive..in fact not only me bying my booze/smokes..but insurance/buying roofs buildig etc[not imediate/but progressive/with a peak/then a low[and if thats not done..no eco activity/though some will rebuild by barter]

the real question/is\..has eco activity increased..
or are the volenteers suckking otherwise paid work?

<<..within the economy increased..in relation to the productive part.>>

>>But of course none of this activity should be added to GDP<<

It isn't added. It is included.>>

freaking same same
im including the tax burdens on you..but every penny you 'spend'..is added to gdp/but as expenmditure is linked to it..its govts aid/to beat any/of it up..

but only..so they can spend more

see how it should go/is money suply links to asset
as assets increase[via deflation]..the money supply..to govt
is increased../by way of\..'other consuming taxes...'anyhow govt should revenue raise by money moving..wether its moved for ever..or a micro second/a transaction/tax..on all transactions/double for corpertions/inc's/ltd's..and trust's tax minimisation..or money-export.
Posted by one under god, Monday, 19 May 2014 9:22:56 AM
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Nope. Wrong.

>>It isn't added. It is included.>>
freaking same same<<

That is the persistent error in Ludwig's logic.

There are ten people in a room.

If John walks in to join the people in the room, he is added to the total, making eleven in all.

If John is included in the people in the room, there are still only ten.

Most people learn this simple concept when they are in their first year at school. But perhaps that was so long ago for you and Ludwig that you have forgotten.
Posted by Pericles, Monday, 19 May 2014 3:20:10 PM
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Is there another aspect to this misunderstanding, Ludwig?

"Of course disasters, accidents and illnesses lower our economic productivity. GDP would be lower than it would otherwise be."

You do understand the difference don't you, and that economic productivity is not economic product?

As near as I can figure it you do not want GDP to be what it is defined as, but to be something it is not defined as.

Wouldn't it be easier to argue for a Net Domestic Product? Though "it would be hard to sort out just what should or should not be included in this calculation."

On which side of the accounts would the time and costs of posting comments online appear, for example?
Posted by WmTrevor, Monday, 19 May 2014 3:38:35 PM
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O ‘ullo Pericles. Trust you ‘ad a great weekend.

<< Yes, it does. >>

Well thankyou for agreeing with me!

<< Not necessarily. >>

No. Absolutely necessarily! ALL economic activity that is generated by disasters, accidents and illnesses gets added to (included in) GDP. Check the definition of GDP again. It doesn’t exclude this sort of economic activity.

So I take it that in saying; ‘not necessarily’, you can indeed see my point that economic activity that results directly from disasters, accidents and illness does indeed sometimes at least contribute to GDP and make GDP bigger than it would otherwise be.

<< It isn't added. It is included. >>

Added… included… it is absolutely the same thing! If it is added to the GDP total, that total would be bigger than if it was not added. It if is included in the GDP total, that total would be bigger than the total would otherwise be, by exactly the same amount as if it was added to it!!

<< If John walks in to join the people in the room, he is added to the total, making eleven in all. If John is included in the people in the room, there are still only ten. >>

If John walks into a room with nine people, there are then ten.

If John is included in the people that are then in the room, there are then ten.

Added to…. Included in… Same difference!!

Most people learn this simple concept when they are in their first year at school. But perhaps that was too long ago for Pericles!! ( :>/
Posted by Ludwig, Monday, 19 May 2014 10:25:45 PM
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Not at all, Ludwig.

>>Added to…. Included in… Same difference!!<<

Here are the dictionary definitions.

add (verb)
1. join (something) to something else so as to increase the size, number, or amount. e.g. "a new wing was added to the building"
2. put together (two or more numbers or amounts) to calculate their total value. e.g. "they added all the figures up"

include (verb)
1. comprise or contain as part of a whole. e.g. "the price includes dinner, bed, and breakfast"
2. make part of a whole or set. e.g. "we have included some hints for beginners in this section"

>>If it is added to the GDP total, that total would be bigger than if it was not added.<<

True, but that way of describing it is still confusing you. The total is only bigger after it is added. That is, if 1 is added to 99, the total is 100, which is bigger than 99.

This is where you go trip yourself up:

>>It if is included in the GDP total, that total would be bigger than the total would otherwise be, by exactly the same amount as if it was added to it!!<<

Of course it would. But that is not what we are talking about, is it, because you have had to subtract it, before adding it back in.

If 1 is included in 100, then the total stays the same.

Sometimes my patience amazes me.

It is a bit sad that we have to spend so much time on elementary arithmetic. But it is the only way you will ever understand why "increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol" can only be the result of external stimulus - e.g. increased government funding, or increased efficiency elsewhere in the economy - and does not happen of its own accord.

No-one goes "whoopee, there's a bush fire, our GDP will increase", which is what you were proposing when we started this discussion on "add" vs. "include".
Posted by Pericles, Tuesday, 20 May 2014 8:06:36 AM
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<< You do understand the difference don't you, and that economic productivity is not economic product? >>

Yes WM Trevor. Although it depends on just what you call ‘productivity’ and ‘product’.

Of course all economic activity does not product a tangible material product. But a lot of it does produce good outcomes in the form of services of all sorts.

And we’ve got to consider the demand for productivity, product, goods and services. So if we are producing lots of product and non-product productivity (goods and services respectively), but the demand is constantly increasing and this production is just going along with the demand, then we aren’t really achieving anything…. Which is exactly what is happening with respect to our super high immigration / population growth rate.

So using a Net Domestic Product indicator instead of GDP would still have the fundamental problem of showing high product, without it being compared to the rate of demand or the per-capita product or the real improvements (or lack thereof) for our economy, quality of life and future prosperity (sustainability).

An NDP indicator would suggest that the achievement of high economic product output would be very good for our economy, end of story... which would be just as misleading and outrightly false as the GDP indicator currently is.

The trick is to work out how exclude (treat as neutral) all the product and productivity that is simply catering for the ever-increasing demand (and which happens in response to disasters, accidents and illness), which is simply providing the same level of services and infrastructure for ever-more people without producing anything truly positive for our society.

<< On which side of the accounts would the time and costs of posting comments online appear, for example? >>

This would be outside of any economic / GDP / NDP calculations, wouldn’t it? I can’t see how it would contribute to or detract from these.
Posted by Ludwig, Tuesday, 20 May 2014 9:22:11 AM
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I wrote:

>> If it is added to the GDP total, that total would be bigger than if it was not added. <<

Pericles, you replied:

<< True… >>

Thankyou for agreeing with me.

This is all that really matters here.

<< If 1 is included in 100, then the total stays the same. >>

And if 1 is included in the total that was 100 before it was included, the total would be 101.

Hey, you can look at ‘included’ as either not adding to a total as you do, or adding to a total as I do. Both are legitimate interpretations. My interpretation is just the same as adding something to the total. Including in… Adding… Same thing.

The important point is that you know what I mean: that economic activity included in a total makes that total bigger by the amount of that inclusion than it would otherwise be without that inclusion. Obvious and simple. And undeniable as it concerns contributions to GDP.

<< No-one goes "whoopee, there's a bush fire, our GDP will increase" >>

Of course they don’t.

So then, why does the economic activity that results from it get directly added to the GDP total? Or included in that total, which would be smaller if it was not included?

Quite apart from any diversion of material goods or labour from other jobs, quite apart from the fact that disasters surely do have an overall negative impact on our economy and quite apart from the obvious fact that economic activity spurred by a disastrous fire event is simply taking us from a bad situation back to a neutral situation, it all contributes to GDP!! !! !!

This is simply insane! Anyone who has the slightest clue about economics… or about logical thought processes… can surely see that we shouldn’t be adding stuff which is obviously not positive to a total that totally indicates that it is entirely positive!! ( :>|

Ah, but I am just repeating myself.
Posted by Ludwig, Tuesday, 20 May 2014 10:16:37 AM
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ludwig/quote..<<..This is all..that really matters..here.>>
i agree/this has been..entertaining]so-far.

<< If 1..is included..in 100,
then the total..stays the same...>>

yes..1..is included..to make 100...in singular unit progression to the total/..whole..of 100]..but in doing so..has lost its singular/entity

<<And if..1..is included in the total
that was 100..before it was included,..the total would be 101.>>

inclusion..of one/\excludes all else..[including 101][when..100=inclusion..of all]

you can look at..‘included’>>
as being the past/done..concluded..as it 'was'..included

<<..as either..not adding to a total..as you do,>>

me either..was means is must be..100
as 100 is all it was past included]..

<<..or adding..to..a [new?]..total as I do...Both are legitimate interpretations.../My interpretation is just the same..as adding something..to the total.>>

and thus modifying what 'was'
into the more usefukll of what now is

<<..Including in… Adding… Same thing.>>
i hope i have added my support/not that that changes anything?

<<The important point..is that you know what I mean>>

mean=means=average..:..that economic activity..*includ*ed*>>
past tense,,}..<<..in a total>>..sum certain]..<<..makes that total bigger*..by the amount of that inclusion..>>

absolutly/irrefutably/this moment modiefies what was previously concluded\to be included..conclusivly..consecutivly un addintionalised..<<>.than it would otherwise be..without that inclusion...>>

yes/thats clear/before i added mu 'inclusion/conclusion..collusion..<<..Obvious and simple...>>

And undeniable..in/as far\it concerns..contributions to GDP...so far as productive blogging is concerned..

<< No-one goes "whoopee,..there's a bush..
lockem-up/citizen arrest\em..

sorry/busche..<<..fire,..our GDP will increase" >>
but if it was set..into a hypothetical 'target'..of 100
the accident has drawn that predictive 100/back to 99..but thats lost forever

any input..is extra gdp..extra cost over return
i need plant again..[that reminds me we bailout plantations revaged by cyclone/but in the old days we chopped off most of the leaf/we bailout fools/their a dead loss..gdp=98?..plus one=what we got..clever accounting

money gets created..lol..you will love this
simply by us saying we allready recieved 'it'..its tthen put on the books as a debt/yet nothing was lent pre signing reciept..you allready 'got'..it...include includes a definitive condition/any change to that condition/alters the end fruits.
Posted by one under god, Tuesday, 20 May 2014 11:46:00 AM
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So as far as you are concerned Ludwig, words mean anything you choose them to mean.

>>My interpretation is just the same as adding something to the total.<<

Despite my providing you with two, clear and separate definitions of "add" and "include", you still maintain that they mean the same thing.

There seems little point in continuing this conversation in English.

Can you speak German?

But perhaps this will help.

>>Anyone who has the slightest clue about economics… or about logical thought processes… can surely see that we shouldn’t be adding stuff which is obviously not positive to a total that totally indicates that it is entirely positive!!<<

So where do you count expenditure on hospitals? There is a vast army of people out there tending the sick, which is clearly one of your "not positive" activities, given that the patients are non-productive for the duration of their illness.

Because, you know, they are certainly included in the calculation of GDP.

It is only a short logical step from there to show that bushfires, cyclones, earthquakes etc. have precisely the same impact. They do not add anything to our GDP. And the most likely outcome is that they reduce it.

Your problem, as has been pointed out before, is that you are unhappy that GDP counts everything. You want it to count only "good stuff", without being at all certain where the line may be drawn.

>>...all the economic activity generated by these bad things... gets ADDED to GDP... It absolutely SHOULDN’T be! It should be left out of the GDP calculation, or perhaps be subtracted from the total.<<

Well tough. That's not going to happen. At the risk of repeating myself, this is deeply "flawed" economic thinking:

>>[GDP] is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc.<<

Perhaps the best thing for you to do Ludwig is to learn a little about economics.
Posted by Pericles, Tuesday, 20 May 2014 2:05:48 PM
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<< So as far as you are concerned Ludwig, words mean anything you choose them to mean. >>

That’s a silly thing to say Pericles. You have carefully explained what you mean and I have carefully explained what I mean.

You’ve got to admit that my interpretation and definition is every bit as good and as valid as yours.

More later.
Posted by Ludwig, Tuesday, 20 May 2014 2:25:40 PM
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Jeez, I must have the patience of a saint.

>>You’ve got to admit that my interpretation and definition is every bit as good and as valid as yours.<<

Let's run through that again, shall we.

Mine are not interpretations. They are definitions.

And they are not my definitions. They are dictionary definitions.

Here are those dictionary definitions once again.

add (verb)
1. join (something) to something else so as to increase the size, number, or amount. e.g. "a new wing was added to the building"
2. put together (two or more numbers or amounts) to calculate their total value. e.g. "they added all the figures up"

include (verb)
1. comprise or contain as part of a whole. e.g. "the price includes dinner, bed, and breakfast"
2. make part of a whole or set. e.g. "we have included some hints for beginners in this section"

And here is Ludwig-speak.

>>Hey, you can look at ‘included’ as either not adding to a total as you do, or adding to a total as I do. Both are legitimate interpretations. My interpretation is just the same as adding something to the total. Including in… Adding… Same thing.<<

Once again, with feeling:

So as far as you are concerned Ludwig, words mean anything you choose them to mean.

>>More later.<<

Can't wait.

I'm eagerly anticipating a Ludwig-ized version of that old Bill Clinton classic, "It depends on what the meaning of the word 'is' is"
Posted by Pericles, Tuesday, 20 May 2014 3:29:16 PM
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For goodness Pericles. More words do not right you make!

I said:

<< More later >>

You should have held off and given me a chance to properly reply to your previous post. Heaven knows I could write a whole book about it!!

Crikey, I’m the professional beachbum, having taken a redundancy some time back. While you’re apparently the professional businessman, in charge of several employees. And yet you seem to have much more time to indulge in OLO than I do!!

Alright, please consider this:

GDP has been telling us in no uncertain terms that our economy’s been hootin along in recent years, yes?

Afterall, we’ve had a hooter of a mining boom, and we’re still right in it, just back a bit from the peak. And we’ve had hootinly high growth due to horribly high immigration for decades, except for a bit of a low patch under Keating if I recall correctly.

And yet…… we’ve got major issues with the Federal budget, with infrastructure, with services like health and education, major environmental issues, major discontent with politicians, term after term whether they be Lib or Lab… and in short: we are pretty obviously not gaining a higher quality of life or a more secure future as a result of all this growth.

GDP, being the horribly flawed measure that it is, has been MISLEADING US TERRIBLY!!

continued
Posted by Ludwig, Tuesday, 20 May 2014 6:07:26 PM
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Now, if GDP had been formulated so that it didn’t include all the economic growth generated by immigration that just duplicates all the basic requirements for that extra population, and it didn’t include stuff that happens as a direct result of economically negative disasters, accidents and illness, then it would have come somewhere much closer to giving us a realistic indication of what is really happening here.

<< So where do you count expenditure on hospitals? There is a vast army of people out there tending the sick, which is clearly one of your "not positive" activities, given that the patients are non-productive for the duration of their illness. >>

YES there is a 'vast army'! And all this sort of economic activity should be NEUTRAL to GDP!

<< Your problem, as has been pointed out before, is that you are unhappy that GDP counts everything. You want it to count only "good stuff", without being at all certain where the line may be drawn. >>

<< Well tough. >>

Hahahaa. That’s bizarre!!

Of COURSE I want the indicator that’s supposed to indicate only good stuff to only include good stuff.

And what do you want? For it to continue to be an incredibly basically fundamental dismally gravely flawed FALSE indicator…. which you KNOW includes a WHOLE lot of stuff that should be considered neutral or negative, and calls it all positive!!

The proof is in the pudding, Pericles.

The pudding is the high GDP growth that we’ve had for many years. But there is decided lack of pudding when it comes to the types of real improvements across our society that that high GDP has directly and unequivocally told us that we should have been having for all of those years, due to a hootinly good rate of economic growth!

<< At the risk of repeating myself, this is deeply "flawed" economic thinking >>

Please, just sit back for a moment…. and ponder just how deeply flawed your thinking is on this issue. Perhaps you need to learn a little about REAL economics!
Posted by Ludwig, Tuesday, 20 May 2014 6:12:17 PM
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Yeah, right.

>>Please, just sit back for a moment…. and ponder just how deeply flawed your thinking is on this issue. Perhaps you need to learn a little about REAL economics!<<

And this advice comes courtesy of...

>>...the professional beachbum<<

Go... catch a wave.

Or whatever it is you beachbums do.

Just don't, whatever you do, start your own business.
Posted by Pericles, Tuesday, 20 May 2014 11:01:43 PM
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Pericles, don’t tell me you’re giving up?!?

What about my ‘proof in the pudding’ comments?

Irrefutable aren’t they.

All we need to do is to look at the nature of GDP, which has been growing like the clappers for many years, and compare it to our real-world economic situation and….. it all becomes glaringly obvious that there is something extremely wrong with the way GDP is formulated!

So, to uphold GDP as being of a sound economic basis is just terribly poor, for anyone who has a realistic understanding of economics.

Look at the rate of GDP growth in the last three years: http://www.tradingeconomics.com/australia/gdp-growth

Average growth of 0.81% per quarter since the start of 2011.

It has averaged 0.88% per annum from 1959 to 2013.

This is an absolutely staggering growth rate when you think about it. In fact GDP has increased by some 250% just since 2004!! http://www.tradingeconomics.com/australia/gdp

So…. with this sort of indication from GDP, how is it possible that we have a Federal budget ‘crisis’, or a humungous need for infrastructure expenditure or declining benefits for pensioners and other welfare recipients or the prospect of increasing prices for just about everything or a forthcoming increase in GST, or all sorts of other things, all of which clearly indicates that things are not going too well for us economically?

I mean; GDP is at the most stark odds with the very things that it is supposed to be indicating are in good nick!! !!

And the biggest reason for this is our absurdly high rate of immigration – or more specifically; all the economic growth that is needed to simply give this massive number of new immigrants each year all the basic infrastructure and services that the established population has, all of which makes a HUGE contribution to GDP… but which is at best neutral... and absolutely should NOT be part of the GDP calculation!
Posted by Ludwig, Wednesday, 21 May 2014 7:36:35 AM
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Your what, Ludwig?

>>What about my ‘proof in the pudding’ comments?<<

Your numbers:

>>Average growth of 0.81% per quarter since the start of 2011. It has averaged 0.88% per annum from 1959 to 2013. This is an absolutely staggering growth rate...GDP has increased by some 250% just since 2004!!<<

And at the same time, per capita GDP rose from US$13,267 in 1962 to $37,228 in 2013 - that's a growth rate of 2% per annum.

So we are, every one of us, substantially better off than we were in [pick a year].

But that's not the point, is it. What you are asking is:

>>So…. with this sort of indication from GDP, how is it possible that we have a Federal budget ‘crisis’, or a humungous need for infrastructure expenditure or declining benefits for pensioners and other welfare recipients or the prospect of increasing prices for just about everything or a forthcoming increase in GST, or all sorts of other things, all of which clearly indicates that things are not going too well for us economically?<<

We can discount the last bit - "things are not going too well for us economically" - because as you have shown us, we have done fantastically well.

However there has to be a point at which you say, hey, we have done a great job and increased everybody's wealth over the last fifty years, but we need to start thinking about the next fifty.

Mind you, I believe the "crisis" is only a crisis in the eye of Hockey, who needs to make the previous government look as bad as he possibly can.

That is not to say we don't need to find a way forward that doesn't rely so heavily on digging stuff out of the ground and flogging it, we certainly do. Infrastructure needs some attention, for sure. Benefits need to "decline" - that's the rationale for mandated super - or we will have not enough taxpayers left to provide them.

But that's just detail.

Go to the beach. When you get back, tell me again how terrible it all is.
Posted by Pericles, Wednesday, 21 May 2014 3:11:52 PM
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Once again Pericles I could write a book in response to your post.

And this time I will (well… half a book at least)…

<< And at the same time, per capita GDP rose from US$13,267 in 1962 to $37,228 in 2013 - that's a growth rate of 2% per annum. So we are, every one of us, substantially better off than we were in [pick a year]. >>

Firstly, it is nice to note that you haven’t questioned the enormous growth rate of GDP – 250% since 2004 and an average of 0.88% pa since 1959. And a huge increase in growth rate to 0.81% per quarter from the start of 2011.

I haven’t checked the figures, but I presume that this much greater growth rate started well before 2011 and is pretty well correlated to big increases in immigration…. much more so than to the mining boom.

So, do you really think that we are substantially better off to the extent indicated by GDP? Are we 2½ times better off than were in 2004?

Obviously we aren’t. So obviously there is something critically wrong with GDP…. or more specifically; with the indication of economic wellbeing, prosperity and improvement that GDP is supposed to be giving us.

Alright, I have established that GDP is enormously errant as an economic indicator. Well… obviously if GDP is fundamentally flawed, then per-capita GDP is also fundamentally flawed!

continued
Posted by Ludwig, Thursday, 22 May 2014 9:34:08 AM
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And obviously NOT “everyone of us” is better off! Clearly there are a whole lot of people that are no better off at all. In fact, we are probably not any better off on average! And if we are, it’s skewed strongly towards the rich end of the spectrum.

So Pericles, how can you espouse per-capita GDP as translating into us all being better off?

Once again, this per-capita GDP measure is based on a very large part of GDP; that part resulting from economic activity related to immigration; which simply should NOT be added to (included in) GDP!

A realistic measure of GDP would be MUCH lower than it is. And then of course a realistic measure of per-capita GDP would be much lower, if not negative.

When it comes to people being or not being better off, you also need to consider all sorts of things outside of the GDP calculation, especially the rising prices of most basic necessities. Even if per-capita real GDP, as it should be measured, was increasing, it might still not translate into real average gains, if expenses are also increasing at the same or a greater rate. And we know that the prices of many basic goods and services have indeed gone well up in recent years.

Then there are other less tangible things that work against perceived improvements in peoples’ live, like congestion and travelling times, environmental quality, crime rate, access to health services, etc.

So again; it is a very woolly assertion indeed that you make; that the increasing per-capita GDP that we have had for many years has meant that we are all better off.

continued
Posted by Ludwig, Thursday, 22 May 2014 9:34:32 AM
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You quoted me in your last post:

>> So….with this sort of indication from GDP, how is it possible that we have a Federal budget ‘crisis’, or a humungous need for infrastructure expenditure or declining benefits for pensioners and other welfare recipients or the prospect of increasing prices for just about everything or a forthcoming increase in GST, or all sorts of other things, all of which clearly indicates that things are not going too well for us economically? <<

But you didn’t answer my question! You’ve skipped around the issue. And what a huge issue to avoid addressing!

What about the massive need for infrastructure? Or the other things I mention. How does this fit with your assertion that every one of us is substantially better off?

<< However there has to be a point at which you say, hey, we have done a great job and increased everybody's wealth over the last fifty years, but we need to start thinking about the next fifty. >>

Interesting. So what are you really saying here? That it is not looking as good for the future as it has in the past?

Well… how does that fit with GDP? I mean; GDP is ripping ahead at the moment, and giving NO indication of any need for change in the near future!

<< Infrastructure needs some attention, for sure >>

Wonderful. I’m so pleased you can appreciate that. So then… why do we need more or better infrastructure? Why hasn’t our massive rate of economic growth led us to be right up there with infrastructure? This is one thing that we would surely be right on top of…. if the GDP indicator was worth a pinch of the proverbial! You know that a massive amount of tax-payers’ money has always been put into infrastructure (and services).

continued
Posted by Ludwig, Thursday, 22 May 2014 9:35:07 AM
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So there is only one possible answer; yes you know it perfectly well: massive immigration / population growth. That is: massive continuous demand for more infrastructure, despite the absolutely enormous amount of the stuff that is constantly being built, and has been built at a great rate for many years!

This constantly increasing demand not only works against the good part of economic growth – by demanding expenditure that should be put into things that improve the lives of the pre-existing population, but alarmingly, it all gets counted as positive stuff in our crazy GDP indicator!!

This is tantamount to madness. It really is brazen economic criminality!!

<< Benefits need to "decline" - that's the rationale for mandated super - or we will have not enough taxpayers left to provide them. >>

No, benefits don’t need to decline at all. They could do with a bit of re-evaluation so there is a better correlation between who gets benefits and who needs them. Then they should increase for those who really need them.

And the big factor concerning there not being enough taxpayers’ money to pay for all the stuff we need… and hence putting pressure on the government to reduce benefits, is… yes… our absurdly high immigration rate.

Ah, but let’s not get carried away with detail.

<< Go to the beach. When you get back, tell me again how terrible it all is. >>

No, no beach yesterday. But I did go for a nice hard run up Castle Hill in Townsville, amidst many lycra-clad nubile young women! And no… there wasn’t anything at all terrible about that!! ( :>)
Posted by Ludwig, Thursday, 22 May 2014 9:35:48 AM
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Actually, yes, Ludwig.

>>So, do you really think that we are substantially better off to the extent indicated by GDP? Are we 2½ times better off than were in 2004?<<

The country as a whole has increased its product by that much. The numbers tell you so.

Have each of us experienced that level of increase in our prosperity? Of course not. But on a per capita basis, we are all better off, as once again the numbers clearly show.

The incontrovertible reality of that national growth is that it was created by people. People digging stuff out of the ground. People organizing to sell it to places where it is needed. If we had experienced a shortage of people to do this, who would have made it happen? You seem to think that we can be prosperous as a country independently of the number of people employed. As if prosperity is somehow our right, granted automatically.

>>So obviously there is something critically wrong with GDP…. or more specifically; with the indication of economic wellbeing, prosperity and improvement that GDP is supposed to be giving us.<<

Only in your imagination.

GDP gives us a measure of how well off we are in comparison to other parts of the world. GDP per capita gives us a view of how we each, individually, are benefitting from that prosperity. They are both numbers that are easily calculated, and difficult to fudge.

>>Alright, I have established that GDP is enormously errant as an economic indicator. Well… obviously if GDP is fundamentally flawed, then per-capita GDP is also fundamentally flawed!<<

You haven't. So it isn't.

So with that out of the way, the rest of your standard anti-immigration rant gets washed away. You are simply wasting your breath, if you think that we can continue to increase our prosperity relative to the rest of the world, and our individual prosperity within that growth, by shutting our doors and creating fortress Australia.
Posted by Pericles, Thursday, 22 May 2014 12:24:52 PM
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Ah, Pericles, methinks there is a thorn in your Gordian Knot.

>if you think that we can continue to increase our prosperity relative to the rest of the world, and our individual prosperity within that growth, by shutting our doors and creating fortress Australia.<

This statement appears to assert/suggest that all growth is inseparably bound to population growth, but underlying such a proposition is an assumption that the Earth's finite resources (and capacity to absorb environmental abuse) would by some magic be able to sustain ever-increasing populations the world over.
Not feasible - at least in my humble view.

The flaw in the proposition is that it fails to take account of the potentials of individual (per capita) 'productivity' increase.
The world is shrinking, populations must also shrink and per capita productivity increase to sustain and to grow individual affluence.

Oz is not yet 'full', but in my view the best option for increasing prosperity is to increase productivity - and that means to work smarter, and to get all hands pulling in the same direction.
The less distractions, the smoother the transition to the 'smarter' Oz.

Distractions: Housing and caring for an ever-increasing 'dependent' population, unrealistic wages and conditions, trashing of R&D provisions, inordinate barriers to innovation, scarcity of job opportunity, excessive focus on infrastructure at the expense of investment in long-term industrial/occupational development, too many wanting too much too soon, and lack of overall political vision.

To be 'can do', we'll all have to put our backs into it, and stop procrastinating and fabricating excuses.
A brave new world awaits.
Posted by Saltpetre, Thursday, 22 May 2014 2:51:24 PM
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A brave bid for mixed metaphor of the year, Saltpetre.

>>Ah, Pericles, methinks there is a thorn in your Gordian Knot<<

But you would be wrong to suppose the following:

>>This statement appears to assert/suggest that all growth is inseparably bound to population growth<<

Not at all. What was it that I wrote that gave you that idea?

>>...underlying such a proposition is an assumption that the Earth's finite resources... would by some magic be able to sustain ever-increasing populations the world over.<<

But we both know that isn't possible, don't we? There are indeed limits to growth. It is just that Australia has not reached that point just yet. As witnessed by the fact that our per capita GDP continues to grow, as the economy as a whole continues to grow.

>>Oz is not yet 'full', but in my view the best option for increasing prosperity is to increase productivity - and that means to work smarter, and to get all hands pulling in the same direction.<<

It doesn't have to be the only option, though. Growing the overall economy, which will enable it to better withstand cyclic variations, is also a good path.
Posted by Pericles, Thursday, 22 May 2014 3:55:19 PM
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O Pericles, you’re running right off the rails!

Your post is full of things that are just wrong wrong WRONG!

Where do I start…..

<< The country as a whole has increased its product by that much. The numbers tell you so. >>

My goodness! That is just staggering! You really are looking only at the numbers… and not at all at the real world, aren’t you.

I’ve brought to your attention just how utterly flawed the GDP numbers are, and yet you can continue to assert that because the numbers ‘tell’ you something, then that something must be true!

Well, you’ve just very succinctly shown how bad GDP really is. Not only is it utterly flawed, but there are people like you, and no doubt many who would call themselves economists, some in high-falutin and very influential positions, who look at the numbers, only the numbers and nothing but the numbers… and make very important decisions that affect Australia’s economic future based on those utterly flawed numbers!!

<< Have each of us experienced that level of increase in our prosperity? Of course not. >>

Right. And have each of us experienced the level of increase in prosperity indicated by per-capita GDP? Of course not.

<< But on a per capita basis, we are all better off, as once again the numbers clearly show >>

Oh puleeease!

Sheesh, I went to considerable lengths in my last quadruple post to explain why our ever-increasing per-capita GDP does NOT indicate that we are all better off. You have just slipped past all of that, without comment… and continued to make absurd assertions!

continued
Posted by Ludwig, Thursday, 22 May 2014 6:37:44 PM
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I wrote:

>>Alright, I have established that GDP is enormously errant as an economic indicator. Well… obviously if GDP is fundamentally flawed, then per-capita GDP is also fundamentally flawed!<<

You quipped:

<< You haven't. So it isn't. >>

Mwa haa haaaa!! Thanks for the detailed response ( :>). Surely if you truly believe that is it isn’t, then you could have put a bit of substance into your reply. The fact you haven’t strongly suggests that you really do see that GPD and hence per-capita GDP are indeed fundamentally flawed. But of course you would be loath to concede anything in this regard.

<< …your standard anti-immigration rant… >>

<< …by shutting our doors and creating fortress Australia. >>

You’re scraping the bottom of the bucket there Pericles. We’ve been head-bangin on this forum for a few years now. You totally know my views on immigration. You know that I am not anti-immigration and that there nothing ‘fortress Australia’ about my desires. Shame shame shame on you for stooping to this very low level, of asserting things about my views which you know are not true. I’ve told you this a few times over the years, but you keep occasionally falling back to this very low quality of correspondence.
Posted by Ludwig, Thursday, 22 May 2014 6:39:05 PM
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I call it as I see it, Ludwig. Sorry if that doesn't meet with your approval.

>>My goodness! That is just staggering! You really are looking only at the numbers… and not at all at the real world, aren’t you.<<

I am looking at the numbers because that is what GDP consists of. Numbers. The source of those numbers is clearly defined. If you don't like what they tell you, or disagree that they have any validity in your world, that is, regrettably, your problem.

>>I’ve brought to your attention just how utterly flawed the GDP numbers are, and yet you can continue to assert that because the numbers ‘tell’ you something, then that something must be true!<<

You have stated that in your opinion, GDP numbers are "utterly flawed". Unfortunately, they cannot answer back, because a) they are just numbers and b) the activities that they track are clearly defined. So it is not the numbers that are flawed, just what you choose to read into them.

>>I went to considerable lengths in my last quadruple post to explain why our ever-increasing per-capita GDP does NOT indicate that we are all better off.<<

You certainly went to considerable lengths, Ludwig, but you didn't actually say anything meaningful. Most people would consider an increase in their share of GDP to be a good thing, in exactly the same way that they would consider a decrease to be a bad thing. But if you don't share that view, that is a personal issue, not an economic one.

"You haven't. So it isn't." was a straightforward response to your claim that "I have established that GDP is enormously errant as an economic indicator. Well… obviously if GDP is fundamentally flawed, then per-capita GDP is also fundamentally flawed!"

Somehow you seem to believe that just because you assert something, it must be true and correct. Sadly, this is rarely the case.

>>You totally know my views on immigration. You know that I am not anti-immigration<<

As I said before, I call it as I see it.
Posted by Pericles, Thursday, 22 May 2014 7:52:13 PM
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<< I call it as I see it, Ludwig. >>

Not always Pericles. Some of your comments such as:

<< shutting our doors and creating fortress Australia >>

…are surely not genuine expressions of how you see my views. You know me better than that. They seem to be cheap insults and false assertions that know full well are false.

Hey, we do have good debates. We’ve had a lot of them on OLO. I really appreciate that. And despite the tetchiness and cheap insults from time to time, it has been and remains really good… and I thank you for it.

But it would be better without those sorts of false assertions.

<< If you don't like what they [the numbers] tell you, or disagree that they have any validity in your world, that is, regrettably, your problem. >>

Um…. no…. it is certainly not just my problem. It is a major problem for our society. To have such a terribly flawed prime economic indicator, which our decision-makers seem to take as gospel, is of enormous importance to the future of our nation, to the ability for us to match resource demand and supply capability, to get ahead in terms of genuine quality of life factors and to achieve a sustainable society.

The ramifications of the flawed nature of GDP are absolutely enormous.

continued
Posted by Ludwig, Thursday, 22 May 2014 8:54:42 PM
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<< …it is not the numbers that are flawed, just what you choose to read into them. >>

It is the concept of GDP that is fundamentally flawed. That makes the GDP numbers fundamentally flawed.

<< You certainly went to considerable lengths, Ludwig, but you didn't actually say anything meaningful. >>

Wow. Well it is all there in black and white for anyone else to read who may be following this sordid discussion to make their own judgement on that.

<< Most people would consider an increase in their share of GDP to be a good thing, in exactly the same way that they would consider a decrease to be a bad thing. >>

Really?

I think you might find that there are a whole lot of people out there who no longer believe that continuous rapid growth is the answer to all our ills, or that the prime indicator; GDP, is worth a brass razoo.

When you consider the amount of disillusionment out there and add to it the amount of apathy in the general community, I think you will find stark little real support for GDP.

I think most people who have given this subject a bit of thought, and who are independent of the enormous bias of the big-business profit motive and the political pandering to it, will side more with me than you.
Posted by Ludwig, Thursday, 22 May 2014 8:56:29 PM
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Well, Pericles,

We are led to believe that "shutting our doors and creating fortress Australia" would not only be substantially detrimental to our economic prospects, but would actually court economic disaster, or even physical invasion, and, in any event would not be at all possible.
We either go with the flow, or we risk being ostracized as a pariah.

But is it fear which fires this outlook, or blind obedience to the prevailing global economic paradigm, or, of all things, a genuine vision of the superlative of national interest?

We are bound, and beholden, to global trade, and thus 'fortress' cannot apply, but why should 'shutting the door' be ruled as diametrically opposed to Oz' economic and/or developmental interests?
(Excepting of course for business travel, tourism, education, diplomacy and the like, and some selective residential immigration directly in the national economic interest.)

I accept we have a moral obligation to participate in international efforts to resolve the current world refugee crisis, but I question suggestions that such participation must, of necessity, include absorption of a 'quota' of displaced persons as fundamentally 'key' to Oz' future economic prospects.

As regards:

< Most people would consider an increase in their share of GDP to be a good thing,<

The problem I see with this broad-brush assignment is that GDP is not in fact shared equally, with a large portion inevitably going to the top few percent of the population, a significant portion going to infrastructure development - which many may not view as a significant personal gain - and another significant portion going to multinational interests.
In the end result, the portion of GDP growth applying directly to the personal interests of the bulk of the population may not necessarily be very significant at all.
(Larger population must also equate to a proportionately broader sprinkling of the 'crumbs'.)
Posted by Saltpetre, Friday, 23 May 2014 1:40:32 AM
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No problem, Ludwig.

>>I think most people who have given this subject a bit of thought, and who are independent of the enormous bias of the big-business profit motive and the political pandering to it, will side more with me than you.<<

I'm genuinely unconcerned what you think other people might think. Even less concerned whether they might share your opinion. Having a chicken-little view of our economic position while ignoring reality is not a mindset that I would wish on anyone. But if it is how they choose to live, then that's fine by me.

What is at issue here is that you have a particular view as to what GDP is made of, what it stands for and what it is used for. Clearly I have been unable to help you by pointing to the facts.

You have a choice. Either give up a couple of hours beachbumming every day in order to learn about economics, after which you might be able to support your views with facts instead of emotion; or you can continue to believe that Australia is going to hell in a handbasket, with that opinion supported by your misapplication of a set of numbers that you clearly misunderstand.

But if beachbumming is your preference, that's all good too.

Have a great day.
Posted by Pericles, Friday, 23 May 2014 8:31:33 AM
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Ahh Pericles, by all indications I have a much better understanding of economics than you seem to have. May be it is because whenever I am thinking about economics I am viewing it holistically, in the big picture, considering not only the numbers, but what they really mean and how well they translate into all the things that our economy is supposed to translate into – all the quality-of-life things, both now and well into the future.

Please consider this from Tradingeconomics.com:

< Australia's economy is dominated by the service sector (65 percent of total GDP). Yet its economic success is based on abundance of agricultural and mineral resources. The most important and the fastest growing sector of the economy is industry with mining accounting for 13.5 percent of GDP, manufacturing for 11 percent and construction for 9.5 percent. Agriculture accounts for the remaining 2 percent of the GDP. >

http://www.tradingeconomics.com/australia/gdp-growth-annual

Now consider the definition of GDP:

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

http://www.investopedia.com/terms/g/gdp.asp

continued
Posted by Ludwig, Friday, 23 May 2014 9:59:14 AM
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Well…this should immediately ring alarm bells with any economist!

GDP includes all services. But services are not really productive. And yet they make up 65% of GDP!

The productive sectors are mining, agriculture and manufacturing.

We know that service-provision is very rapidly increasing, in about a one to one ratio with population growth. And we know that those services are basically just duplication of what we already have in order to cater for that population increase.

So, anyone who thinks about this for more than a few seconds must surely realise that GDP is utterly compromised.

I would suggest that most ‘economists’ and politicians know this perfectly well, and are happy to go along with the enormous misrepresentation of economic growth and success inherent in it.

Afterall, the prime motive here appears to be to appease the big end of town and placate the masses while doing it. If leading the masses to believe in false indicators and economic prospects is the way to do this, then so be it.

Now.. is that cynical view? Or is it a realistic one?

I think both, with the latter prevailing!
Posted by Ludwig, Friday, 23 May 2014 10:01:15 AM
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Query:

From the tradingeconomics definition of GDP:

< The monetary value of all the FINISHED goods and services… >

Pray tell: what is a finished service??

Most services by their very nature are ongoing.

And what is a finished good? If a new freeway takes three years to build, is all the economic activity that goes into it in the first two years not counted in GDP until the third year?

Perhaps you can enlighten me here Pericles.

Hey the sun is shining. I’ve really got to go find a nice beach…. preferably one with a few young bikini babes on it. Chow!
Posted by Ludwig, Friday, 23 May 2014 10:02:18 AM
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Thanks for the chuckle, Ludwig.

>>Ahh Pericles, by all indications I have a much better understanding of economics than you seem to have.<<

You have about the same level of understanding of economics as I have of surfing. Which is to say, I have seen other people do it, but haven't the first clue how to ride a wave. Or whatever it is that they do.

>>...whenever I am thinking about economics I am viewing it holistically, in the big picture<<

Yep. I do the same with surfing. I view it holistically. From a distance. With a beer in my hand.

>>GDP includes all services. But services are not really productive. And yet they make up 65% of GDP!<<

Ouch! Services are "not really productive", are they not? That's the equivalent of my saying that catching a wave is not really surfing.

Oh look. The world average for services as a component of GDP is 63.2%

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

The economies who - according to Ludwig's law of services - are less productive than Australia, include France, UK, Belgium, Japan, USA, Neteherlands, Italy Sweden, Canada and Germany.

What does that tell you?

>>The productive sectors are mining, agriculture and manufacturing.<<

Tell that to the Germans. Over 70% of their GDP is generated through services. Are they in dangerous territory, do you think?

>>Pray tell: what is a finished service?? Most services by their very nature are ongoing.<<

Ok, a valid question, although it might help if you first understood what a service is.

"Services correspond to ISIC divisions 50-99 and they include value added in wholesale and retail trade (including hotels and restaurants), transport, and government, financial, professional, and personal services such as education, health care, and real estate services."

http://data.worldbank.org/indicator/NV.SRV.TETC.ZS

So the value of a finished service is the amount that is invoiced, e.g. when you leave the restaurant, the bill that you pay counts as a finished service.

See, you are already on the road to enlightenment!
Posted by Pericles, Friday, 23 May 2014 3:17:23 PM
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Oh, about that freeway.

>>And what is a finished good? If a new freeway takes three years to build, is all the economic activity that goes into it in the first two years not counted in GDP until the third year?<<

A very good question indeed.

Since freeways are infrastructure, and therefore not visibly "consumed", they have a special place in GDP calculation.

"Government (G) - This category includes government spending on... capital goods, such as highways, missiles, and dams."

http://www.investopedia.com/exam-guide/cfa-level-1/macroeconomics/gross-domestic-product.asp

The simple answer is once again to look at the invoices. How much was spent on concrete, how much on hiring the machinery etc. etc. So the answer to your question is that the economic activity is calculated each year, on the basis of what is actually spent on the project.

If you would like to investigate this component a little more deeply, I suggest you look it up under "Gross Fixed Capital Formation". Wikipedia is a good starting point,

http://en.wikipedia.org/wiki/Gross_fixed_capital_formation

...and will eventually lead you to the World Bank.

http://data.worldbank.org/indicator/NE.GDI.TOTL.ZS

This shows that 28% of our GDP has its roots in GFCF, which places us in mid-table on the world stage. This is because China (49%) is investing massively in infrastructure, which will benefit its economy in years to come, while most developed economies (USA: 19%, UK: 15%, Germany: 17%) have their infrastructure investment spread over many previous centuries. For example, you can still travel along roads in the UK that were built by the Romans, 2000. years ago.

It is excellent that you are showing an interest, Ludwig. Keep those questions a-coming.
Posted by Pericles, Friday, 23 May 2014 3:39:09 PM
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I was wondering what the Romans ever did for us...

But, as you know Pericles, it was the Greeks who realised Phronesis is a double-edged sword, ... not only seeking insight into the implications of actions and events but also the ability to understand how complex and messy situations interact.
Posted by WmTrevor, Friday, 23 May 2014 3:53:01 PM
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Absolutely, WmTrevor.

>>But, as you know Pericles, it was the Greeks who realised Phronesis is a double-edged sword<<

In fact, I believe it was Aristotle himself who said "that's all very well, Plato, but nobody loves a smartypants".
Posted by Pericles, Friday, 23 May 2014 5:40:15 PM
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Pericles wrote:

<< Most people would consider an increase in their share of GDP to be a good thing >>

Saltpetre, you replied:

<< The problem I see with this broad-brush assignment is that GDP is not in fact shared equally, with a large portion inevitably going to the top few percent of the population, a significant portion going to infrastructure development - which many may not view as a significant personal gain - and another significant portion going to multinational interests. In the end result, the portion of GDP growth applying directly to the personal interests of the bulk of the population may not necessarily be very significant at all. >>

Right on!

Most of us don’t get anything like out ‘fair share’ of GDP... and per-capita GDP is thus a most terrible indicator.

Indeed a large portion does go into infrastructure, most of which is just catering for new residents and is not benefitting the existing population at all.

And as for services, which make up an enormous 65% of GDP, a large part of it is again just duplication for ever-more people, without creating improvements for the pre-existing citizenry.

I am amazed at the enormous contradiction in Pericles’ statements: between his assertion that he knows all about economics, and his assertion that:

<< …on a per capita basis, we are all better off, as once again the numbers clearly show. >>
Posted by Ludwig, Friday, 23 May 2014 8:51:55 PM
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Now then, Ludwig. This is not the time to start verballing.

>>I am amazed at the enormous contradiction in Pericles’ statements: between his assertion that he knows all about economics...<<

I have never made any such claim.

I just happen to know more than you, that's all.

Not difficult, it has to be said. Like the man said to his pal as they were being chased by a tiger, "It's no good, we can't outrun him". To which his friend replied "I don't have to run faster than the tiger. I only bneed to run faster than you"

It's statements like this that give you away:

>>And as for services, which make up an enormous 65% of GDP, a large part of it is again just duplication for ever-more people, without creating improvements for the pre-existing citizenry.<<

Such a massive misapprehension of the workings of an economy is truly breathtaking. Except of course, to me. I'm used to it by now.
Posted by Pericles, Friday, 23 May 2014 10:33:28 PM
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<< You have about the same level of understanding of economics as I have of surfing. >>

Well Pericles, you seem to know that surfing requires the catching of a wave. So I reckon you know a good deal about it. More than about economics actually!! { :>/

I mean, if you don’t understand the very basics, then it doesn’t really matter what else you understand… or think you understand!

<< I do the same with surfing. I view it holistically. From a distance. With a beer in my hand. >>

Haaaa hahaaa.

You seem to do the same thing with economics when it comes to viewing it holistically – from a distance, with a beer in your hand… tipping over and spilling everywhere as you nod off!! ( :>)

<< Ouch! Services are "not really productive", are they not? That's the equivalent of my saying that catching a wave is not really surfing. >>

Erm… no it isn’t.

Again from tradingeconomics.com:

< Australia's economy is dominated by the service sector (65 percent of total GDP). Yet its economic success is based on abundance of agricultural and mineral resources. >

http://www.tradingeconomics.com/australia/gdp-growth-annual

The enormous contribution to GDP from services is not productive in terms of the success of our economy. It is largely neutral! And therefore it should largely NOT be included in GDP!!

<< The economies who - according to Ludwig's law of services - are less productive than Australia, include France, UK, Belgium, Japan, USA, Neteherlands, Italy Sweden, Canada and Germany. What does that tell you? >>

Nothing! Because it doesn’t say anything about the other sectors of GDP. Or about population growth and hence the size of the increase in the demand for more services, infrastructure and everything else. And hence it doesn’t say anything about the amount of economic activity involved with duplicating services and the amount that actually goes into improving services in these countries.
Posted by Ludwig, Friday, 23 May 2014 10:43:18 PM
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<< Oh, about that freeway. >>

Wow thanks Pericles. That is a good answer to my question. I appreciate the links.

However, I’ve got to say that you obviously spent a bit of time researching it and finding out just what the answer is… which indicates that you didn’t know beforehand. Well… we’ve both learnt something, so all is good!

<< So the answer to your question is that the economic activity is calculated each year, on the basis of what is actually spent on the project. >>

Yes, as I presumed…. which means that the word ‘finished’ in the GDP definition is meaningless!!

This raises another interesting point – the invoices have to be closely examined in order to work out what gets included in that particular year’s GDP total and what doesn’t.

Well… that’s a bit complicated, and I would think that some of the stuff straddles two financial years or is otherwise finely poised as to whether it gets included that year or the next, or perhaps not at all.

So, if we were to devise GDP definition which only includes the stuff that should be included, and not all the stuff that just duplicates services and infrastructure in direct response to the humungous immigration influx, or occurs in response to disasters, accidents and illness, then the same sort of thing would apply – a close examination of invoices, as well as an examination who benefits from the work being done. Some of it would be difficult to determine, but not significantly harder than at present.

I say this in response to your earlier comments regarding the impracticality of working out just what should or shouldn’t be included if we were to redefine GDP as I would like it to be.

Bottom line – it wouldn’t be significantly harder to work out than for the current system. But it would certainly be a WHOLE lot more meaningful and accurate as an economic indicator.

.

Run….. RUN…. That tiger’s gunna catch you. Coz I can run faster than you!!
Posted by Ludwig, Friday, 23 May 2014 10:45:43 PM
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Not really, Ludwig.

>>Run….. RUN…. That tiger’s gunna catch you. Coz I can run faster than you!!<<

You just talk more, that's all.
Posted by Pericles, Friday, 23 May 2014 11:19:20 PM
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For sure Pericles. I’m a real blabbermouth.

But, you don’t do too badly yourself! ( :>)
Posted by Ludwig, Friday, 23 May 2014 11:45:45 PM
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Ludwig, me ol' mate, I think Pericles must surely be female,
and with the patience of a saint.
Could be wrong of course, about the gender at least.
And you are most definitely a real bulldog,
or at least a bloodhound, determinedly pursuing the 'scent' of your quarry.

Anyhow, it's been an interesting thread.

(And I think our current population is just fine.)
Posted by Saltpetre, Saturday, 24 May 2014 3:47:55 PM
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Interesting perspective Salty.

But I really don’t see why you would allot more patience to Perky than to Luddy!

From my perspective, tis Lud who is the extraordinarily patient one!

But yes, Lud is certainly a bulldog who is not going to let bullsh** go unanswered! Grrrrr! } :> |

<< (And I think our current population is just fine.) >>

Agreed!

We are now at the level that the CSIRO submission and the majority of other submissions to the 1994 Carrying Capacity Inquiry wanted us to achieve as a stable population.

Trouble is of course; we are still growing manically.

So…. do you also have no problem with the size of our immigration program and the open-ended continuously-rapidly-growing-with-no-end-in-sight nature of our population?
Posted by Ludwig, Saturday, 24 May 2014 10:25:17 PM
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I wrote:

>> …as for services, which make up an enormous 65% of GDP, a large part of it is again just duplication for ever-more people, without creating improvements for the pre-existing citizenry. <<

Pericles, you replied:

<< Such a massive misapprehension of the workings of an economy is truly breathtaking. Except of course, to me. I'm used to it by now. >>

Wow! Would you be so kind as to explain where the ‘massive misapprehension’ is here?

Surely you can appreciate that a large population increase requires a large duplication of all the basics – housing, roads, supermarkets, doctors… just to give them what the established population already has.

So all of this, which amounts to a very large amount of economic activity is really NEUTRAL…. and should not be added to GDP which indicates that it is ALL totally positive and advancing our economy!

So….. where’s the misapprehension?
Posted by Ludwig, Saturday, 24 May 2014 10:26:43 PM
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No, Ludwig, I'm not too keen on our current immigration program, but I can see some benefit in taking-in a small quota of suitable genuine refugees.

Perhaps 20,000 per year, for maybe the next 10 years, but subject to annual review of our intake capacity - per budget constraints.
Of course the world refugee situation is really rife right now, and the selection of who, and from where, is exceedingly complex.

My inclination would be for suitable representatives of our immigration department to consult with current local refugee groups, like the Sudanese, Tamil, Myanmar and Congolese communities in Oz, as well as the UNHCR, with a view to sending envoys to relevant refugee centres to review and select suitable refugee families for permanent visas.
No easy task, I'm afraid, but in the current situation I think it must be done, and with some urgency.

I have made my position clear on other threads, regarding the overall worldwide refugee situation, and I see the only solution being to tackle the causes of this situation at its roots, in the countries concerned, by a massive international effort, diplomatically and developmentally, and, if necessary, by a very substantial UN peacekeeping deployment.

Our ability to relocate refugees within our own shores can only be token, but, undertaken appropriately, I believe it can be a win-win.

I am dismayed by our offshore processing and detention arrangements, and I believe these need to be closed post haste - either by the issuing of temporary protection visas or the return of unsuitable applicants to appropriate overseas international refugee centres.

Some of our recent refugee intake appear to be settling in well, and are shaping up to be really worthwhile contributors to our society.
These should be our beacon to where and how we can do the most good, both for our own society and for some most worthy refugee families.

Perhaps our governments could establish agricultural and/or horticultural facilities in rural and regional centres to accommodate some refugee families, at least as an interim, and could establish a public appeal towards such development?
Agricultural schools?
Posted by Saltpetre, Sunday, 25 May 2014 1:51:35 AM
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Saltpetre, we are of one accord re: our refugee intake.

20 000 per annum? Yes, but only within an immigration program that is heading towards net zero.

The causes of refugeeism need to be tackled at the roots, and our intake, even at 100 000 pa, would be only a token effort.

We should be considering the win-win aspect of our intake. As there are very needy refugees all over the world, we should be choosing the ones that are the most compatible with Australian society and the most likely to assist us rather than hinder us in achieving a truly sustainable high-quality-of-life society.

And yes, let’s get the detention centres shut down.

Of course the way to do that is to STOP the boats….which the current government is well on track to doing. However, those now in the centres need to be processed, and given the practice of document-destruction and the high propensity for non-refugee economic migrants to use the people-smuggling onshore-asylum-seeking method, their refugee determination or non-determination is difficult. This needs to be done properly. So the detention centres need to stay open until this is done.

I don’t like the idea of issuing TPVs or of otherwise letting applicants move freely in our society before their refugee claims have been fully assessed. The story with this in other countries is that some people would go underground and become very hard for the authorities to track. This would also create a considerably pull factor for more arrivals.

And by the way; in keeping with the main discussion on this thread, I will note that all of the very large amount of economic activity and government expenditure involved in dealing with onshore asylum seekers since Rudd’s amazing re-opening up of the whole issue in 2007, which has amounted to a huge economic expense, has been added to our GDP, has it not?

Perhaps Pericles could confirm or counter this.
Posted by Ludwig, Sunday, 25 May 2014 7:04:31 AM
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You really should do some homework on this Ludwig. I have given you plenty of references that you can easily follow up on your own without my having to hold your hand every time. You keep making the same basic errors.

>>So all of this, which amounts to a very large amount of economic activity is really NEUTRAL…. and should not be added to GDP which indicates that it is ALL totally positive and advancing our economy! So….. where’s the misapprehension?<<

Your misapprehension is, as always, around the basis of GDP calculation. It counts all economic activity. Not just the parts that Ludwig considers to be "totally positive". That is because GDP is a measure of our... guess what? Economic activity. All of it. Even the bits you feel are "bad", or "neutral". It cannot be any other way, because this is the design point of the GDP calculation.

So, with that in mind, what you say here makes absolutely no sense whatsoever.

>>Surely you can appreciate that a large population increase requires a large duplication of all the basics – housing, roads, supermarkets, doctors… just to give them what the established population already has.<<

It isn't "duplication" Ludwig. It is additional. Additional housing. Additional roads. Additional supermarkets. Additional doctors.

It works like this. You build another supermarket that the new people will use. The "established population" will no doubt continue to buy from their original supermarket, while the new population will buy from the "duplicate" version. This increased turnover is reflected in an increase in GDP.

And because the new arrivals are more productive, GDP per capita will increase as well.

Stick to the beach, Ludwig. Until you can grasp this basic level of understanding, economics will continue to baffle you completely.
Posted by Pericles, Sunday, 25 May 2014 6:53:53 PM
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<< Your misapprehension is, as always, around the basis of GDP calculation. It counts all economic activity. Not just the parts that Ludwig considers to be "totally positive". That is because GDP is a measure of our... guess what? Economic activity. All of it. Even the bits you feel are "bad", or "neutral". >>

Scuuuze me Pericles, but this is what I keep telling YOU!!

GDP counts ALL economic activity… regardless of its merit. It does not count just the positive bits. YES, GDP is a measure of economic activity, NOT of what is good about our economy.

But guess what. It is taken as a prime indicator of what is good about our economy. The larger the better, end of story, according to our dumb pseudoeconomists and politicians!

<< It isn't "duplication" Ludwig. It is additional. >

Of course it is additional. But it is also duplication! How can duplication not be additional?? More houses, more roads, more shops and businesses of all sorts, all of which is just more of the same for more people. It is duplication. It is so obviously duplication. And it is so obviously +/- neutral in terms of benefits for the pre-existing population.

<< The "established population" will no doubt continue to buy from their original supermarket, while the new population will buy from the "duplicate" version. This increased turnover is reflected in an increase in GDP. >>

Yes!! !!

‘the “duplicate” version’. That’s exactly what it is.

Hey, look at what you’ve written here. It really is close to what I’ve been saying all along. Perhaps you’re finally getting it??

So then, onshore asylum seeking has cost us an enormous amount in since 2007. It is an OBVIOUS drain on our economy. But it has created a wide variety of economic activity… which by the definition of GDP gets included in GDP.

What have got to say about this, Pericles?

BTW, I had a grrreat day at the beach today, in exquisite late autmn weather, here in Cairns ( :>)
Posted by Ludwig, Sunday, 25 May 2014 7:44:06 PM
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I wonder what impact there may be on GDP if the money to rebuild, detain, control borders, 'duplicate' infrastructure (roads, public housing, schools...) has to be borrowed, generating debt?

Surely such borrowings, whether by issuing government bonds, or from Oz banks and superannuation funds, etc, or whether borrowed from overseas, should be reflected as a deduction to GDP?
(Or, 'net' GDP?)
And the interest payable?

Puzzling.

Ludwig, my idea of TPVs is that they be applied/issued to genuine refugees, who also reasonably meet our basic intake criteria, in order to give them temporary asylum (even conditionally) - but leaving the option of later evaluation in respect of permanent residency.

Those who do not qualify as genuine refugees, or who for some reason do not meet even our basic intake criteria, in my way of thinking should be returned to an appropriate overseas international refugee/displaced-persons or UNHCR centre.
Now, I know such centres can be hell on earth, and in need of much greater international humanitarian support, but that is where I believe so much humanitarian effort needs to be focused - as well as, and most importantly, much greater international diplomatic and developmental efforts to correct the underlying causes of displacement, disadvantage and/or terror.

To send anyone back to such refugee centres would be a hard thing to do, but, if their claims are not more compelling than all those other hundreds and thousands, then I do not see that they can or should be afforded special treatment.
Such repatriation would of course be much harder on someone who has endured great hardship to make their way to a refuge country, perhaps over very many miles, and months, maybe even years.
Such factors/circumstances would also therefore have to be taken into account before sending anyone 'back'.

The whole issue is one helluva predicament.

GDP input? I guess Oz' direct expenditure would be.
But what of our foreign aid contributions? A deduction? And, if using borrowed money, would this qualify for a double-deduction from GDP?
(Funny how 'expenditure' and 'GDP' seem to be almost interchangeable?)
Where's revenue fit in?
Posted by Saltpetre, Sunday, 25 May 2014 10:46:04 PM
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Careful Saltpetre...

"GDP input? I guess Oz' direct expenditure would be.
But what of our foreign aid contributions? A deduction? And, if using borrowed money, would this qualify for a double-deduction from GDP?
(Funny how 'expenditure' and 'GDP' seem to be almost interchangeable?)
Where's revenue fit in?"

You're running the risk of mixing up the economic sponge, custard, jelly and cream to end up a trifle confused.

GDP is an established measure of a nation's economic activity. That is all it is. Responses to and interpretations of it vary, but neither change what it is.

Unlike the government's budget papers which seem to vary the economic parameters reported each and every year, making meaningful comparison and interpretation across time most difficult. Which is precisely the motive of the politicians in power... whoever they are.

National economics could be said to be analogous to epiphenomenalism where individual transactions are causally related but that the meaning ascribed to the totality of these is an emergent property.

I don't necessarily think this is as interesting as, well... suggesting that one measure of a nation's economic well-being could be changes in the number of accumulative person-years spent at the beach by its citizens.
Posted by WmTrevor, Monday, 26 May 2014 7:22:37 AM
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Let's try this once more, shall we Ludwig.

>>But guess what. It is taken as a prime indicator of what is good about our economy. The larger the better, end of story, according to our dumb pseudoeconomists and politicians!<<

Larger is better, yes. Larger GDP per capita is also better, yes.

This is because smaller is worse.

Here's an observation from our own Lowy Institute:

"The above events have led to the now well known global downturn. All official forecasting agencies, such as the IMF and OECD, 
have described this downturn and so will not be expanded here. As the IMF notes ‘Global GDP is estimated to have fallen
 by an unprecedented 5 per cent in the fourth quarter (annualized), led by advanced economies, which contracted by around 7 per cent’"

http://melbourneinstitute.com/downloads/conferences/mckibbin_stoeckel_session_5.pdf

It should not have escaped your notice, even from a beach in FNQ, that this situation was regarded generally as a "bad thing".

>>What have got to say about this, Pericles?<<

A rising GDP is good, while a falling GDP is bad.
Posted by Pericles, Monday, 26 May 2014 8:04:19 AM
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<< Larger is better, yes. Larger GDP per capita is also better, yes. >>

And your explanation for this is…

<< …because smaller is worse. >>

Haaahahahaaa!

I asked regarding all the economic activity that has been spurred by onshore asylum seeking…

>> What have you got to say about this, Pericles? <<

Your reply in totality is…

<< A rising GDP is good, while a falling GDP is bad. >>

Deeear o dear o dear!

I’m sure you wooda given a more comprehensive answer if you cooda! It is looking as though you really have seen the light… that you at long last do actually get what I am on about.

It is seems that this example of just how crazy GDP is - of onshore asylum seeking being an obvious enormous drain on our economy and yet generating a whole lot of economic activity that gets included in GDP, has done the trick.

continued
Posted by Ludwig, Monday, 26 May 2014 10:07:04 AM
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As for the GFC; it had everything to do with economists, bankers and politicians not sticking to the basic principles of economics. And one way in which they were (and continue to be) violating these basic principles is with the definition of GDP, and hence all the stuff that gets included in GDP totals that such so totally shouldn’t.

For as long as we continue to delude ourselves about our economic health, we will be on a road towards disaster a whole lot bigger than the GFC.

Hey, the way GDP is defined encourages politicians and their moon-unit economic advisers to continue to grow the economy at all costs… and to that end; maintain very high immigration… which simply sits at diametric odds with what we should be doing!

A REAL economist would see the need to keep the demand for goods, services and all manner of expenditure that our economy provides manageable, instead of having it constantly, rapidly and neverendingly increasing.

A real economist would see the imperative of keeping demand within the supply capability, with a high quality of supply and a big safety margin in case of hard times…. ie: sustainable.

THIS is what makes GDP so bad! What it is indicating as a good thing and a strategy to uphold, is almost totally the opposite to what we should do doing!
Posted by Ludwig, Monday, 26 May 2014 10:08:32 AM
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Not a particularly useful contribution, Ludwig.

>>Haaahahahaaa!<<

It appears that you are laughing at the idea that an increased GDP is good, while a decrease is bad. So please, do explain to us all how a reduction in GDP will benefit the Australian people?

>>I asked regarding all the economic activity that has been spurred by onshore asylum seeking…<<

Once again, you are demonstrating your ignorance as to what GDP consists of. Of course it includes the expense of managing the asylum seekers. How else would you account for the money that the employees spend in the supermarkets, the rent paid for their accommodation etc. etc.? It is fuelled by the allocation of taxpayers dollars, which have either been a) borrowed or b) diverted from other activities. Either way, it is economic activity, and therefore must be accounted for. The fact that you disagree with the allocation of funds this way does not make it disappear from the national accounts.

>>...onshore asylum seeking being an obvious enormous drain on our economy and yet generating a whole lot of economic activity that gets included in GDP<<

Indeed. As with cyclones, earthquakes, epidemics etc., if this kind of activity exceeds our country's ability to service them, we will eventually become poorer. And that level of "poorer" will be measured by a reduction in - guess what? - GDP.

In short, you really cannot have it both ways, Ludwig. An increase in GDP is good, a decrease in GDP is not good. What is there to laugh at in that?
Posted by Pericles, Monday, 26 May 2014 11:10:59 AM
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Wm Trevor, (and Pericles, if you're listening),

Ok, I'm trying to make sense of the 'trifle'.

>>GDP is an established measure of a nation's economic activity.<<

And:
>> individual transactions are causally related but that the meaning ascribed to the totality of these is an emergent property.<<

So, I am assuming that overall GDP is compiled from business reporting - tax returns, reports to shareholders and the ASX - plus government(s) own records of government expenditures.

Perhaps then, the business component of GDP is revenue less costs, but before tax - or is it the total expenditure of the business?
(Even if the business does not actually produce a physical product, but only a service - say, like an IT business or a cleaning business.)

What about personal income (non-business, like from wages, share dividends, government handouts, bank interest, etc)?
Any contribution to GDP here?

As for revenue, I don't expect personal or company tax would figure in GDP, but what of government mining royalties? Just another revenue stream, another tax, and therefore not contributing to GDP - although a cost to the mining industry?

Then there's State government taxes and charges, and local government council rates - including charges for garbage disposal, water and sewage - plus DA fees and other charges for new development and construction.

Revenue then figures as the means for governments (Federal, State, Local) to incur expenditure, some of which would be on infrastructure and services (healthcare, education, aged care, transport, childminding rebates, welfare), grants to industry for R&D, special grants to schools and universities, maybe for bursaries or scholarships, and so on.

But if a business runs at a loss, even though it produced product or service, is the loss a deduction from GDP?

If government runs at a loss, relying on borrowings, is the loss then a deduction from GDP?

Is foreign aid a deduction from GDP?

Or, does total expenditure = GDP?

At 30 June 2011 Aust's National Net Worth was $8,089.9 Billion,
with a positive trajectory from 2007, but current and 'real' worth are at odds. How so?
http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~National%20balance%20sheet~224
Posted by Saltpetre, Monday, 26 May 2014 10:37:03 PM
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i was thinking..wondering if these 'bailouts'..affect gdp
the falling gdp will be fun..the death rattle grows louder
http://www.zerohedge.com/news/2014-05-26/retail-death-rattle-grows-louder

The pundits, politicians and delusional retail CEOs continue to await the revival of retail sales as if reality doesn’t exist. The 1 million retail stores, 109,000 shopping centers, and nearly 15 billion square feet of retail space for an aging, increasingly impoverished, and savings poor populace might be a tad too much and will require a slight downsizing – say 3 or 4 billion square feet. Considering the debt fueled frenzy from 2000 through 2008 added 2.7 billion square feet to our suburban sprawl concrete landscape, a divestiture of that foolish investment will be the floor.

If you think there are a lot of SPACE AVAILABLE signs dotting the countryside, you ain’t seen nothing yet. The mega-chains have already halted all expansion. That was the first step. The weaker players like Radio Shack, Sears, Family Dollar, Coldwater Creek, Staples, Barnes & Noble, Blockbuster and dozens of others are already closing stores by the hundreds. Thousands more will follow

Who is keeping the criminals on Wall Street criminals
out of jail? Eric Holder?
http://www.thedailysheeple.com/dave-kranzler-on-gold-housing-and-silver_052014

Is Covington/Burling, Eric Holders law firm, the most powerful law firm in the country? Remember, Holder was the Chief legal counsel for JPMorgan prior to becoming the Attorney General of the United States.

When was the last major gold deposit discovered, 10 million ounces or more, 10 years ago, 12 years ago? Barrick, GoldCorp, Newmont have all high-graded their existing mines to appear to be making money. What this means is they are processing the highest grade ore, the ore with the most gold per ton, to maximize their profits. This will not last long and these giant holes, with little gold left to process, is all that will remain. With the price of gold so low they are working over-time to produce as much gold as possible and get it to market. All of this just to try to stay profitable. How long will they be able to keep up this charade? (
http://www.youtube.com/watch?v=YmvuYTH5nU0
Posted by one under god, Tuesday, 27 May 2014 6:33:16 AM
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<< It appears that you are laughing at the idea that an increased GDP is good, while a decrease is bad. So please, do explain to us all how a reduction in GDP will benefit the Australian people? >>

Congrats Pericles on asking the most blatant straw-man question of all time. You know perfectly well what I found so humorous!

Moving right along…

Isn’t this an interesting aspect of GDP:

GDP = C + G + I + NX

C is all private consumption, or consumer spending, in a nation's economy
G is the sum of government spending
I is the sum of all the country's businesses spending on capital
NX = Exports – Imports.

So the esteemed economic minds that devised GDP could see the merit in subtracting imports, despite the fact they generate economic activity of all sorts. And yet they can’t see the merit in subtracting immigration!

Think about that. There is the most enormous inconsistency there.

Immigration generates a great deal economic activity as do imports… and yet one is subtracted from GDP while the other is added!!

Even back then in the primordial days of GDP, those primitive economists could see that there was merit in not including everything on the positive side of the ledger. It is just a crying shame that subsequent economists, with presumably a progressively better understanding of real economics, couldn’t have seen fit to refine that notion, and subtract or at least leave out a few other things that clearly should not contribute to GDP.

Following this sort of thinking, it is simply amazing Pericles that you; someone who purports to have a pretty good understanding of economics, has no problem with all the economic activity generated by onshore asylum seeking being included in our GDP total.

Crikey, if there is anything that should just totally be left out of the GDP calculation, it is this!

continued
Posted by Ludwig, Tuesday, 27 May 2014 8:31:53 AM
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<< An increase in GDP is good, a decrease in GDP is not good. >>

Now hold on. I think you might find that this aint necessarily so.

I can think of several scenarios:

1. If some common sense were to suddenly be injected into the definition of GDP and it did not include some of the stupid stuff that it now does, then we would have a considerably lower GDP in the first year with the new formula, which would not indicate a proportionally worse-off economy.

2. If we were to have a population that was decreasing, we could possibly have a GDP that was decreasing while the economy was improving… and while per-capita GDP was increasing.

3. There are others, but I think you get the message.
Posted by Ludwig, Tuesday, 27 May 2014 8:33:35 AM
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Interesting that you chose not to answer the question, Ludwig. Most illuminating, in fact.

I asked "So please, do explain to us all how a reduction in GDP will benefit the Australian people?"

And your response?

>>Moving right along…<<

It is not a good look, you know. Then, possibly realizing that this leaves your logic horrendously exposed, you offer:

>>If we were to have a population that was decreasing, we could possibly have a GDP that was decreasing while the economy was improving… and while per-capita GDP was increasing.<<

I've ignored the redefinition suggestion. That's just pure evasion.

So your suggestion is that we somehow engineer a decreasing population. I thought that would be your offering, as you keep banging on about immigration being an economic evil, but I'm a little surprised that you actually say it out loud.

Back to Ludwig-utopia then.

How will you bring this about? Who will do all the work ? How will you organize it that the remaining population suddenly becomes more productive (i.e. raising per capita GDP at the same time that GDP is falling)? What will be the age demographics of your reduced population - how will you retain the workforce that is needed to keep the oldies alive - or does that not worry you? How will you retain the brightest brains, in a dying economy - you certainly won't be able to afford to pay them internationally competitive salaries? Who will be left to teach in universities - this is after all a service, and according to you, does not contribute to our economy.

And why do I expect your response to this to be...

>>Moving right along…<<
Posted by Pericles, Tuesday, 27 May 2014 9:36:13 AM
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All very good questions, Saltpetre.

>>So, I am assuming that overall GDP is compiled from business reporting - tax returns, reports to shareholders and the ASX - plus government(s) own records of government expenditures.<<

Amongst many other sources. Our ABS is at the heart of the statistics-gathering part of the exercise. You are clearly doing your research in the right place, but here is the relevant page that you may have missed:

http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Defining%20and%20measuring%20GDP~221

>>Perhaps then, the business component of GDP is revenue less costs, but before tax - or is it the total expenditure of the business?<<

As you can see from the ABS explanation, this particular area is counted as "value-add", not total expenditure. But you can also see that there are three independent calculations that come to the same conclusion - Income, Expenditure and Production.

Taxation is entirely separate from these calculations, although the government will no doubt base their decisions on which part of the economy to tax, from the baseline calculation themselves.

Here's another guide, with less jargon

http://www.wikihow.com/Calculate-GDP

Might be a little simplistic in places, but useful as a cross-reference with the dry ABS stuff.

Hope this helps
Posted by Pericles, Tuesday, 27 May 2014 9:49:44 AM
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OL'PERRIWRINKLES/[rip-wrinkles]QUOTE..<<..'m a little surprised that you actually say it out loud.>>

IM GLAD ITS..
PUT SIMPLY..IN WRITING
[you talk too fast..per*ridicules]..your like a great masters QUISLING..encoding/rather\than decoding*,with wisdom/but\wisdom/learned/of\ROTE..MEMORIZATION/Rather than origonal thinking..p[let-alone..any/applied patience\..for any essor/being's\seeing.

<<..Back to Ludwig-utopia then.

How will you bring this about?>>

THATS TROLLING[avoidance?]..IS LUDWIGS LUDETOPIA..indeed in the offing?

<<..Who will do all the work..?..>>

ITS STILL FEELS/LIKE AVOIDANCE/
but at least..framing..a new question..is an origonal thought[it might contain hidden gems/or just germs

<<..How will you organize it...that the remaining population suddenly becomes more productive..(i.e.raising per capita GDP}>>

OK MY WAY..IS GOVT..ORDER PEOPLE TO OVER INSURE/ON THEIR HOME.S
AND THEN OVERNIGHT burNOUT APPLIENCES SO HOT THEY START FIRES[everyone gets a bailout for twice the real values of their goods/ANd the gdp went through the roof[thus govt spending[as an expected claw-back percentage..of spending..spends its revenue share.percentages

regardless..of what..gdp was doing
pre the 'natural dissaster/payoff..<<..GDP is falling)?

now we get into the 'adsurdium...<<<..What will be the age demographics of your reduced population..>>

not age specific
job specifiuc [all 3 rd year apprenbtices]
<<..how will you retain the workforc>>

they can only spend their wage in the company store
and their wage will allways be one dollart less than they need
too easy

<>that is needed to keep the oldies alive>>

boost crime numbers/jail every petty crime
run the old peoples homes with prison labour[its a proven buisness model[but dont low wages = less gdp?

so let double wages..=\double gop
Posted by one under god, Tuesday, 27 May 2014 10:43:26 AM
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DAWD..GDP..DPP

its sounding more like a fish-slap/now..<<.n <<or does that not worry you?...How will you retain the brightest brains,..in a dying economy>>

people work/for homour/title/flexible employment terms
the imaginative/boss..needs but appiciate/their talent-s skillsets/extend to all/of\us.

<<..you certainly won't be able to afford to pay them internationally competitive salaries?>>

we can assure/them\this work
wont send their/SOUL\DIRECTLY..TO HELL.

<<..Who will be left to teach in universities ..>>

ANY TEACHER/WHO REALLY TEACHES/MAKES EACH NEW LEARNING[A NEW BUSINESS//OPPERTUINITY]..HIGHER EDUCATION IS ABOUT GETTING THE FRANCHISE/OR PEERR GROUP/SKILL SETS[EACH CLASS SETS UP A REAL BUSNESS/AS CHOSEN FROM SWTUDENMTS SKILLSETS

THE FRUITS OF THIS JOINED STUDY/CAN BE INVESTED..INTO
AND THE STUDENTS EACH HOLD SHARE ACCORDING TO THEIR INPUT[ITS ike super or hoiding shared patent]..at least thats how its done in heaven

[or hell/hard to tell/they interlap together
so much/on so many levels

<<..- this is after all a service,>>

or dis-service[who/is\to/judge?]

<<and according to you,..>>

dont put wurd..tords..ain anyones ,mouth ['not\a/quote]'

<<..And why..do I expect your response..to this to be...

>>Moving right along…<>>>
why dear perJULES..your living out what was..not what is
everything..we thought..was organised..but its organised..on illusion
http://www.washingtonsblog.com/2014/05/enron-2-0-wall-street-wants-manipulate-state-energy-markets-just-like-manipulates-every-market.html

yet you/talk/like..its a skill/talent..a fixed firm foundation
which has extremist paternalistic obsessive control/over everything/so much so we all stopped thinking.

but the fruit is/THE DEBT HEAPED UPON THE POOR
and the elite twice as rich/when..they all earned dIFFERENT KARMA

BUT KARMA..is the feminie aspect/[a real/bitch]
Posted by one under god, Tuesday, 27 May 2014 10:45:45 AM
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Pericles, you know those rails. Well… you’re off them entirely. They’re way back there behind you somewhere, well out of sight…. and your train (of thought) is heading straight towards a huge cliff!

You put up a blatant straw-man question, which failed to suck me in. I rightly side-stepped it… and you call it evasion, and ‘not a good look’.

Well, we’ve been debating this sort of stuff on OLO for years. Who do most OLOers usually side with? Who ultimately does a runner from the subject, because they no longer have any credulity or room to move with their flawed arguments? Not me.

So I’m happy to let others judge who is right, who is off-track and who is avoiding the issues and erecting straw-man arguments here.

<< So your suggestion is that we somehow engineer a decreasing population. >>

There you go again - deliberate diversion into straw-man la la land. You are asserting something you know to be false. I of course was not suggesting anything of the sort.

I’ve made my position on population abundantly clear on OLO – we should head towards net zero immigration, which would take immigration out of the population growth equation. Our population would continue to increase and would stabilise in some three or four decades time if the birthrate remains the same as it is now (the natural birthrate, not the artificially-enhanced baby-bonus birthrate). Then we should maintain a stable population. Or we could let it gently decline if that is deemed the best approach by that time. Or we could increase it if we are confident that the supply capability of all goods, services and everything else that we need is up to the task of matching the increasing demand, and in a sustainable manner.

Why do you do this Pericles? Why do you try to divert the discussion off into the wilderness and in so doing, imply that I hold views and positions that you know full well I don’t?

It’s not a good look. Doesn’t do your credibility any favours at all.

continued
Posted by Ludwig, Tuesday, 27 May 2014 10:46:13 AM
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Back to the topic then….

I hope you can see that your incredibly simplistic assertion that ‘an increase in GDP is good, a decrease in GDP is not good’, is incredibly flawed.

And um… I note that you had nothing to say about my point that exports are subtracted from GDP while immigration is added.

This is a biggie! It is surely a huge flaw in the GDP calculation.

Would you care to comment?

<< I've ignored the redefinition suggestion >>

But of course. That one’s just too hard for you. Mwa hahahaaa!

I do thankyou for injecting a bit of humour into what would otherwise quite a droll discussion ( :> )
Posted by Ludwig, Tuesday, 27 May 2014 10:48:06 AM
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My goodness, Ludwig. With all the pressure, you seem to be losing your grip on the English language too...

>>Who ultimately does a runner from the subject, because they no longer have any credulity<<

credulity n. a tendency to be too ready to believe that something is real or true

An interesting, but somewhat self-defeating, description. In fact, altogether a pretty feeble reason to leave an argument, don't you think?

And then there's this:

>>I do thankyou for injecting a bit of humour into what would otherwise quite a droll discussion<<

Surely, if the discussion was already droll, it wouldn't need an injection of humour?

I know it is difficult keeping it all together when every bit of logic and rational arguments are going against you. But do make an effort, there's a good chap.

Now, where were we.

>>You put up a blatant straw-man question<<

That's ridiculous, and you know it. You stated...

>>[GDP] is taken as a prime indicator of what is good about our economy. The larger the better, end of story, according to our dumb pseudoeconomists and politicians!<<

So the obvious inference is, if bigger is not better, smaller must be.

Yet you deny this too.

>>I note that you had nothing to say about my point that exports are subtracted from GDP while immigration is added.<<

Exports are subtracted, imports are added. Seems pretty straightforward.

Immigration is not "added", just the economic activity that immigrants create. Which is actually indistinguishable from the economic activity that anyone else creates. Including you.

And for the record, I've ignored the redefinition suggestion because giving you carte blanche to change the definition of GDP simply invalidates every argument, for or against.

>>I’ve made my position on population abundantly clear<<

Yep. It appears to me that You believe a smaller population will be good for Australia. Am I wrong?
Posted by Pericles, Tuesday, 27 May 2014 2:56:43 PM
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Pericles, there is an amazing contrast between your excellent command of the Queen’s English and your off-the-rails views on all things economics and population-related.

Many posters have picked you up on this over the years. I am certainly not alone in headbanging with you on this stuff on OLO.

I'm not at all concerned about occasionally using words that might be technically incorrect, especially when the meaning in the context where used is perfectly clear.

My biggest PITA on OLO is MWS!!

I’ll expand…

The biggest pain in the ar…mpit about writing stuff on OLO has been this extraordinary missing word syndrome that I suffer terribly from. It seems that on average, there is one MW in every bloody post. No amount of proof-reading or spell-and-grammar checking can prevent it!

Second to this is the OLW (one-letter-wrong) syndrome… where a post is corrupted by a single incorrect letter, such as ‘it’ where it should be ‘is’ or ‘out’ where it should be ‘our’

I HATE that stuff, with a vengeance!! I wish we could edit after posting, as per Skype and Facebook!

You are a very minor PITA in comparison, Pericles ( :>)

But I do thank you for going to considerable lengths to point out that my use of the words; ‘credulity’ and ‘droll’ were not the best choices.

So, after all of our correspondence, which must now number in the thousands of posts, the grand total of incorrect words that I have used and that you have pointed out is…..um…….2!

I’m sure if there had been any others, you woodna held back in coming forward about them!!

Now, where the blazes were we....
Posted by Ludwig, Wednesday, 28 May 2014 8:34:29 AM
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Oh yes….

<< So the obvious inference is, if bigger is not better, smaller must be. >>

If GDP is bigger while being based on a whole lot of stuff that does not indicate that our economy is improving, then bigger is certainly not better…. and smaller would be even worse!!

<< Immigration is not "added", just the economic activity that immigrants create. >>

Um… yeayus!

All that enormous economic activity from our enormous immigration intake gets added to GDP, despite it being +/-NEUTRAL in terms of supply and demand and our overall economic wherewithal.

So, if all of this is going to be added to GDP, then why wouldn’t imports be added as well? Or at least not subtracted. Why wouldn’t the silly economists and politicians strive to make our GDP appears as big as possible? This is what they seem to be doing in every way, except with the subtraction of imports!

<< …I've ignored the redefinition suggestion because giving you carte blanche to change the definition of GDP simply invalidates every argument, for or against. >>

So what you are actually saying is that you have a completely closed mind on the idea of redefining and thus improving GDP so that it could become a much more meaningful economic indicator ??

<< Yep. It appears to me that You believe a smaller population will be good for Australia. Am I wrong? >>

I’ve made my position on population abundantly clear. But as is your wont (sheesh, I hope I’ve used the right word here), you’ve read something else into it which is completely different to what I have said.

You are wrong. I don’t advocate a smaller population. I advocate the lowest population level that we can achieve from this point forward while maintaining a significant immigration program and accepting that our birthrate (minus the influence of the baby bonus) is actually very good and doesn’t need to be further lowered.
Posted by Ludwig, Wednesday, 28 May 2014 8:37:26 AM
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Not sure about that, Ludwig.

>>Pericles, there is an amazing contrast between your excellent command of the Queen’s English and your off-the-rails views on all things economics and population-related.<<

I'd say that I am equally picky - pedantic, if you will - on both counts.

>>Many posters have picked you up on this over the years. I am certainly not alone in headbanging with you on this stuff on OLO.<<

You are the most persistent, though. Most of the others back off when they realize that they haven't quite thought it all through in a logical fashion, or hadn't done their homework very well.

Like here, for instance...

>>If GDP is bigger while being based on a whole lot of stuff that does not indicate that our economy is improving, then bigger is certainly not better…. and smaller would be even worse!!<<

Coles supermarkets turn over fifty billion dollars a year, employ fiftyfive thousand people, at a net margin of less than four percent.

My local mini-mart turns over a few hundred thousand, employs one guy (who is there from 7 in the morning to 10 at night), and has net margins closer to 15%.

Thinking in GDP terms, which of these do you think would have a) power to make things happen, e.g build new stores, upgrade roads, revitalize a shopping mall etc., and b) be more able to withstand economic shocks, downturns, interest rate changes etc.etc.?

It is the same with economies. The larger the economy (you only have to think of the US to understand this) the greater their power to make things happen, and to withstand external economic pressures. They do of course achieve this latter through their mega borrowing power, but seem to rub along somehow. This resilience is not always available to other, smaller economies, which is why it is generally accepted that having a growing GDP is actually better for that country's people than a shrinking one.

If you still disagree, can you perhaps offer an example of where a country's shrinking economy has benefitted its citizenry??
Posted by Pericles, Wednesday, 28 May 2014 1:19:07 PM
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<< I'd say that I am equally picky - pedantic, if you will - on both counts. >>

Really. Oh, well I’ll take that asa compliment, seeinas you ave extreemely rarely picked me up on me yuse ov the old country’s langwidge!

<< Most of the others back off when they realize that they haven't quite thought it all through in a logical fashion, or hadn't done their homework very well. >>

Haaa hahaahaaa haaahaaaaaa ha …… ha ….haaha……….AAAAAAAAAH HAAAAAAA HAHAHAHAHAHAAA!

What a fascinating perception!! My perception is that you have time and time again lowered one’s head, tucked one’s ears back and slinked off with tail between legs, after others have pointed out the absolute folly of your arguments!

<< The larger the economy … the greater… [the] power to make things happen… >>

Whoa, hold on there. You’re off with the fairies!

Has our economy, which is apparently 250% larger than ten years ago, given us 250% more power to get infrastructure up to scratch, to make the quality of health and education considerably better, to raise our quality of life and environment, or bring us closer to a sustainable society?

Has it given us one iota more power?

Pericles, a larger economy does NOT give us more power to do the essential things, for as long as the number of people and the number of issues and the magnitude of those issues continues to increase!!

This is the great furphy of our time: that economic growth is the answer to all our ills, end of story.

This is what GDP tries to tell us. And isn’t it just so TOTALLY and UTTERLY WRONG!

If we were to increase economic turnover and profits while NOT increasing the number of pie slices that it all has to be divided up amongst, then we might be at the start of the right track towards a healthy future.

But an ever-bigger economy, which has an ever-bigger demand for everything built into it as a fundamental element, is just going to get us NOWHERE!
Posted by Ludwig, Wednesday, 28 May 2014 8:41:52 PM
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Ludwig, you're not alone in making the occasional 'typo'.
Get this one:

1. >The new sware shop [sic] offer values ALZ at $4.35< (share swop?[sic]= swap)
[extract from an equities 'report'.]

And, this one (copied directly, using Ctrl-C) from 'wikiHow' re calculating Real GDP from Nominal GDP (i.e. to take account of inflation - in this case of 25% - which 'wiki' explains gives a 'deflator' of 125 [1 + 0.25, all x 100 = 125{%}) [Note, 'wiki' did not include the %]

(My Note 1. 'wiki' would have been better to have left this 'deflator' as 1.25,; but below you will see why, and will see a second, and actual 'mistake' in their calculation):

2. >>"Divide the nominal GDP by the deflator. Real GDP is equal to the ratio of your nominal GDP divided by 100. As an equation, it starts off like this: Nominal GDP ÷ Real GDP = Deflator ÷ 100.

So, if your current nominal GDP is $10 million, and your deflator is 125 (inflation was 25% from the base period to the current period), this is how you'd set up your equation:
$10,000,000 ÷ Real GDP = 125 ÷ 100
$10,000,000 ÷ Real GDP = 1.25
$10,000,000 = 1.25 ÷ Real GDP
$10,000,000 ÷ 1.25 = Real GDP
$8,000,000 = Real GDP"<< [my parentheses, at both ends of quote.]

My Note 2. Just taking the first sentence of the above instruction:
>Divide the nominal GDP by the deflator.<
And, using 1.25 as the 'deflator' gives $10 million divided by 1.25 = $8 million. (Hence, no need for the rest of the babble.)

Note 3. The second sentence >Real GDP is ... 100< is gobbledegook!

Note 4. Regarding the above 'calculation':
Second line finally 'reveals' the 1.25,
Third line is 'wrong', and should read $10m = 1.25 X "Real GDP" [and not, divided by.]

Which then finally leads in fourth line to $10m/1.25 = $8m [in fifth line.]
Phew, what a torment! (Talk about 'life wasn't meant to be easy'?)
Posted by Saltpetre, Thursday, 29 May 2014 3:55:42 AM
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Anyhow, Ludwig, Exports minus Imports = 'Balance of Trade'.
(Or, Income from overseas interests, less payments to overseas interests = 'Balance'.) (A Logical 'adjustment' to locally 'produced' income/'product'.)

And, me ol' mate, I think a part of the explanation of why we do not seem to have seen much of that '250%' you mention, is perhaps that we (Oz) were a bit behind the proverbial '8' ball beforehand - as far as public infrastructure, education, healthcare, etc - possibly due to 'State Governments' lack of fiscal prowess [or incompetence?], or, in NSW, the likes of .., .. and .., and Water .., Wine, Mining ..?

(The Recession we 'had to have'; the 'Banana Republic'; the 'level playing field'; "Free" Trade; BLF; Water-side Workers; Three Tiers of 'Government'; "Batts"; "Halls"; Consultancies, Commissions, and more Consultancies, Studies, Committees, Inquiries ...)

Additionally, we must have had quite an increase in population during that 250% period you mentioned (though I haven't looked up the actual figures), so the GDP 'growth' has been spread more widely.
Public expenditure in 'accommodating' a portion of that population increase would also have diluted the pool available for 'the rest'.
(Guess you know what 'portion' that might have been; plus perhaps a few little-one 'bonuses'?)

And, I wonder if that 250% was 'REAL' or 'Nominal'?
(If overall inflation in the period was 250%, then 'Real' = 1.0 X Starting Point.)
Posted by Saltpetre, Thursday, 29 May 2014 5:16:47 AM
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Pericles,

As, Exports - Imports; = 'Balance';
Then, why not 'Loans' to overseas interests 'Minus' 'Borrowings' from overseas interests? (As a logical 'adjustment' to GDP? - when measured by the Income method, or, in 'effect' when measuring by the Expenditure method.)

Sorry, I haven't yet had a chance to absorb the ABS info in the link you most kindly provided; but I will get to it.

But surely, if one borrows in order to 'grow' GDP, and there is interest to pay on such borrowings, then any resultant 'growth' would have to be 'adjusted' to take account of loan-repayment responsibilities - principal plus interest?
(I guess the 'PIGS' {who, in the end result, couldn't 'fly'} could answer that one for us.)

I can't convince myself that 'growth' and population-increase are co-dependent.
(In truth, I'm not even convinced that growth is even essential - unless one is preparing for war, or seeking utopian affluence. In peace, many alternatives are available for 'production', and productivity.)
Firstly there are finite limits to population growth - unless one totally throws caution to the wind, and lets the chips fall where they may. A fool's outlook, ultimately.
Secondly, growth for its own sake is geared to make some inordinately wealthy, and masses wanting desperately to catch up; whereas a more effective distribution of existing 'product' could provide reasonably for all, without forever chasing after the treadmill to the stars, to eventual total un-sustainability.

If a virus doesn't get us first, 'growth' may ultimately desolate this incredible planet. And, for what?
Posted by Saltpetre, Thursday, 29 May 2014 5:21:06 AM
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Hang in there, Saltpetre... economic statistics has always been an arcane science.

Often the concepts behind the calculations are more easily grasped. Like this from the Reserve Bank,

"GDP - Gross Domestic Product. A key measure of the value of economic production in the economy. GDP is determined in one of three ways: the value of goods and services produced less the cost of production; the sum of incomes generated by production; the sum of final expenditure on goods and services produced plus exports minus imports. An average of the three approaches may be calculated and is also referred to as GDP."

This might be a useful link:

http://www.econlib.org/library/CEECategory.html

If you need to lighten the mood... Spurious Correlations is a fun couple of minutes:

http://www.tylervigen.com/

All economics, to my mind, extend from a couple of basic concepts. Like the expression: 'every problem is either; you want something you can't have or you have something you can't get rid of', economics seems to be reducible to: 'someone has a surplus of something and someone else wants more of it'.

The complexity arises from the myriad ways individuals, groups, organizations and states deal with this.
Posted by WmTrevor, Thursday, 29 May 2014 8:55:29 AM
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This is right up there with your best efforts, Ludwig, congratulations.

>>Haaa hahaahaaa haaahaaaaaa ha …… ha ….haaha……….AAAAAAAAAH HAAAAAAA HAHAHAHAHAHAAA!<<

It is always good to have strong, constructive discussions with you, on topics in which you can add your wit, wisdom and undoubted expertise in this manner.

>>Has our economy, which is apparently 250% larger than ten years ago, given us 250% more power to get infrastructure up to scratch, to make the quality of health and education considerably better, to raise our quality of life and environment, or bring us closer to a sustainable society?<<

It has most certainly played a part in doing so. Indeed, far more than a declining GDP would.

But I'm not sure where you are getting your figures from - as far as I can tell, our overall economy, measured in GDP terms, is 150% larger over the ten years, not 250%. But let's not worry about detail, shall we.

It would be interesting for you to consider the alternative, though. What would be our situation here if GDP were to decline by - say - a mere 10%. Would you feel better, or worse off? Would we be able to build more, or fewer, hospitals, schools etc.?

You would do well to take a look at some of the European economies whose GDP has shrunk over the past few years, and ask them the question: would you prefer to live in a growing, or a shrinking economy?

And there's no need to exaggerate.

>>This is the great furphy of our time: that economic growth is the answer to all our ills, end of story.<<

It is definitely one very important component, yes. But no-one in their right mind would isolate it as the only important variable, and certainly wouldn't go so far as to describe it "the answer to all our ills". That's just self-serving hyperbole.

>>But an ever-bigger economy, which has an ever-bigger demand for everything built into it as a fundamental element, is just going to get us NOWHERE!<<

Except better off, of course. [See per capita GDP for details]
Posted by Pericles, Thursday, 29 May 2014 9:52:36 AM
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Talking about the state of our economy -
the following article may be of interest to those
that are willing to read from sources other than those
of only - NewsCorp Ltd:

http://newmatilda.com/2014/05/26/real-debt-danger
Posted by Foxy, Thursday, 29 May 2014 1:44:29 PM
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<< Additionally, we must have had quite an increase in population during that 250% period you mentioned (though I haven't looked up the actual figures), so the GDP 'growth' has been spread more widely. >>

That’s the biggie, Saltpetre.

If we had had a moderate rate of immigration over that period, all else being equal, I reckon our economy would be hooting along, in terms of achieving all the improvements that is supposed to achieve.

<< I can't convince myself that 'growth' and population-increase are co-dependent. >>

They certainly aren’t co-dependent. Although they have been closely correlated in Australia for decades, even through the mining boom.

Of course there is enormous folly in that: massive growth in infrastructure, service and everything else on the supply side of the equation, which is closely correlated to massively increasing demand (population growth), is just pointless!

But if you look at GDP, you will think that it is all fantastic!
Posted by Ludwig, Thursday, 29 May 2014 7:41:58 PM
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<< This is right up there with your best efforts, Ludwig, congratulations. >>

Why thankyou Pericles my friend!

I’m a down-to-earth person. If you say something silly, I’ll let you know about it. If you say something hilarious, I’ll ROFL around for ages…. then I’ll slowly pick myself up,…. fall back on the floor and ROFL some more… then eventually get myself together, and succinctly express my great appreciation of your humour in my follow-up post!

<< It has most certainly played a part in doing so. Indeed, far more than a declining GDP would. >>

Are you sure about that??

This enormous increase in GDP and thus in our economy doesn’t seem to have achieved much at all. Look at infrastructure, services, environment and sustainability. Where are the real improvements?

<< …our overall economy, measured in GDP terms, is 150% larger over the ten years, not 250% >>

Quite right. It is 250% as large as it was in 2004, or 150% larger. Thankyou for the clarification.

<< What would be our situation here if GDP were to decline by - say - a mere 10%. Would you feel better, or worse off? Would we be able to build more, or fewer, hospitals, schools etc.? >>

If our GDP declined by 10% while population growth stayed the same, we’d not be in a good place. But if population growth declined by 20%, we’d be in a better place than if we had an increase in GDP accompanied by the normal rate of increase in population size.

And of course if we had a lower rate of population growth, we wouldn’t need so many new hospitals, schools, etc. We would initially, but then the demand would fall away somewhat in subsequent years.

continued
Posted by Ludwig, Thursday, 29 May 2014 7:45:16 PM
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<< And there's no need to exaggerate - > This is the great furphy of our time: that economic growth is the answer to all our ills, end of story.< >>

No exaggeration there at all. That is exactly how it is. If it wasn’t, then our decisionmakers would understand that massive growth that is underpinned by a massively increasing demand for everything is just bonkers. They apparently don’t understand this most basic of economic principles.

<< It is definitely one very important component, yes. >>

Well I’m pleased you can appreciate that.

<< But no-one in their right mind would isolate it as the only important variable… >>

Sure. There are several other huge things that come into play. Not least the enormous power that the big business profit motive has over our government decisionmakers.
Posted by Ludwig, Thursday, 29 May 2014 7:46:59 PM
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Thank you Foxy, finally an article I can understand about debt. 'The Real Debt Danger' by Ian McAuley in 'NewMatilda'. Unfortunately 'NewMatilda' is not approved for consumption by our mates the 'Usual Suspects' on OLO. These guys exist purely on a bland diet of "Ruperts Rubbish" as fed to them through a daily ingestion of half truths and down right lies they avidly consume freely, complements pf the "Murdoch Mouthpiece", 'News Limited'. With the words of the Profit Rupert ringing in their ears, which are duly reinforced by his disciples Tax Em' Tony and Joe Cockey, the poor unfortunate 'Usual Suspects' live in a fantasy hell of fear and loathing about debt and its implications, totally divorced from the reality of Australia's situation!
Ludwig, thanks for your contribution it makes a lot of sense to me. This business of "growth" which politicians from both sides seem to treat as the ultimate ideal, given the Worlds population explosion can't be SUSTAINABLE! To me, its a bit like, as the balloon gets bigger, the simply solution is to pump more air in, which we all know where that leads in the long term.
Posted by Paul1405, Friday, 30 May 2014 7:43:36 AM
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Only in your imagination, Ludwig.

>>If our GDP declined by 10% while population growth stayed the same, we’d not be in a good place. But if population growth declined by 20%, we’d be in a better place than if we had an increase in GDP accompanied by the normal rate of increase in population size.<<

This goes to prove conclusively that you don't understand how GDP occurs. We have been experiencing "an increase in GDP accompanied by the normal rate of increase in population size", and our prosperity has continued to increase.

Which draws attention to the part of my previous post you chose to ignore.

>>But an ever-bigger economy, which has an ever-bigger demand for everything built into it as a fundamental element, is just going to get us NOWHERE!

Except better off, of course. [See per capita GDP for details]<<

The incontrovertible facts are that our increased population has been responsible for an increase in GDP, and when shared out amongst the entire population, an increase is also evident.

Any thoughts?
Posted by Pericles, Friday, 30 May 2014 11:02:46 AM
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JULES/QUOTE..THE quote/ludwig<<..if population growth declined by 20%,.we’d be in a better place..than \if..we had an increase in GDP accompanied./,...by the normal rate of increase in population size.<<

perjury/note..<<..This goes to prove conclusively..>>

huh?

<<..that you don't understand how GDP occurs.>>

20 percent decline=..on the rate of growth..is still \4/5 ths higher
all growth=growth..unless..<<We have been experiencing "an increase>>GROWTH..BE IT SLIGHTLY/SLOWER GROWTH.

<<..in GDP accompanied.,.by the normal rate of increase..in population size",..and our prosperity has continued to increase.>>

just less fast/but still in the black
[unless govt malfeasance..loads us with usurious or odious criminal debt/at interest..no less..[its treason]

<<>.Which draws attention to the part
of my previous post you chose to ignore....>>But an ever-bigger economy,..which has an ever-bigger demand*?

more people dont indicate more demand/let aloner ability to meet demand

<<..for everything built into it..as a fundamental element,
is just going to get us..,NOWHERE!

Except better off, of course.>>

YES BIGGER NUMBERS SOMEHOW MEANS MORE FOR ALL OF US
YOU CAN DIVIDE A CAKE INTO INFINITY

And beyond..in theory..proffer/

<<>.[See per capita GDP for details]<<,,The incontrovertible facts are that our increased population..has been responsible for an increase in GDP,>>

not really..only that the money cost/value..has in creased economically/not necessarily FOR THE BETTER.

>>//and when shared out amongst the entire population,
an increase is also evident.Any thoughts?>>

YES A PIE CAN EASY BE CUT INTO TWO
OR HALF OF A HALF.. or even quarter of a half

BUT..THAT MEANS WE EACH GET LESSS
THE MORE WANT A BITE OF THE GOVT CASH-COW CAKE...THE LESS EACH CAN GET[UNLESS YOU GOT FIRST BITE..ON THE CHERRY/..THE SECOND BITE.. and THE CHERRY IS GONE.
Posted by one under god, Friday, 30 May 2014 12:32:54 PM
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Perhaps this offering from one under god will help you understand, Ludwig.

>>20 percent decline=..on the rate of growth..is still \4/5 ths higher
all growth=growth..unless..<<We have been experiencing "an increase>>GROWTH..BE IT SLIGHTLY/SLOWER GROWTH.<<

It certainly is a very close match to your own reasoning.
Posted by Pericles, Friday, 30 May 2014 5:04:21 PM
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<< Ludwig, thanks for your contribution it makes a lot of sense to me. >>

Very good Paul.

<< This business of "growth" … can't be SUSTAINABLE! >>

Absolutely. And yet GDP indicates that growth is good and faster growth is better, end of story… with no considerations of anything else at all!

And Pericles is going to great lengths to defend GDP!! ( :>/
Posted by Ludwig, Friday, 30 May 2014 7:33:19 PM
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<< We have been experiencing "an increase in GDP accompanied by the normal rate of increase in population size", and our prosperity has continued to increase. >>

Pericles, please define ‘prosperity’. Either that or stop making preposterous assertions.

Our prosperity has not increased in the last ten years. In this time frame GDP and the whole economy increase to 250% of what it was in 2004. And yet our prosperity has NOT increased.

Are we any better off in terms of the provision of infrastructure and services? Has unemployment or homelessness or crime or all manner of other quality-of-life factors improved at all, let alone to the tune of 2.5 times as good as they were in 2004?

Has the quality of our agricultural output improved? Has the quality of the land that supports agriculture improved or declined?

Our non-renewable resource base is considerably smaller than it was a decade ago, which definitely equates to a reduction in prosperity, all else being equal.

<< This goes to prove conclusively that you don't understand how GDP occurs. >>

GDP, what’s that??

Oh…. you mean that bodgy indicator that includes a whole lot of stuff that is OBVIOUSLY neutral and thus should be included within a total which purports everything that makes it up to be entirely economically positive?

The real issue here is not your allegation that I don’t understand GDP, but your obvious lack of understanding of long-term economics, and of what economic growth is supposed to provide for us…. and indeed would if it was real. Our economic growth, in terms of achieving a supply capability that can cater for the demand and at a significantly better quality, is alas not real at all!

Again, look at infrastructure, services, homelessness, cost of living, and all manner of other things.

continued
Posted by Ludwig, Friday, 30 May 2014 7:37:53 PM
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<< Except better off, of course. >>

How about a bit of justification. Show us where infrastructure, services and any other QOL factors are significantly better, let alone 2.5 times better than ten years ago.

And tell us: if everything is so much better than it was in 04, why we are so far behind with infrastructure that Abbott has seen it as a top priority, and why are health and education services are always in the news?

<< The incontrovertible facts are that our increased population has been responsible for an increase in GDP… >>

Yes yes YES!!

But has that increase in population been responsible for a concomitant increase in the supply and quality of infrastructure and services, or has it worked diametrically against this?

So um… how does an enormous increase in GDP, which has very largely happened as a result of enormous population growth, sit with a far far less enormous improvement in all the things that economic growth is supposed to give us??

<< …and when shared out amongst the entire population, an increase is also evident. >>

An average per-capita increase actually does not mean that the average person is seeing much of an increase, if any. I think you would agree that the richer are getting rapidly richer and the poor ain’t getting much out of it at all.

And of course we are talking about a measurement (per-capita GDP) which is utterly flawed because it is based on the utterly flawed GDP indicator…. which sort of renders it rather meaningless. Actually it is much worse than meaningless – it is HIGHLY misleading.
Posted by Ludwig, Friday, 30 May 2014 7:41:40 PM
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Economists and politicians live in fear of NEGATIVE GROWTH, two quarters of this negative growth and we are plunged into RECESSION, heaven forbid, I assume a whole year of negativity its a DEPRESSION!
Although the Great Depression of 1929 started overnight with no period of negative growth.
I can never understand how our economy can be valued at $ billions one day, and simply by having some 'expert' wave a bunch of figures around have that same economies value reduced by some $ billions or increased, whatever the case may be, because of what those obscure figures say. Example, retail sentiment is down 4 points, therefore the economy is worth $$$ less. It seems to me we rely too much on these non producing Nervous Nellie's and not enough on the industrious hard work of our people.
I recently though what right does some US based non producing Rating Agency have to dictate to Australia, how we should be running our country by threatening to "DOWNGRADE" our rating from AAA to Z unless we do economically as they say! Who are these non producing parasites? I am an admirer of Australia's greatest politician Jack Lang, who was dismissed from office by Governor Game in 1932 for refusing to pay British bond holders, their pound of flesh, (debt that NSW had accrued while helping Britain to fight WWI, ironic isn't it) as he was told to do. Instead Lang choose to try and do something to relieve the pain and suffering of the ordinary people of NSW caused by the Great Depression, a time of over 30% unemployed, for that he was sacked! Makes for interesting reading.
Posted by Paul1405, Saturday, 31 May 2014 8:08:57 AM
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Pericles…. yoohoo…

I wrote:

>> How about a bit of justification. Show us where infrastructure, services and any other QOL factors are significantly better, let alone 2.5 times better than ten years ago.

And tell us: if everything is so much better than it was in 04, why we are so far behind with infrastructure that Abbott has seen it as a top priority, and why are health and education services are always in the news? <<
Posted by Ludwig, Tuesday, 3 June 2014 7:28:15 PM
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Well there you go. Pericles is unable to answer this question.

He’s been reminded a couple of times on another thread that he is actively posting on that I have been awaiting a reply. But no, he isn’t going to come back on this one.

So I can only assume that… at long last… after putting up some 70 posts on this thread, that I have managed to get my message over to him that his support for GDP and all that goes with it that we have discussed here, is right off the rails.
Posted by Ludwig, Saturday, 7 June 2014 8:17:24 PM
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You cannot be serious, Ludwig.

>>So I can only assume that… at long last… after putting up some 70 posts on this thread, that I have managed to get my message over to him that his support for GDP and all that goes with it that we have discussed here, is right off the rails.<<

Like so many of your assumptions, this bears absolutely no relation to reality, but instead remains the product of your tortuous logic and wild imagination.

Your simply posing a question does not automatically deserve a response; it would need to be relevant and sensible, and demonstrate a capacity to understand a response. This, unfortunately, does neither:

>>How about a bit of justification. Show us where infrastructure, services and any other QOL factors are significantly better, let alone 2.5 times better than ten years ago. And tell us: if everything is so much better than it was in 04, why we are so far behind with infrastructure that Abbott has seen it as a top priority, and why are health and education services are always in the news? <<

Clearly, you are unable to see how the very phrasing of this "question" demonstrates how pointless it would be trying to even begin to structure a reply. You have shown so little understanding of the concepts that underpin our economy, or the measures that are taken to validate its health, that the phrase "pearls before swine" would only tell one tenth of the story.

Feel free to continue to wallow in the depths of your lack of knowledge on the topic, Ludwig, just do us all a favour and stop pretending that you know what is going on, fiscally speaking.

Tell you what, why don't you just go surfing. Do something that you are good at for a change.
Posted by Pericles, Monday, 9 June 2014 2:23:37 PM
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Pericles, why have you bothered responding?

When I prompted you on another thread for a response to my question here, it was clear that you weren’t going to respond, and that you had finished with this thread.

So I wrote a concluding post, which sums it up exactly as I see the situation. And you’ve just reinforced that by responding again, without addressing the question.

You poo-poo me for daring to ask such a question. Well sorry, but that is ridiculous. At this point of our long discussion, it is a perfectly relevant, sensible and proper thing to ask you.

It is very basic. If you can’t answer it… and you apparently can’t… then it really does drastically undermine your whole thesis!

Come on, this is so rudimentary – the ever-increasing GDP, and ever-increasing economy that it indicates is a very good thing, is NOT a very good thing at all in terms of the parameters that really matter – infrastructure, services and our overall standard of living and quality of life!

Pericles, if your whole argument is to have any merit, then you need to be very strong on these basic points. You need to be able to decisively show that infrastructure and services have improved well ahead of the ever-increasing demand exerted by high population growth.

But of course you can’t do this, because increasing GDP and economic growth, which have been accompanied by very high population growth / immigration have just simply NOT achieved what the GDP indicator would have us believe has been achieved or should be achieved.

PS. I did do something that I am very good at today. A lot of birding and a bit of botanical photography, Mt Surprise – Georgetown – Croydon. Out to the Gulf tomorrow. ( :>)
Posted by Ludwig, Monday, 9 June 2014 7:06:38 PM
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Then I suggest you stick with it, Ludwig.

>>I did do something that I am very good at today. A lot of birding and a bit of botanical photography, Mt Surprise – Georgetown – Croydon. Out to the Gulf tomorrow.<<

You are unable to see that GDP per capita is a perfectly acceptable manner in which to track our increasing prosperity. And it is this attitude that infects every question you ask.

For example:

>>You need to be able to decisively show that infrastructure and services have improved well ahead of the ever-increasing demand exerted by high population growth.<<

The answer to this is that the steady increase of GDP per capita shows conclusively that the impact of immigration on our economy is positive. If you reject this measurement - which is incidentally in use across the globe and is not confined to our specific situation - then no other explanation could possibly satisfy you. Which is why I said "you are unable to see how the very phrasing of this 'question' demonstrates how pointless it would be trying to even begin to structure a reply".

How can I say this? It is like discussing young-earth creationism with someone who rejects all the findings of archaeologists for the past two centuries. If you do not have a grounding in economics, and reject its measurement systems, you are bound to be frustrated by being unable to understand the arguments.

>>...increasing GDP and economic growth, which have been accompanied by very high population growth / immigration have just simply NOT achieved what the GDP indicator would have us believe has been achieved or should be achieved<<

That may be your view. But all the statistics that are in common use to measure our prosperity as a nation, say otherwise.
Posted by Pericles, Tuesday, 10 June 2014 8:48:18 AM
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<< You are unable to see that GDP per capita is a perfectly acceptable manner in which to track our increasing prosperity. >>

Pericles, that is a most extraordinary statement. You know full well that GDP and GDP-per-capita are nothing of the sort.

It is accepted across the world, but it is most definitely NOT a good way in which to track our increasing prosperity… especially in Australia’s case where massive population growth contributes enormously to economic growth!

<< The answer to this is that the steady increase of GDP per capita shows conclusively that the impact of immigration on our economy is positive >>

Bollocks!!

I bring you back to the FACT that infrastructure and services are TERRIBLY in need of massive improvement. Even the pro-growth GDP-worshipping Abbott government concurs with this!

The very fact that Abbott is our ‘Infrastructure PM’ says very loudly that something has gone terribly wrong over the last two or three decades that we have had rapidly increasing GDP and very high economic growth!

Why can’t you get this into your head Pericles?

It is so simple – the massive economic growth that we have had, now for many years, has simply NOT done what it is supposed to do… and has left us with a HUGE shortfall in terms of some of the most basic quality-of-life things!

I have to conclude that you can see this perfectly clearly but that you are just never going to admit it… and will do anything other than simply concede that the sort of economic growth and concomitant increasing GDP that we have had has NOT achieved improvements in infrastructure, services, standard of living or quality of life for Australian citizens.

continued
Posted by Ludwig, Tuesday, 10 June 2014 9:13:57 PM
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<< That may be your view. But all the statistics that are in common use to measure our prosperity as a nation, say otherwise. >>

No they don’t. But yes GDP certainly does!!

For goodness sake, can’t you look past the stats and bogus indicators and see the real world? Don’t you ever listen to the radio or watch TV or read newspapers or online news? All these media are full of stories about how our basic quality-of-life factors are not only not improving but are becoming steadily worse.

LOOK AT THE REAL WORLD, Pericles!!
Posted by Ludwig, Tuesday, 10 June 2014 9:14:58 PM
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I am starting to think that you are arguing simply to save face, Ludwig.

>>You know full well that GDP and GDP-per-capita are nothing of the sort. It is accepted across the world, but it is most definitely NOT a good way in which to track our increasing prosperity… especially in Australia’s case where massive population growth contributes enormously to economic growth!<<

So let us think about that for a moment.

Here's a snapshot on which you might care to ponder:

Our Prime Minister stands up in Parliament and says "Good news, Australia. Our GDP is decreasing! Aren't we great!"

Next to stand up is Smokin' Joe Hockey. "And the even better news, everybody, is that GDP per capita is also declining!".

Across the floor, the Opposition is devastated.

"We can't argue with that, Madam Speaker. Ludwig tells us that this is the very best news that Australia's economy has heard in decades. GDP and GDP per capita have been increasing for so long now, we have all forgotten how wonderful it is to have the economy back performing miracles again."

[Exeunt omnes]

Can you see any problem with this scenario?
Posted by Pericles, Tuesday, 10 June 2014 10:32:09 PM
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I wrote:

<< I have to conclude that you can see this perfectly clearly but that you are just never going to admit it… and will do anything other than simply concede that the sort of economic growth and concomitant increasing GDP that we have had has NOT achieved improvements in infrastructure, services, standard of living or quality of life for Australian citizens. >>

Thankyou Pericles for exquisitely demonstrating this!

So are you ever going to look at the real world?

Are you ever going to directly compare the enormous economic growth that we have had over the last couple of decades, and the enormous increase in GDP that accompanied it (well…. they are just the same thing, aren’t they?), with the enormous LACK of improvements in all the basics that economic growth is supposed to provide?

Are you going to at least comment in some way on the enormous disparity here?

Or are you just going to continue to completely avoid this, which really is the CRUX of this whole issue?
Posted by Ludwig, Wednesday, 11 June 2014 7:13:03 PM
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Here’s a scenario for you:

Opposition leader Ludwig puts it to Infrastructure PM Abbott that his worship of economic growth, with its primary indicator GDP, sits right at the heart of all our infrastructure problems, and that the long-term answer to this issue is to slash immigration and head towards a stable population….and that we desperately need a MUCH better economic indicator than GDP – one which is not going to wildly MISLEAD us regarding our economic prosperity.

Abbott and all his cronies gasp in utter disbelief… and once they again manage to speak, they ridicule Ludwig loud and long, and the Speaker of the House is powerless to stop them from just going at it for a very long time!

Then it is in the news the next day…..and lo and behold, there is MASSIVE support for Ludwig’s comments. They get rave reviews from the ordinary people out there and wonderful commendations from most commentators… and condemnation from big business leaders and commentators that are in their pockets.

Ludwig’s party wins in a landslide at the next election, because in addition to his comments, he had laid out a full plan to achieve a sustainable Australian society.

Ludwig is then the most popular PM that this country has ever seen, and wins five consecutive terms before his retirement.

And the country becomes a much much much better place than it would have been if the likes of Abbott had continued with their manic continuous growth doctrine, while taking their cues to do so from the utterly flawed GDP indicator.
Posted by Ludwig, Wednesday, 11 June 2014 7:16:36 PM
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Neat sidestep, Ludwig. But utterly unconvincing.

Just for the record, can we agree that a) GDP growth is good for Australia and b) GDP per capita growth is also good for the Australian people.

Or would you endorse the alternative, that c) GDP reduction is good for Australia and d) GDP per capita reduction is good for the Australian people.

Because the success or otherwise of "Ludwig's Party" depends on recognition that only one of these two scenarios can be true.

As a personal recommendation, stick to "birding", whatever that might entail. I suspect that is where your true talent lies.
Posted by Pericles, Wednesday, 11 June 2014 10:01:52 PM
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What you have effectively just said Pericles is:

“Yes Ludwig you are right. The enormous economic growth that we have seen in the last twenty or so years is at stark odds with the fact that we are now a very long way behind with basic infrastructure and services, and have barely achieved anything regarding unemployment, homelessness, the old-age pension or other safety nets, or with the overall cost of living and quality of life. Yes, there is obviously something very very wrong here. There is something fundamentally askew with the way GDP is defined if it can indicate that we have been doing very well economically for a long time, while in real terms the situation is obviously extremely different.”

The fact that you won’t even broach this particular point, when pressed time and time again to do so, says crystal clearly that you can’t address it. You can’t uphold the virtues of GDP when presented with the real-world comparisons.

Well Pericles, I guess that’s it. I guess we’ve reached the end of this discussion. I don’t see how it can progress if you are going to continue to totally sidestep this critically important issue.

As many have said to you on OLO over the years, there is something fundamentally wrong with your thinking regarding economic growth, population growth and sustainability.

Perhaps it is time for you to reflect on this. Think about how many posters have broadly agreed and how many have taken issue with you.

I do this all the time as a matter of course. I was pleasantly surprised when I first came to OLO as to how many people broadly agreed with me and continue to do so.
Posted by Ludwig, Thursday, 12 June 2014 2:43:39 AM
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Gee, Ludwig, you have just taken the concept of verballing to an entirely new level.

>>What you have effectively just said Pericles is:<< et seq.

Over a hundred words, all written by your good self, that you somehow contrive to attribute to me. An excellent achievement!

>>You can’t uphold the virtues of GDP when presented with the real-world comparisons.<<

You have that entirely the wrong way round. It is you who put forward the idea that our economy is crumbling around us, without providing the slightest scrap of evidence outside your own, birding- and surfing-influenced opinion.

For my part, I have pointed out that all the measurements that economists make have been moving upwards, indicating increasing prosperity for all.I have also made the point, repeatedly, that a reversal of these numbers would indicate bad times. On no occasion have you cared to show how these measurements indicate anything other than that which they show: higher GDP = good, lower GDP= bad.

>>Perhaps it is time for you to reflect on this. Think about how many posters have broadly agreed and how many have taken issue with you.<<

Perhaps their level of understanding of economics matches your own, Ludwig, but I neither know nor care. I do try to address the more articulate of them, out of courtesy, and to help increase their ability to follow economic argument. But the simple fact that they have different opinions is completely meaningless.

After all, it might just be the case that only those who lack understanding, choose to dispute the logic. The rest just nod their head, and move on.

Just possible, don't you think.
Posted by Pericles, Thursday, 12 June 2014 2:33:09 PM
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And still there is no comment about the discrepancy between the enormous increases in GDP and in the size of our economic turnover that we have seen for many years now, and the fact that we remain a very long way behind a desired level of infrastructure, services, and just about all other quality-of-life factors, in fact no better than had in ~1980.

Pericles, you contradict yourself enormously: You say I have verballed you… and then you prove that what I said that you had effectively said is indeed true!!

BTW, that’s not verballing. I said that you effectively said such and such… which is very different your past verballings of me where you have said in hard and fast terms that I have said something that I haven’t or that I hold a view that I don’t.

Come on, we’ve discussed ‘verballing’ on a previous thread. You really are in no position to accuse me of verballing you.

Now how’s this for a classic piece of Pericles verballing:

<< It is you who put forward the idea that our economy is crumbling around us… >>

Show me where I have ever said that our economy is crumbling around us. What I am saying is that there are no real signs of improvement in most of the things that really matter, ie: no real increase in prosperity for all the massive increases in economic turnover that we have had over the last ~30 years.

<< Perhaps their level of understanding of economics matches your own, Ludwig… >>

You are talking about Divergence and many other posters on OLO, who clearly have a much more holistic view of economics than you do.

I am very pleased to have the level of knowledge about economics that I have, compared to the level you have, thankyou very much.

BTW, you’ve got another fallacy about me embedded in your cranium, which has just come out of nowhere. I don’t surf. Never have. But as for birding. Yes indeed, I am right into that! Both the feathered variety and the bikini variety! {{ :>)
Posted by Ludwig, Thursday, 12 June 2014 7:23:54 PM
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But Ludwig, as convincing as your opinion may be to you, it is still only your opinion.

>>And still there is no comment about the discrepancy between the enormous increases in GDP and in the size of our economic turnover that we have seen for many years now, and the fact that we remain a very long way behind a desired level of infrastructure, services, and just about all other quality-of-life factors, in fact no better than had in ~1980.<<

You provide no tangible evidence of this view (whereas I have GDP to back up my argument that we are increasingly prosperous), instead you just complain that everything somehow has fallen apart.

And this is pure comedy:

>>Show me where I have ever said that our economy is crumbling around us.<<

I've only picked two samples, and only from this thread. But there are many others...

>>...we’ve got major issues with the Federal budget, with infrastructure, with services like health and education, major environmental issues<<

>>...we have a Federal budget ‘crisis’, or a humungous need for infrastructure expenditure or declining benefits for pensioners and other welfare recipients or the prospect of increasing prices for just about everything or a forthcoming increase in GST<<

...and so on ad naus.

>>I am very pleased to have the level of knowledge about economics that I have<<

And I'm glad I'm not a Gamma.
Posted by Pericles, Friday, 13 June 2014 7:49:48 AM
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Pericles, you seem to have a reasonable knowledge of conventional economics, which includes a few ‘givens’, such as: all growth is good, growth automatically equals prosperity, and the definition of GDP is just fine thankyou very much.

The great problem is that when you see mismatches between this conventional thinking (I won’t call it wisdom) and what is happening in the real world, you fall back on what you know as a student of economics, rather than looking more closely at the real-world happenings. You won’t even consider pondering that something could be wrong with the conventional economic methodology, let alone seeking to find out what it is.

Rather than going anywhere near exploring what the problems might be with conventional economic dogma, you seem to just dig your heels in and say something like; “she’s all good mate, the real world’s doin just fine, and its becoming progressively more prosperous. GDP tells us so.”

Really, your whole argument on this thread is so fundamentally flawed right at the most fundamental level!!

If you are not willing to set aside your completely unquestioning worship of GDP and economic growth and have a good close look at them, then you are not going to find the path to the truth in this issue!!

Bottom line – what GDP has been telling us for many years is at STARK odds with what is happening in our society in terms of what continuous high economic growth is supposed to provide.

You can’t deny that. So you need to have a good hard look at why it is so. And the answer lies with all the things that I have said about the vagaries of GDP and continuous economic growth that is largely predicated on high population growth.

continued
Posted by Ludwig, Friday, 13 June 2014 7:57:16 PM
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I have never said that our economy is crumbling around us.

Those two quotes do not support your assertion that I have said this. They support my assertion that the rapid economic growth that we have had for many years has NOT led to improvements in infrastructure and services. And that we are now a long way behind with these things, probably further than we were 30 years ago. Our economy is not crumbling around us…..yet.

See Pericles, you have this terrible habit of polarising things; you project some things that I say to the end of the spectrum, or at least to a much worse position than what I have stated. You’ve always done this.

Please endeavour to represent me properly when you say that I have said something, and if you are not sure then don’t do it, or seek clarification first.
Posted by Ludwig, Friday, 13 June 2014 7:58:29 PM
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In the GDP debate, I would also like to pose an observation.

Wages and salaries have kept going up, as generally has the face value/cost of equities and their resultant dividends (excepting in recession/ depression/GFC).
(And even in our GFC-recession wages did not go down; people were laid-off instead.)

Along with increasing wages, prices have also generally increased.
But has any resultant increase in GDP actually represented any real 'increase' in average productivity/output?

Along with increasing wages and prices, welfare and social support costs have also kept pace, as have other government expenditures - for education, health, roads, infrastructure, policing, soldiering, armaments, patrol vessels and government jets.

GDP may supposedly be calculated on a total revenue or total expenditure basis - but is viewed as reflecting an actual increase or decrease in overall productivity or production output.
But, is this real, or a reflection of inflation/deflation?

Increasing population may contribute to an increase in notional (face-value) GDP. But, as the impact of any change in GDP value is spread over the larger population, the per-capita GDP value may even fall - particularly if many of the population additions occupy low paid jobs or are on welfare, and therefore contributing less than 'average' productivity.

Changes in foreign exchange rates may also impact on measured GDP, but will anything really have changed in consequence?

It seems that, in the absence of recession/depression, GDP will just keep going up, due purely to market forces.
But, the 'real' impact of any increase in GDP may only actually be measured by a genuine increase in cost-adjusted average productivity.
Therefore one is drawn to a view that an increase in GDP, of itself, is not necessarily an accurate representation of an inflation-adjusted increase in average annual output.

Naturally, each year's net output is added to pre-existing savings/wealth and infrastructure, so, in the absence of force majeure (or plague, pestilence or national disaster), conditions will generally be seen to improve - particularly if money/means is/are used wisely.
However, the rate of GDP 'increase' will appear not necessarily to correlate precisely with any observed 'rate' of general 'improvement'.
Posted by Saltpetre, Saturday, 14 June 2014 12:58:20 AM
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Same old, same old, Ludwig.

>>Bottom line – what GDP has been telling us for many years is at STARK odds with what is happening in our society in terms of what continuous high economic growth is supposed to provide. You can’t deny that.<<

But I can, and do, deny that. All my observations - admittedly being predominantly Sydney/Melbourne centric - support the view that Australia is becoming more prosperous as a country, and its citizens are individually better off than they were 10, 20, 30, 40 50 years ago and beyond.

Right now, from my office window, I can see the massive investment taking place in Barangaroo, turning what was previously dockside territory into a semi-public harbourside space. We already have invested in a desalination plant, ready for the next drought, and a new airport is finally on the drawing board. Not to mention a heap of improvements planned for public transport around Australia's premier city.

The fact that these observations are themselves underscored by the GDP numbers is relevant, since they would not be possible otherwise.

There's a tiny smidgeon of local illustration. Where's your evidence that this would have happened without the increased prosperity that has been measured by GDP?

>>Our economy is not crumbling around us…..yet.<<

I'm really glad that you have finally come around to that position. And my guess is that it won't crumble until the GDP numbers start to trend downwards. They will be the canary in the coal mine, if you don't object to a birding analogy.
Posted by Pericles, Saturday, 14 June 2014 2:50:37 PM
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<< …the rate of GDP 'increase' will appear not necessarily to correlate precisely with any observed 'rate' of general 'improvement'. >>

That’s for sure Salty, especially while we have very high immigration basically driving economic growth and thus the increase in GDP.

And even if there is an overall general improvement, most ordinary folk may see very little of it and may indeed see things worsening overall. Improvements are very unevenly distributed, and tend to go more to the ‘haves’ than the ‘have-nots’.

Then, when we factor in all the things that contribute to GDP that just damn well shouldn’t, we’ve got a hooter of a shockingly misleading economic indicator!
Posted by Ludwig, Saturday, 14 June 2014 9:00:03 PM
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<< Same old, same old, Ludwig. >>

Yep.

Until you address the very basic discrepancy between constantly growing GDP and seriously lacking real improvements, all I can do is to basically keep on emphasising the fundamental flaw in your argument.

I wrote:

>> Bottom line – what GDP has been telling us for many years is at STARK odds with what is happening in our society in terms of what continuous high economic growth is supposed to provide. You can’t deny that. <<

You replied:

<< But I can, and do, deny that. >>

Well that is just extraordinary and amazing, Pericles!

Again, how do you explain the general opinion that we are very badly in need of a major catch-up with all manner of infrastructure and services, after having had very ‘good’ economic growth for many years?

You can’t explain that.

You can’t can you. I challenge you to explain this.

Crikey, even from a Sydney/Melbourne-centric point of view, you still couldn’t deny that this is the case.

Bear a thought for all those people living in Sydney’s western suburbs.

<< Not to mention a heap of improvements planned for public transport around Australia's premier city. >>

Well there you go! Why should a heap of improvements be needed at this point in time, after 20 or 30 years of high economic growth?? Especially given that transport infrastructure has always been near the top of the agenda!

See, you’ve just shot your argument in the foot…. again!

continued
Posted by Ludwig, Saturday, 14 June 2014 9:44:05 PM
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<< Where's your evidence that this would have happened without the increased prosperity that has been measured by GDP? >>

Wrong question. It basically wouldn’t have needed to happen if we hadn’t been burdened with very high immigration! The increase in economic turnover that has been accompanied by an almost equal increase in the demand for everything that this economic growth should be providing, has simply NOT led to real increases in prosperity.

As usual Pericles, you are only seeing one side of the picture. Think about the massive increase in the DEMAND for services, infrastructure and everything else that has accompanied the increase in GDP over the last 2 or 3 decades.

I wrote:

>> Our economy is not crumbling around us…..yet. <<

You replied:

<< I'm really glad that you have finally come around to that position. >>

Hahaha. That’s always been my position, and you know it. You should have just admitted that. But of course, that was never going to happen. ( :> /
Posted by Ludwig, Saturday, 14 June 2014 9:45:48 PM
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The underlying problem of your assessment, Ludwig, is that you cannot see the bigger picture. Everything comes down to whether you personally feel better off or not, and not whether actual measurements tell a different story.

You haven't ever run a business, but let's see if you can follow the logic here..

Let's consider the "GDP" of Joe.

Joe finds a way to make widgets in his garage. He makes a profit, enough to keep himself and his family, with a bit left over. His "GDP" is measured in tens of thousands of dollars.

He borrows some money to build a widget factory that employs a handful of people. He makes enough to keep himself and his family, to pay the interest on the debt, with a bit left over. His "GDP" is now measured in millions of dollars.

He goes back to the bank, and gets enough credit to open new production lines in his factory, and is now able to employ thousands of people. He makes enough to keep himself and his family, to pay the interest on the debt, with a bit left over. His "GDP" is now measured in hundreds of millions of dollars.

Every one of those employees buys groceries at the local market, provides employment for doctors, dentists, car salesmen, real estate agents etc. Their taxes pay for roads, transport, schools and teachers, plus the odd foray of a pollie to the local brothel.

That's called an economy. Thousands of elements combining to form financial relationships between people, business and government.

But under Ludwignomics, Joe would not have moved from his garage, as you neatly summarize it here:

>>The increase in economic turnover that has been accompanied by an almost equal increase in the demand for everything that this economic growth should be providing, has simply NOT led to real increases in prosperity.<<

But without the increase in the "GDP" of Joe, there would be less work for a whole lot of people, not to mention a shortfall in taxes to employ loads of public servants.

Is it starting to make more sense now?
Posted by Pericles, Sunday, 15 June 2014 12:58:06 PM
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First observation:

You ignored my challenge to explain why we are very badly in need of a major catch-up with all manner of infrastructure and services, after having had very ‘good’ economic growth for many years.

Second observation:

You have ignored my point that you had shot your argument in the foot.

Of course these two things are very closely related. All that “heap of improvements planned for public transport around Australia's premier city” slots straight in to my side of this debate.

Actually, you didn’t shoot your argument in the foot; you bazookered right in the midriff and sent guts flying in all directions!

Thanks for the basic lesson in economics. So then, given that you do understand economics to this extent, why is it so hard for you to understand our national economics?

Why do you have such an enormous problem with the FACT that we have had high economic growth and GDP and even continuously increasing per-capita GDP for a long time, and the FACT that we are not seeing real improvements in most or all of the basic components of the quality-of-life (QOL) framework of our society, and are just not keeping it all up to the growing population, let alone improving it?

If you can see how it has all worked for Joe, then you can surely see how it all works at the national level.

continued
Posted by Ludwig, Sunday, 15 June 2014 8:51:36 PM
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You, as a student of economics, would know all about supply and demand. And yet you seem to just leave out the fact that the demand for all the basic QOL factors has increased rapidly all the time that economic growth and GDP have increased.

Slowly but steadily increasing per-capita GDP would suggest that the economy has increased at a greater rate than the QOL demands for expenditure from that economic growth…. except for a couple of things…

1. GDP includes a whole lot of stuff that it just shouldn’t include and is therefore a considerably inflated indicator of economic wellbeing and prosperity, and therefore per-capita GDP is an inflated measurement as well, and

2. economic growth is not distributed evenly by any stretch of the imagination. So the ordinary people would see considerably less return from an increasing per-capita GDP than it would suggest that they would receive, even if it was an accurate measurement of average per-person economic growth.

You opened your post with:

<< The underlying problem of your assessment, Ludwig, is that you cannot see the bigger picture. Everything comes down to whether you personally feel better off or not, and not whether actual measurements tell a different story. >>

Well, I think it is clear now that it is entirely the other way around. You are looking at things on the micro or medio scale, while I am always considering macroeconomics, as well as all the big-picture factors of long-term economic prosperity and the achievement of a sustainable society with a sustainable (not a constantly rapidly growing) economic philosophy at its core. You don’t seem to ever even bear a thought for these things!
Posted by Ludwig, Sunday, 15 June 2014 8:54:50 PM
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It's actually quite simple, Ludwig.

>>First observation: You ignored my challenge to explain why we are very badly in need of a major catch-up with all manner of infrastructure and services, after having had very ‘good’ economic growth for many years.<<

I ignored it because it is an expression of your opinion, not of reality. I can't tell you what opinion to hold.

>>You have ignored my point that you had shot your argument in the foot.<<

Well, yes. Because it is once again only your opinion that my argument falls.

You fail to point out anything that is inaccurate, but instead you take the simple fact that we are forever improving our infrastructure, as evidence that infrastructure is falling behind demand. Despite the fact that in your scenario, there would be even less money available for improvements, not more, as you seem to imply.

>>Why do you have such an enormous problem with the FACT that we have had high economic growth and GDP and even continuously increasing per-capita GDP for a long time, and the FACT that we are not seeing real improvements in most or all of the basic components of the quality-of-life (QOL) framework of our society, and are just not keeping it all up to the growing population, let alone improving it?<<

Because these are not facts, Ludwig (or even FACTS), but yet another manifestation of your paranoia about economic growth. Clearly, you did not understand one word of the "GDP of Joe" example.

So in desperation, you fall back onto your original fallacy:

>>GDP includes a whole lot of stuff that it just shouldn’t include<<

GDP has been a very reliable historical (note: not predictive) indicator of our prosperity, and that of the world at large. The proof of this is that when it declines, people are worse off, businesses close, unemployment rises etc. Conversely, when it lifts, businesses open, unemployment falls, people are better off.

But if you want to create a new index, by all means do so. Define some parameters that you believe are more meaningful, and let us discuss them.
Posted by Pericles, Monday, 16 June 2014 10:51:35 AM
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Pericles you’ve been pushed so tightly into a corner that it is amazing that you can find any wriggle room at all. You really are sounding as though you are on your last gasp with this debate.

I wrote:

>>First observation: You ignored my challenge to explain why we are very badly in need of a major catch-up with all manner of infrastructure and services, after having had very ‘good’ economic growth for many years.<<

You replied:

<< …it is an expression of your opinion, not of reality >>

Ah but hold on…. what was that classic faux pas statement you made three posts ago? …

<< Not to mention a heap of improvements planned for public transport around Australia's premier city >>

'Improvements' that would not be needed if our very rapid rate of economic growth over the last two or three decades had achieved what it was supposed to achieve.

You also said in that post…

<< We already have invested in a desalination plant, ready for the next drought, and a new airport is finally on the drawing board. >>

Hmmm… two more huge projects that Sydney badly needs in order to CATCH UP with the demands of its rapidly increasing population… and which would NOT have been needed if this population hadn’t accompanied the rapid economic growth of the last 20 or 30 years!

So it is just my opinion that we are very badly in need of a major catch-up with all manner of infrastructure and services is it?

Hmmm… Perhaps you should rethink that one.

Actually, you need to rethink your whole argument, right from the most basic level.
Posted by Ludwig, Monday, 16 June 2014 9:11:59 PM
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Blimey Ludwig, you do have a knack of picking the example that proves exactly the opposite of what you intended. This is a cracker, even for you.

>>Hmmm… two more huge projects [desalination plant, airport] that Sydney badly needs in order to CATCH UP with the demands of its rapidly increasing population… and which would NOT have been needed if this population hadn’t accompanied the rapid economic growth of the last 20 or 30 years!<<

The desalination plant, as you very well know, has not been activated yet. Why? Because it was built well before it is actually going to be needed.

The airport, as you very well know, has not been built yet. Why? Because the existing facilities are still able to cope with the traffic, and because there are other actions (e.g. reducing curfew times, which are anomalous) that can be brought to bear if needed, well before we reach capacity.

Once again, your opinion is at total odds with reality.

I notice that you still haven't formulated a response to this little clincher:

"GDP has been a very reliable historical (note: not predictive) indicator of our prosperity, and that of the world at large. The proof of this is that when it declines, people are worse off, businesses close, unemployment rises etc. Conversely, when it lifts, businesses open, unemployment falls, people are better off."

Any thoughts?
Posted by Pericles, Monday, 16 June 2014 11:48:47 PM
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<< The desalination plant, as you very well know, has not been activated yet. >>

and…

<< The airport, as you very well know, has not been built yet. >>

Hahahaaa… You don’t say Pericles.

So, in what way do these interesting little details make these huge projects any less a part of the enormous CATCH UP of infrastructure that is needed due to very rapid population growth in Sydney?

They are both things that we would NOT have needed at all if we hadn’t been chasing eternal infernal rapid growth that is driven primarily by eternal high immigration!

So the authorities are planning a little bit in advance… maybe. Or maybe Sydney could have done with a second airport some years back…. And maybe it is lucky not to have experienced real drought conditions and found itself in need of a huge desal plant by now.

So maybe these things aren’t being planned in advance at all. Maybe it is more of case of them actually being needed ages ago, and of the authorities doing what they do so well - playing catch-up!

<< Once again, your opinion is at total odds with reality. >>

You wish!!

<< Any thoughts >>

Yes I was actually going to comment on that before writing this post. But hey, you again presented such an easily countered piece of Periclesiastic pollywaffle that I couldn’t resist addressing it first.

I will reply to your GDP comments later.

But for now…. the beach beckons! ( :>)
Posted by Ludwig, Tuesday, 17 June 2014 11:11:29 AM
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Pfff, it is not the greatest day for the beach. Overcast and windy ( :>(

A bit of revision of GDP: It includes economic activity generated by all sorts of activity, which it shouldn’t include because it simply is not stuff that is taking or economy forward. Things like bushfires, droughts, car accidents, smoking-related illness, and population growth.

This last factor is the biggest by far in Australia. It basically means that our enormous economic growth has been pretty well neutral in real per-capita terms over the last, say ~30 years. And the little bit of an increase in per-capita GDP that we have seen could be accounted for by all the economic activity that gets added to GDP which just damn well shouldn’t be added to it.

In other words: our rapidly increasing GDP, and our slightly increasing per-capita GDP are highly inflated indicators of economic prosperity. That makes them dangerously FALSE indicators!

So, within a paradigm of rapid population growth, we need rapid GDP growth JUST TO STAND STILL. Even with a high rate of GDP growth, we could still be going backwards in real terms.

So if we were to actually have negative GDP growth, we would well and truly be going backwards… and of course such a situation would be accompanied by businesses closing, rising unemployment and all manner of other nasties.

Hope this helps, Pericles.
Posted by Ludwig, Tuesday, 17 June 2014 12:48:44 PM
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Round and round we go again, Ludwig.

>>A bit of revision of GDP: It includes economic activity generated by all sorts of activity, which it shouldn’t include because it simply is not stuff that is taking or economy forward. Things like bushfires, droughts, car accidents, smoking-related illness, and population growth.<<

As I have pointed out on many occasions, it is not the role of a GDP calculation to exclude these elements.

>>In other words: our rapidly increasing GDP, and our slightly increasing per-capita GDP are highly inflated indicators of economic prosperity. That makes them dangerously FALSE indicators!<<

As I have also pointed out on many occasions, this argument falls totally flat when you look at the reality, which is, quite simply, increased GDP = good, decreased GDP = bad. You have had numerous opportunities to refute this glaringly obvious fact, but have not done so.

So, once again, if you really believe that these numbers indicate the opposite, please show one single example where a lower GDP has been of benefit.

>>So, within a paradigm of rapid population growth, we need rapid GDP growth JUST TO STAND STILL.<<

The part that you insist on ignoring is that the increase in GDP is actually created by the population growth. It isn't a matter of "we need GDP growth to stand still", it is that without population growth, we would not just stand still, but go backwards.

And it appears that you have finally come to accept what this entails:

>>...if we were to actually have negative GDP growth, we would well and truly be going backwards… and of course such a situation would be accompanied by businesses closing, rising unemployment and all manner of other nasties.<<

I fail to see how someone intelligent enough to recognize that it is not a good idea to go to the beach on a day that is overcast and windy, cannot grasp these equally simple facts.
Posted by Pericles, Tuesday, 17 June 2014 1:16:58 PM
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This, Pericles, I absolutely can not agree with:

>>without population growth, we would not just stand still, but go backwards.<<

We have discussed this before, and I thought we had agreed, that, if the whole world were to adopt such a 'conviction', and pursue it with all haste, then the world would quickly be headed for an overpopulation disaster - famine, wars, mass movement of populations seeking that last blade of grass. Wildlife would be virtually extinguished, and forests razed to plant crops (and ultimately end up with exponentially-diminishing productivity, and thence to dust-bowls or deserts). The oceans would be polluted to destruction and fish stocks virtually elliminated. No whales, no porpoises, no seals, no sea-birds - no nothing (at least of any use).

Hence, if there is to be any quality of life for future generations, there must be a line drawn, a mandatory and uncompromising maximum world population limit. Full Stop. (I personally think we've already exceeded the QOL World Population Sustainability Limit QOLWPSL.)

Furthermore, I can see no reason why at least a modest growth in GDP could not be maintained with a stable, and even a falling population. It just means working smarter, producing more of what is needed (and of what is hopefully actually useful) with less. If smaller populations consume more useful products, build better and more environmentally friendly homes, and are served with better roads, transport, education, healthcare, aged-care, recreation facilities, beautifully maintained national parks and reserves, wildlife and botanical nature walks, better museums, theatre, arts, universal solar power, child-care, NBN Extraordinaire, free phones, and universal productive meaningful occupation ..., why, it would be bliss - and all totally sustainable and superbly environmentally-friendly. Utopia.

As to GDP: Perhaps we need a breakdown of the relevant revenue inputs to GDP, in broad categories, as percentile components;
And, the same sort of breakdown on the expenditure side, showing what percentage of GDP is actually spent on what - roads, hospitals, schools, universities, bureaucracy/government, armed services, policing, welfare services, emergency services, foreign aid, interest on debt ...

We could be thus 'informed'. Maybe such already exists?
Posted by Saltpetre, Tuesday, 17 June 2014 8:44:17 PM
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<< Round and round we go again, Ludwig. >>

Yeayus. Not getting us very far, is it. But at least it’s fun!! ( :>)

Alright… I admit it: I do get my jollies in weird ways!

<< …it is not the role of a GDP calculation to exclude these elements. >>

CORRECT! It is not the role of GDP to exclude all those things that don’t make a positive contribution to economic prosperity.

This can only mean that it is not the role of GDP to accurately forecast real meaningful economic growth. But of course it is taken as the primary indicator of exactly that!

I note that you do at least accept that economic activity from all those adverse things does indeed to get added to….oow… I mean; included within, GDP.

Pericles, how do you reconcile your virtual worship of GDP as a really good indicator of economic growth or prosperity and your acceptance that it does indeed include economic activity generated by a whole host of economically neutral or negative things?

<< …quite simply, increased GDP = good, decreased GDP = bad. >>

Hells bells, that is extraordinary!

Increasing GDP that is accompanied by high population growth may or may not have a net positive effect. If the demand for resources, goods, infrastructure and services is rapidly increasing at the same time as economic growth is rapidly increasing, then there is a problem. Indeed under that scenario, we could have high GDP growth and be going backwards in real terms at the same time... as I said in my last post!

And I would put it to you that this is exactly what is happening.

Crikey Moses – it is nowhere near as simple as ‘increased GDP = good’. And as for decreased GDP; it would be very bad indeed within a paradigm of rapid population growth.

continued
Posted by Ludwig, Tuesday, 17 June 2014 8:44:22 PM
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<< The part that you insist on ignoring is that the increase in GDP is actually created by the population growth. >>

Oh dear, now you are starting sound rather schizophrenic!

One of the main points that I have made over and over is that the rapid economic growth that we have had for the last ~30 years has been very largely predicated on rapid population growth.

OF COURSE GDP is created very largely by population growth!! Thankyou for admitting this.

<< It isn't a matter of "we need GDP growth to stand still", it is that without population growth, we would not just stand still, but go backwards. >>

What??

Rubbish!! How do you figure us going backwards if we didn’t have population growth?

Pericles, you seem to be stealing some of my assertions and trying to play them back against me. That is a very weird strategy. It indicates to me that maybe just maybe, in your own inimitable manner, you are starting to admit that what I have been saying all along has indeed got a lot of merit!

<< I fail to see how someone intelligent enough to recognize that it is not a good idea to go to the beach on a day that is overcast and windy, cannot grasp these equally simple facts. >>

Well… I’ma parrently notarf as smartas you thingk I am. I DIDgo dountha beech today, onan ovrcarst and windey day! (:>|
Posted by Ludwig, Tuesday, 17 June 2014 8:47:25 PM
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<< I can see no reason why at least a modest growth in GDP could not be maintained with a stable, and even a falling population. It just means working smarter, producing more of what is needed (and of what is hopefully actually useful) with less. >>

Absolutely, Saltpetre.

And this is EXACTLY what we should be striving to do...

Stabilise our population and thus stop the increase in the demand for resources, goods, services and infrastructure, and start getting smart about our economic growth. Instead of expending so much effort on the duplication of services and infrastructure, and having to deal with the ever-greater pressure being exerted on existing S&I, we could actually start to improve them!

This is the essence of a sustainable society.

But hey, the increase in GDP would be far less than it is now. However, per-capita GDP would be similar to what it now is.

So I wonder how Pericles would view this – as a very bad thing because of much lower GDP growth, or not a bad thing at all if per-capita GDP growth was about the same.
Posted by Ludwig, Tuesday, 17 June 2014 9:30:01 PM
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Well, duh.

<<I can see no reason why at least a modest growth in GDP could not be maintained with a stable, and even a falling population. It just means working smarter, producing more of what is needed (and of what is hopefully actually useful) with less.>>

That's called productivity, Saltpetre, and is a concept that has absolutely nothing to do with population growth or decline. If people are more productive, and there are fewer droughts, bushfires, cancer patients, floods etc., then we will all be better off.

The measure of this "better-off-ness" would, I suspect, be measured via GDP per capita. A figure that of course includes all the economic activity devoted to droughts, bushfires, cancer patients, floods etc. - if it didn't, then you would not be able to track the improvements in the economy that would be caused by a reduction in their influence.

>>This can only mean that it is not the role of GDP to accurately forecast real meaningful economic growth. But of course it is taken as the primary indicator of exactly that!<<

Absolutely not, Ludwig, and you should really have understood this simple fact by now. GDP records history. It is a number that is calculated after all the factors are known, and added up. It predicts nothing. It measures the past. How many times do I have to repeat this very straightforward reality. It is not the role of GDP to accurately forecast any form of economic growth, nor does any sane person use it to predict the future.

If you cannot grasp even this fundamental, we really are wasting our time in this discussion.

Even though it is, as you say, fun.
Posted by Pericles, Wednesday, 18 June 2014 9:59:52 AM
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<< That's called productivity, Saltpetre, and is a concept that has absolutely nothing to do with population growth or decline. >>

What?!? Productivity has nothing to do with population growth?!?

But Pericles, you said:

<< …the increase in GDP is actually created by the population growth. >>

So are you now saying GDP and productivity are completely different things??

<< The measure of this "better-off-ness" would, I suspect, be measured via GDP per capita >>

You suspect? You mean you are not sure?

I do find that very strange. I would have thought that you’d categorically say that per-capita GDP is a very good indicator of betteroffedness!

Crikey, it is looking more and more as though your love of GDP and per-capita GDP is quite divorced from any of the things that economic growth is supposed to be giving us.

You are saying, are you not, that productivity is something quite different to economic growth, and that betteroffedness (improvements in quality of life) are only an incidental spinoff from GDP growth, and that per-capita GDP is just roughly correlated to this, and as such is only a crude indicator of it.

That’s the message I am getting at the moment. Could you please clarify.

continued
Posted by Ludwig, Thursday, 19 June 2014 7:48:45 AM
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<< A figure that of course includes all the economic activity devoted to droughts, bushfires, cancer patients, floods etc… >>

YES!

<< …- if it didn't, then you would not be able to track the improvements in the economy that would be caused by a reduction in their influence. >>

Eh??

How does one GDP number, which just lumps all economic growth together regardless of how it is generated, track any improvements or changes in the influence of negative factors like droughts or floods?

<< GDP records history. It is a number that is calculated after all the factors are known, and added up. >>

Yes.

<< It predicts nothing >>

Ah, but it does! It predicts that all else being equal, we should be able to get the same sort of economic growth in the following year and into the future, and that if immigration increases by a given amount, then GDP should increase by a similar amount in the next year.

Sure, it is designed to show how much growth we had in the 12 months leading up to the GDP number. But it is surely as useful as a forecast tool as it is as a meaningful indicator of economic growth in the past year. In fact, given how terrible it is at indicating the REAL economic growth just ‘achieved’, it would surely have to be a much more useful as an indicator of what to expect in the following year and beyond.

<< It is not the role of GDP to accurately forecast any form of economic growth… >>

Or inaccurately for that matter! It is its role to wildly mislead us regarding economic prosperity!

OK, that is not its role. But it certainly is its REALITY!!

continued
Posted by Ludwig, Thursday, 19 June 2014 7:49:49 AM
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<< …nor does any sane person use it to predict the future. >>

Absolutely! However, there are MANY insane people using GDP to predict the future. They look at how much economic growth we now have and at all the components of it and plan to uphold or increase it, for ever and a day. Sorry, but GDP IS indeed being used as a predictive tool, big time, by a whole lot of completely insane continuous-growth-worshipping completely antisustainabilityist and-very-highly-vested-interest-driven people!!

No sane person should use GDP to indicate anything!! !! !!
Posted by Ludwig, Thursday, 19 June 2014 7:50:32 AM
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You are clutching at straws, Ludwig.

>>So are you now saying GDP and productivity are completely different things??<<

Of course they are, I have never claimed otherwise. How could it be any other way?

GDP is a measure of the cumulative volume of transactions in an economy, while productivity refers to the efficiency of the inputs. So you can increase GDP by becoming more efficient (productive) in your use of resources, or you can decrease it by being less efficient. Surely you can understand that?

>>I would have thought that you’d categorically say that per-capita GDP is a very good indicator of betteroffedness!<<

It's pretty good, yes. Not perfect, of course, but the best measure we currently have. What it is not, may I say again, is a predictor of the future. You don't plan with it, you measure the results of your plan with it.

>>You are saying, are you not, that productivity is something quite different to economic growth<<

Productivity improvements will contribute to economic growth. But they are not the same as economic growth. It's like driving in the most efficient gear will beneficially affect your fuel consumption. But the gearbox itself does not consume petrol.

>>betteroffedness (improvements in quality of life) are only an incidental spinoff from GDP growth<<

You will probably have noticed that I don't mention "quality of life", which is a totally subjective issue. You would hate the quality of life I lead in the city, almost as much as I would hate living in outer woop-woop. GDP does not measure your personal happiness.

>>How does one GDP number, which just lumps all economic growth together regardless of how it is generated, track any improvements or changes in the influence of negative factors like droughts or floods?<<

The impact of prolonged drought, or massive floods, will be reflected in lower-than-otherwise GDP.

Hope we've cleared that up. Again.

>>However, there are MANY insane people using GDP to predict the future<<

Rubbish. GDP is a historic measurement. Show me one example where GDP has been used as a predictive tool.

You can't. Because it isn't.
Posted by Pericles, Thursday, 19 June 2014 9:33:35 AM
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<< You are clutching at straws, Ludwig. >>

No Pericles. I am trying to understand your perspective. Even after all our enormous amount of OLO correspondence going back over a period of quite a few years, I need to do this, because you keep coming up the stuff that seems to be inconsistent with what you have previously said, if not directly contradictory.

Ok, so you think that GDP and productivity are very different things.

<< So you can increase GDP by becoming more efficient (productive) in your use of resources… >>

YES. And you can get a better relationship between GDP and productivity by moving the drivers of economic growth away from population growth and onto value-adding enterprises… and by excluding economic activity generated by economically negative things.

<< It's pretty good, yes. Not perfect, of course, but the best measure we currently have. >>

Wow. I would consider per-capita GDP to be a terrible indicator of betteroffedness. Surely we’ve got a bunch of much better measures: the unemployment rate, and all sorts of stats on pensions, cost of living, home affordability, etc, etc.

continued
Posted by Ludwig, Thursday, 19 June 2014 7:58:36 PM
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<< Productivity improvements will contribute to economic growth. But they are not the same as economic growth. It's like driving in the most efficient gear will beneficially affect your fuel consumption >>

OK. So how does this sit with the fact that our economic growth is very largely driven by population growth? Those insane people in the major decision-making positions are chasing higher economic growth, pretty much end of story. There just isn’t any real push to improve efficiency or increase productivity per unit of primary resource or per resident of this country.

So surely we should be moving right away from economic growth driven by population growth and towards a much less insane economic base – one of manufacturing, technological and other value-adding enterprise. And one which does not have a constantly increasing rate of consumption of resources or increasing demand for evermore basic infrastructure.

Surely you concur with this. And yet you support the continuation of huge immigration, not least because it gives us ‘healthy’ annual GDP growth, right?

<< I don't mention "quality of life", which is a totally subjective issue. >>

And ‘better-off-ness’ isn’t??

Actually, QOL is certainly not totally subjective. Fuzzy around the edges, yes. But it is a very important basic principle. It is more important than standard of living or prosperity, both of which are just as fuzzy around the edges in their definitions.

<< GDP does not measure your personal happiness. >>

Indeed it doesn’t. And it is only distantly related to productivity... and to prosperity. Add these points to those that I have mentioned many times: that it includes economic activity generated by all manner of economically negative things, and while it is based largely on population growth it doesn’t take into account the enormous rate of increase in the demand for everything that population growth causes...

...and we've got an indicator of what exactly??

What on Earth is GDP really about?? What is it actually telling us?

continued
Posted by Ludwig, Thursday, 19 June 2014 8:02:48 PM
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<< The impact of prolonged drought, or massive floods, will be reflected in lower-than-otherwise GDP. >>

Yes. That’s about all you can say about it in reference to the influence of economically negative factors. Which is a very long way from it being useful for tracking any improvements in these negative factors.

<< Show me one example where GDP has been used as a predictive tool. >>

Can you honestly say that there is no predictive aspect to GDP? Surely not. The size of the GDP increase in a given year could be used to give us some indication of what to expect in the following year, or of how much smaller or larger it might be depending on various changes.

It is not supposed to be a tool for predicting the future, but just as with all stats we can look at the numbers and at the things that contribute to them and predict what we can expect in the following year, or few years, and adjust our expectations relative to known or mooted changes in certain variables.

I hope you can see what I mean.
Posted by Ludwig, Thursday, 19 June 2014 8:04:33 PM
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Hardly, Ludwig.

>>I hope you can see what I mean.<<

You keep changing the playing field.

We were talking about GDP, which is a simple, factual number. Now you want to talk about productivity.

>>And you can get a better relationship between GDP and productivity by moving the drivers of economic growth away from population growth and onto value-adding enterprises<<

These are not either/or propositions. You can improve productivity without growing the population, if you a) provide industry with the right incentives to increase output without increasing costs (although the unions might have a problem with that). Or b) you can improve productivity by allowing into the country those people who are going to be more productive that the existing average. Actually, that was behind much of the "favoured category" style of immigration in the seventies and eighties.

Either process will work. Both processes together will work better.

>>So how does this sit with the fact that our economic growth is very largely driven by population growth?<<

Because our immigration policies have historically favoured b), and because over the last few decades it has proved simply too difficult to get the average Aussie worker to put more in, without wanting more out.

And this is simply silly:

>>The size of the GDP increase in a given year could be used to give us some indication of what to expect in the following year<<

Try explaining that to the European countries whose GDP was hit for six by the GFC. Greece. Spain. Ireland. Portugal. UK. There was absolutely nothing predictive in the GDP figures from one year to the next. Only when their economies had started a recovery, did the lagging indicator, GDP, reflect the change.

Leading indicators such as consumer confidence indices, building starts etc. contain a modicum of predictive power. Just not GDP.
Posted by Pericles, Friday, 20 June 2014 12:08:41 AM
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<< You keep changing the playing field. >>

No Pericles. I’m trying to broaden the discussion, in my great quest to understand how you can say what you have been saying. I think this is a sensible thing to do, isn’t it, rather than just rehashing what has been said and going around in meaningless circles.

<< We were talking about GDP, which is a simple, factual number. Now you want to talk about productivity. >>

Anything wrong with that? Correct me if I am wrong, but didn’t you raise this aspect first. And um, don’t you think that productivity is, or should be, highly relevant to a discussion about gross domestic PRODUCT?

<< You can improve productivity without growing the population… >>

Absolutely!

So then, I wonder why you aren’t on my side of the population debate. Why aren’t you advocating economic growth that is driven to a much larger extent by manufacturing, technology and innovation? Why don’t you join me in denouncing the absurdity of economic growth that is primarily driven by population growth?

I note that you haven’t picked up on my comment: >> … one which does not have a constantly increasing rate of consumption of resources or increasing demand for evermore basic infrastructure. <<

This is something that I keep emphasising, but which you are very reluctant to comment on. It is of enormous importance. Population growth increases the need for expenditure from or economic growth to about the same extent that it increases economic growth. It really doesn’t get us very far at all. And in the longer term, it is bound to work against us.

continued
Posted by Ludwig, Friday, 20 June 2014 4:09:40 AM
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<< Either process will work. Both processes together will work better. >>

Why would both processes - better productivity by way of improved value-adding and more economic growth by way of population growth – work better than just the former by itself?

Wouldn’t the best approach be to completely curtail the population-growth-driven aspect, and for us to achieve a stable population and hence not have ever-increasing demands on our resource base, environment, and economic turnover via evermore goods, services and infrastructure?

<< Leading indicators such as consumer confidence indices, building starts etc. contain a modicum of predictive power. Just not GDP. >>

Yes, all manner of indicators do indeed have some predictive element to them. I’m pleased that you can see this. So then, how can you single out GDP as being the only one that doesn’t? That doesn’t compute.

No GDP didn’t predict the GFC. A new factor came out of left field and caused massive change. As I said earlier: GDP is of some use as a predictive tool, on the basis that things remain much the same, or we can reasonably know what things might change.

There is a parallel here between the complete failure of GDP to indicate the GFC and its complete failure to indicate anything about our future economic wellbeing in Australia, in terms of the size of our non-renewable resource base, our progress towards renewables or towards a sustainable society. So it is only useful as a crude indicator of what we can expect in the very short term, and as I have emphasised repeatedly: is a terribly MISLEADING indicator of what our real economic position is and what it is likely to be a few years down the track.
Posted by Ludwig, Friday, 20 June 2014 4:11:34 AM
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I disagree, Ludwig.

>>I’m trying to broaden the discussion, in my great quest to understand how you can say what you have been saying. I think this is a sensible thing to do<<

In fact, exactly the opposite is the case. If you want to learn about something, you move from generalizations to specifics, do you not? It is pointless trying to read À la recherche du temps perdu in the original, until you have first understood the fact that it a) is written in French, and b) is quite a long book. Those facts may lead you to learn the basics of the French language - structure, simple phrases etc. - before mastering the vocabulary to a point where you can understand the subtleties and emotional torments within M. Proust's oeuvre.

At no point would it be worthwhile to broaden your learning into, say, German or Russian. Unless, of course, you have mastered Proust, and wish to move on to Grass or Dostoevsky.

Stick to the knitting, Ludwig. First understand the concept of GDP, which has absolutely no influence on productivity. As I pointed out, it is the reverse that is true.

>>Correct me if I am wrong, but didn’t you raise this aspect first. And um, don’t you think that productivity is, or should be, highly relevant to a discussion about gross domestic PRODUCT?<<

Actually, you first referred to productivity, in an early post on this thread

http://forum.onlineopinion.com.au/thread.asp?discussion=6365#188311

And for the record, of course productivity is "relevant" to a discussion on GDP. But you were using it as a diversionary tactic, as you were running out of defences for your stance on GDP as a predictive tool.

>>So then, how can you single out GDP as being the only one that [isn't predictive]?<<

As I pointed out, simply because it is a post facto measurement. You cannot predict tomorrow's weather from yesterday's rainfall. GDP tells you about the past. Only. Imagining that it has any other significance is pointless. Like suggesting Proust would have been an easier read if he had written in Urdu.

(Possibly would have, actually)
Posted by Pericles, Saturday, 21 June 2014 6:06:49 PM
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Congratulations Pericles on writing a whole post (of exactly 350 words) without furthering the discussion one iota!

<< If you want to learn about something, you move from generalizations to specifics, do you not? >>

No. Not necessarily. If there are things related to the subject which haven’t been discussed or even introduced into the discussion, then it is pertinent to do so, starting off in a broad (generalised) manner.

Hey, stop trying to invent rules and impose them on me.

I am trying to keep focussed on the subject at hand, and discuss all that is relevant to it. You are quite wrong to suggest that I’m not doing it properly. I was actually under the impression that the quality of this debate had picked up in recent posts.

<< And for the record, of course productivity is "relevant" to a discussion on GDP >>

Yes of course it is. So then, what is the first half of your post all about??

<< But you were using it as a diversionary tactic, as you were running out of defences for your stance on GDP as a predictive tool. >>

Hey, what were you doing while you were writing this post? You seem to be quite off with the fairies.

1. It is directly relevant, but I was using it as a diversionary tactic, eh? Bizarre!

2. I was running out of defences for GDP as a predictive tool. Oh really? So that is why I gave you a full explanation of the extent to which GDP could be seen as a predictive tool, and to which it certainly can’t be. How odd!

continued
Posted by Ludwig, Saturday, 21 June 2014 7:10:54 PM
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<< Stick to the knitting, Ludwig. >>

Pericles, this is a shocker of a suggestion. You keep saying things to the effect that if I am not an expert in the subject, then I should butt out, and stick to beach-bumming or botany or whatever. Well….

1. How about you sticking to your own principles, because you are certainly no expert or otherwise highly knowledgeable person in this field.

2. You are so wrong to tell people that they shouldn’t be discussing things unless they are experts. You should be doing exactly the opposite – encouraging people with little knowledge to take an interest and be involved in discussions like this one. Apathy is our biggest problem. We certainly don’t need those few people who are not apathetic to butt out of subjects like this.

3. You are going against the very nature of OLO in making this sort of suggestion.

So, in the interests of getting back on track and actually discussing something relevant to the topic here, can you address this please:

>> Yes, all manner of indicators do indeed have some predictive element to them. I’m pleased that you can see this. So then, how can you single out GDP as being the only one that doesn’t? That doesn’t compute. <<

and…

>> So it is only useful as a crude indicator of what we can expect in the very short term… <<

I consider this predictive aspect of GDP to be of very little significance. I am only entertaining debate on it because I found myself in disagreement with your comments in this regard. But really, it is very much off to the side of our discussion.

[this is my 100th post on this thread!!]
Posted by Ludwig, Saturday, 21 June 2014 7:15:15 PM
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100 TH WELL DONE
ANYHOW..PROOF ITS ALL MADE UP
http://www.washingtonsblog.com/2014/05/enron-2-0-wall-street-wants-manipulate-state-energy-markets-just-like-manipulates-every-market.html

NUMBERS ARE SO EASY TO TRICK UP...EH
DOUBLE BOOKS...accountaNTS in confidence
no end to it really
http://patriotrising.com/2014/06/18/amount-fraud-across-board-epic-weve-never-seen-anything-like/

http://www.nature.com/news/publishers-withdraw-more-than-120-gibberish-papers-1.14763?WT.mc_id=TWT_NatureNews
http://www.redressonline.com/2014/06/materialism-and-misery-and-the-need-for-change/

http://www.spiritwritings.com/GatewayOfUnderstanding.pdf
Posted by one under god, Saturday, 21 June 2014 7:25:03 PM
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Lecturing me on consistency is a tad cheeky, Ludwig.

>>I consider this predictive aspect of GDP to be of very little significance.<<

Only two days before, you were of this opinion:

>>However, there are MANY insane people using GDP to predict the future. They look at how much economic growth we now have and at all the components of it and plan to uphold or increase it, for ever and a day. etc etc.<<

Which is why I proceeded to point out that productivity is a measurement different to, and separate from, that of GDP.

For a topic with "very little significance", you certainly make a great deal of fuss over it.

Now you ask:

>>So, in the interests of getting back on track and actually discussing something relevant to the topic here, can you address this please: "Yes, all manner of indicators do indeed have some predictive element to them. I’m pleased that you can see this. So then, how can you single out GDP as being the only one that doesn’t? That doesn’t compute." and "So it is only useful as a crude indicator of what we can expect in the very short term"<<

Once again: GDP is a measurement of past activity. If you use it as a predictive tool, you are using it improperly.

But you do actually understand this, perhaps without realizing:

>>They look at how much economic growth we now have and at all the components of it and plan to...<<

What they look at is not the GDP number itself, but the inputs. If we dig up more coal and sell it overseas, that activity will be reflected in GDP. If we see the onset of El Niño as a drought threat, we can expect it to do some damage to our farming GDP sometime later.

GDP is an inanimate number, because it can only tell you what happened yesterday. If you want to know what happens tomorrow, the size of your GDP - much like yesterday's weather - is not going to help you.

Can we put that to rest now?
Posted by Pericles, Sunday, 22 June 2014 11:21:44 AM
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<< 100 TH WELL DONE >>

Thanks OUG. I don’t know if there is anything well done about it, it’s just an interesting statistic… and it’s the second time I’ve ‘achieved’ it.

Yes the numbers can be manipulated.

And that is a very valid way of looking at GDP. One could argue that it is highly manipulated, by politicians who want it all to look as good as possible. It is very hard to believe that pollies and their economic advisers don’t know full well that what they are espousing as a good thing in the annual GDP figures isn’t very considerably manipulated.

Afterall, all that economic turnover that results from droughts, floods, smoking, obesity, car accidents, etc, that gets added to GDP (included within the total), just so obviously shouldn’t be, and is thus very dodgy indeed. It is absolutely amazing that the general public is so gullible that politicians and economists can get away with something so enornously bodgy.
Posted by Ludwig, Sunday, 22 June 2014 9:27:49 PM
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Pericles, what is contradictory about these two statements of mine? …

>> I consider this predictive aspect of GDP to be of very little significance. <<

>> …there are MANY insane people using GDP to predict the future. They look at how much economic growth we now have and at all the components of it and plan to uphold or increase it, for ever and a day… <<

Nothing is contradictory.

As I explained three posts back:

<< …it is only useful as a crude indicator of what we can expect in the very short term, and as I have emphasised repeatedly: is a terribly MISLEADING indicator of what our real economic position is and what it is likely to be a few years down the track. >>

Anyone who uses it to predict anything beyond the very short term is indeed insane!

<< For a topic with "very little significance", you certainly make a great deal of fuss over it. >>

No. It is simply a matter of you saying things that I disagree with and me picking you up on your errant logic! Crikey, if I don’t do that, you might start thinking that I actually agree with you, or can’t address your comments… or something totally bizarre like that!! ( :>/

continued
Posted by Ludwig, Sunday, 22 June 2014 9:29:14 PM
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<< Once again: GDP is a measurement of past activity. If you use it as a predictive tool, you are using it improperly. >>

Fine. But it can be seen as an aid to predicting the GDP total for the following year, simply because the same composition of all the things that contribute to it would result in a similar GDP total, bigger than the previous year in proportion to the increase in immigration. And if some factors change, as they are bound to do, then we can predict the change in GDP as a result. Of course there are very many variables. But at least we can get a rough feeling from one year’s GDP as to what we should get the following year.

That’s it. Its use as a predictive tool doesn’t go any further than that.

<< What they look at is not the GDP number itself, but the inputs. >>

Of course they look at all the inputs. And they look at the number. And after looking at how the various inputs might vary, they can predict how the GDP number might vary from the previous number.

Ok, so you are completely playing down any predictive value of GDP.

I find that interesting. The debate seems to have done a switch-around here. You, as the arch advocate of GDP, should be the one espousing it as having some sort of predictive value, as with all manner of other indicators, which you agree do have some predictive value… and I should perhaps be saying: no GDP doesn’t have anything of the sort.

Well…. I am virtually saying that. But you seem to just be on the wrong side entirely regarding this point. It just doesn’t fit with your great support for GDP.
Posted by Ludwig, Sunday, 22 June 2014 9:31:09 PM
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Oh, Ludwig. It is really very, very simple.

>>Ok, so you are completely playing down any predictive value of GDP.<<

If by "playing down" you mean "stating that it has no predictive content whatsoever", then sure, I'll go with that.

>>I find that interesting. The debate seems to have done a switch-around here. You, as the arch advocate of GDP, should be the one espousing it as having some sort of predictive value<<

Why on earth would you assume that? I couldn't have stated it more plainly: today's GDP number has no predictive capability whatsoever. Nor did last quarter's. Nor last year's. Why would I espouse it as such, when I know it ain't so?

>>..as with all manner of other indicators, which you agree do have some predictive value...<<

But Ludwig. Listen closely. GDP is not used as an indicator. Why, I hear you ask? Because - guess what - it has no predictive qualities.

Some measurements do indeed have the ability to give some idea of what is coming down the track. They are generally referred to as "leading indicators".

Here's Wikipedia's summary:

"Leading indicators are indicators that usually change before the economy as a whole changes".

Investopedia describes an index, a composite of these indicators:

http://www.investopedia.com/terms/c/cili.asp

You will notice that GDP does not feature in their index. For the simple reason that it fails the test - can it indicate what might happen in the future?

No. It can't. And anybody who tries to use it in that manner is an economic idiot. Have you ever seen any competent economist use GDP in this way? I'll bet you haven't.

>>It just doesn’t fit with your great support for GDP.<<

My "support" for GDP, as you describe it, is limited to its ability to accurately track our national prosperity. Which it has done, perfectly competently, for a long while.

You are still conflicted, because you want it to show something completely different. Sadly, you cannot explain what that "something" should look like.
Posted by Pericles, Sunday, 22 June 2014 10:52:54 PM
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So then, we have established that the predictive use of GDP is extremely limited, and could be used in no other way than to give us a rough guide of what to expect in the following year, and perhaps for a year or two after that if all the contributing factors are likely to remain much the same...

...and that it is indeed a very highly misleading entity to try and use as an indicator of future wellbeing, productivity, prosperity, quality of life or anything else!

Well, given that it is giving us a totally misleading picture about these things now, and in past, of course it is not going to be of any use for future indications.

But alas, there is no shortage of people who will use it as an indicator of future economics... or at least as one factor in amongst a bunch of other indicators.

So, it is basically useless as a future indicator. It is highly misleading as a present indicator of economics or of anything meaningful related to economics, and as I said a few posts back:

It doesn’t measure personal happiness. And it is only distantly related to productivity... and to prosperity. Add these points to those that I have mentioned many times: that it includes economic activity generated by all manner of economically negative things, and while it is based largely on population growth it doesn’t take into account the enormous rate of increase in the demand for everything that population growth causes...

...and we've got an indicator of what exactly??

What on Earth is GDP really about?? What is it actually telling us?

continued
Posted by Ludwig, Monday, 23 June 2014 7:46:59 AM
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You wrote:

<< My "support" for GDP, as you describe it, is limited to its ability to accurately track our national prosperity. Which it has done, perfectly competently, for a long while. >>

But it doesn’t do anything of the sort! It misleads us terribly in that regard.

Lets have a closer look at that…

It doesn’t measure personal happiness, quality of life, standard of living, productivity, prosperity, environmental health, non-renewable resource draw-down, recycling, value-adding, the ever-increasing demand for everything, the amount of economic activity that it includes which is clearly not taking us forward in economic terms, our ability to maintain ever-increasing economic activity into the future, etc, etc.

In other words, it is indeed an extremely bodgy indicator or measure, which tells us sweet stuff-all about our real national economic situation, and which does indeed mislead us terribly.

It is manipulation at its worst. It leaves out factors that would cause it to be lower number. And much worse than that: it includes stuff which simply obviously and blatantly should not be included!

Give it up Pericles! It’s rotten to the core!
Posted by Ludwig, Monday, 23 June 2014 7:48:53 AM
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You really still don't get it Ludwig, do you.

>>So then, we have established that the predictive use of GDP is extremely limited,<<

No, we haven't.

We have established that the predictive use of GDP is non-existent.

You have it right when you say...

>>...it is indeed a very highly misleading entity to try and use as an indicator of future wellbeing, productivity, prosperity, quality of life or anything else<<

Which is exactly the reason why it is not used in this manner.

>>But alas, there is no shortage of people who will use it as an indicator of future economics... or at least as one factor in amongst a bunch of other indicators.<<

Only in your imagination. No sane economist, or even politician, would risk their reputation on such a pointless exercise. Have you any examples of this? If not, please stop pretending that GDP is used, in any way, shape or form, as a predictor of anything whatsoever. Deal?

>>It is highly misleading as a present indicator of economics or of anything meaningful related to economics<<

Wrong again. You want it to say something other than what it does say, for your own personal reasons. That does not invalidate it as a realistic measure in anyone else's calculations.

>>It doesn’t measure personal happiness.<<

Correct. Do you happen to know a measurement that achieves this feat? I doubt it. So why single out GDP?

>>What on Earth is GDP really about?? What is it actually telling us?<<

Just this:

"The monetary value of all the finished goods and services produced within a country's borders in a specific time period".

>>In other words, it is indeed an extremely bodgy indicator or measure, which tells us sweet stuff-all about our real national economic situation, and which does indeed mislead us terribly.<<

Wrong again. It tells us "our real national economic situation", with some level of precision.

But that is all it does. It cannot mislead, because it is inanimate. If you choose to use it for a purpose for which it was not designed, that's your problem.
Posted by Pericles, Tuesday, 24 June 2014 9:55:35 AM
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Very entertaining Pericles…

I wrote:

>> So then, we have established that the predictive use of GDP is extremely limited <<

You replied:

<< No, we haven't. >>

Yes we have. Me and every other sensible and logical-thinking person on the planet, that is!

<< We have established that the predictive use of GDP is non-existent. >>

No we haven’t. We’ve established that it has predictive value, to the same extent as any other number of any sort that is arrived at via a set of contributing factors, for as long as those factors remain much the same or vary in a manner that is reasonably well understood, in the following twelve month period. This is the case with various other indicators, which you acknowledge do have some future-indicative value.

Again, it makes no sense for you to single out GDP as being somehow different in this regard.

Yes it does. No it doesn’t. Yes it DOES. NO it DOESN’T. Hehehe!

<< You have it right when you say... ...it is indeed a very highly misleading entity to try and use as an indicator of future wellbeing, productivity, prosperity, quality of life or anything else >>

Heeey woohoo! We have agreement!!

I wrote:

>> But alas, there is no shortage of people who will use it as an indicator of future economics... or at least as one factor in amongst a bunch of other indicators. <<

You replied:

<< No sane economist, or even politician, would risk their reputation on such a pointless exercise. >>

Wonderful. More agreement!

However, many insane people do indeed use it in this way.

You can surely see that there is no shortage of insane people who simply see that GDP is growing and think that that is just marvellous, and that all else being equal it should keep on growing, and being marvellous. They see the current situation as an indicator of what we should expect in the near future.

continued
Posted by Ludwig, Tuesday, 24 June 2014 11:56:31 PM
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As wrong as they are to think that this is just dandy, they are right to look at the current setup and predict that the same will continue, more or less, or that GDP will decline in the next few years as the mining boom slows, or other factors change… and perhaps start thinking that a boost to immigration could well counter this.

I asked:

>> What on Earth is GDP really about?? What is it actually telling us? <<

Your answer…

<< Just this: "The monetary value of all the finished goods and services produced within a country's borders in a specific time period". >>

YES! (including all those generated by floods, car accidents, illness….and all of the duplication of everything that goes hand in hand with rapid population growth.)

I other words: it is actually telling us sweet stuff-all of any real value.

<< It tells us "our real national economic situation", with some level of precision. >>

Oh PLEASE! That it certainly does NOT tell us. Not by a million miles!!

<< It cannot mislead, because it is inanimate. >>

What?!?

So, no ‘inanimate’ number can mislead us then? Surely you can see that lots of numbers can mislead us terribly, if they are ill-conceived. Statistics of all sorts can be highly misleading, even if they are honestly and accurately derived.

‘It cannot mislead, because it is inanimate’ - what a strange thing to say!
Posted by Ludwig, Tuesday, 24 June 2014 11:59:18 PM
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LUDWIG..;HOW DOES THIS FACTER INTO GDP?
the transphere of wealth..was paid for by bailout[bailout=cashflow>
http://www.wholesaledirectmetals.com/index.php/gold-blog/622-govt-seizes-control-of-all-your-financial-accounts

how does bail-in affect gdp..
[bail-in for the benifit of shadow;
is when bankers take our savings as being investment..and turn them into worthless promises of shares]

anyhow

''your/Homes”..are being turned/Into Rental Empires.

Private Equity Firms Drowning in..baiLout/top-down/Profits..[or rather their/claim/to be drowning in proffits..[mainly by importing thousands..of mexicans..into their future ghetto's]/nsa is actually delivering them/

regagardless..

Security is a slippery idea these days —
especially when it comes..to homes and neighborhoods.
http://rinf.com/alt-news/breaking-news/americas-housing-recovery-transforming-foreclosed-homes-rental-empires-private-equity-firms-drowning-profits/

Perhaps the most controversial development in America’s housing “recovery” is the role played by large private equity firms. In recent years, they have bought up more than 200,000 mostly foreclosed houses nationwide and turned them into rental empires.

In the finance and real estate worlds, this development has won praise for helping to raise home values and creating a new financial product known as a “rental-backed security.” [next big bubble/or laest way to become a slum lord?

Many economists and housing advocates, however, have blasted this new model as a way for Wall Street to capitalize on an economic crisis by essentially pushing families out of their homes, then turning around and renting those houses back to them...

rent=GDP RIGHT?
EVEN IF its govt rent assistance?
tax deductability..does thAT/add or subtract..from gd[product?or\production?]

http://patriotrising.com/2014/06/18/amount-fraud-across-board-epic-weve-never-seen-anything-like/
http://www.washingtonsblog.com/2014/05/enron-2-0-wall-street-wants-manipulate-state-energy-markets-just-like-manipulates-every-market.html
http://www.washingtonsblog.com/2014/05/enron-2-0-wall-street-wants-manipulate-state-energy-markets-just-like-manipulates-every-market.html

http://www.voltairenet.org/article178638.html

AND WHAT ABOUT THAT BAILOUT/10 billion joe gave tHE FED?
that the fed gifted to the imf/world banker[all fractional reserved leveraged..into manyfold joes gift/to imf

anyhow the money is comming back as student debt

so the bank already has our future leaders in debt to them[too clever by far/govt saves money/by students getting inti debt/to imf

how does that money flow/affect gdp
http://www.theblaze.com/stories/2014/06/23/it-takes-mark-cuban-less-than-90-seconds-to-outline-his-dire-prediction-about-the-student-loan-crisis/

they want us in debt/from cradel to grave
why[read the enron link]..your super is gone/at least hold some cash/[in low denomination notes/but especially..in coin/that debasement of the queens coin is high-treason...BEST HOPE WE DONT GO TO WAY/then treaon=death.

its them or us//these leeches are taking the living/life blood
into coroerate excess/via eNRONESQ pricing..and stuff the pubic weal/let alone the common good...
Posted by one under god, Wednesday, 25 June 2014 8:20:09 AM
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That's just vanity, Ludwig.

>>Yes we have. Me and every other sensible and logical-thinking person on the planet, that is!<<

You actually believe, it would appear, that you are in the company of intelligent people, when you apply GDP - a historical and inanimate number - to the cause of predicting the future. It is noticeable also, that you haven't been able to find one single instance of this habit, despite my asking you to justify it. Are you really sure that you aren't on your own in this folly?

I can sort-of vaguely see how you manage to mislead yourself, though.

>>You can surely see that there is no shortage of insane people who simply see that GDP is growing and think that that is just marvellous, and that all else being equal it should keep on growing, and being marvellous. They see the current situation as an indicator of what we should expect in the near future.<<

Growing GDP is good. Shrinking it is not good. So that part is right.

But "seeing the current situation as an indicator" is where your thinking goes off the rails. The anticipation that continued GDP growth will occur is dependent upon the economic inputs, not on the historic GDP figure. So today's GDP cannot possibly be "an indicator of what we should expect", either in the near, medium or long-term future.

It is akin to saying "Collingwood are ahead at the first change, so we don't need to put anybody on the park for the second quarter". The quality of the inputs - economic, or football players - will determining the outcome of the economy (next quarter's GDP) in the first instance, and the half-time score in the case of the footy.

>>So, no ‘inanimate’ number can mislead us then? <<

The number itself cannot mislead. It is the use to which it is put - such as your desire for GDP to become some kind of crystal ball into the future - that can mislead you. As it obviously does in this instance.

Are you starting to see it now?
Posted by Pericles, Wednesday, 25 June 2014 10:45:35 AM
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Crikey Pericles, you are going on about this future-indication bit!

Our positions are actually very close on this. You say that there is no predictive element to GDP and I say that the predictive element is very limited indeed, and that any predictive power of GDP in terms of our economic wellbeing is completely absent.

Can’t you just accept that GDP is not totally devoid of some use as a predictive tool, to the extent that it can be used as the basis for predicting the GDP of the following year, in just the same way as the unemployment rate or any number of other indicators can be, in combination with a bit of understanding of the factors that contribute to these numbers and how they might vary.

And I still don’t understand how you can single out GDP as having zero predictive element to it while accepting that all other indicators (inanimate numbers) are indeed useful as predictors of what to expect down the track.

<< Growing GDP is good. Shrinking it is not good. >>

Please, get over this incredibly simplistic thinking! Growing GDP that is based largely on population growth is not good in the long term. You know; the same population growth that constantly impinges on our environment and demands a greater rate of consumption of non-renewable and potentially renewable resources and (for the umpteenth time) demands a huge amount of duplication of all the basic supporting infrastructure and services without leading to improvements for the pre-existing population.

Yes, this is the same enormous population growth that is working directly against us achieving a sustainable future, and which is constantly increasing the stress-load on our economy and resource base.

It is the primary factor that is giving us a constantly increasing economic turnover and GDP.

So for goodness sake; a growing GDP is NOT a good thing…. for as long as it is intimately connected to a rapidly growing population.

continued
Posted by Ludwig, Wednesday, 25 June 2014 11:46:00 AM
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I can sort-of vaguely see how you manage to mislead yourself, though.

You are just so totally duped by the conventional economic setup and the inherent worship of continuous growth that you just can’t see past it and see the inherent fundamental flaws in it.

This is the classic elephant-in-the-living-room scenario. It is just so obvious where constant rapid population growth is leading us in terms of demand/supply balance, economic wellbeing, quality of life and sustainability…. and yet the powers that be can’t see past the ends of their noses. All they can see is the very short-term advantages of more labour and bigger domestic markets.

Come on Pericles, you’ve got to get your head around the population growth factor, and how it affects our whole economic paradigm …and how our population-growth-driven constantly increasing GDP, which is touted to be good and only good, is actually a very long way from good!
Posted by Ludwig, Wednesday, 25 June 2014 11:47:29 AM
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I was being polite, Ludwig.

>>Come on Pericles, you’ve got to get your head around the population growth factor<<

I know you have a thing about population control, but I was trying to keep it separate from simple number-crunching.

Which you still don't "get". This is your first problem:

>>So for goodness sake; a growing GDP is NOT a good thing…etc.<<

You have failed to provide one single example that shows declining GDP to be a good thing. Ask Spain how they have enjoyed theirs. Their population numbers, incidentally, are stable.

The other is - still - the predictive power of GDP:

>>Can’t you just accept that GDP is not totally devoid of some use as a predictive tool, to the extent that it can be used as the basis for predicting the GDP of the following year<<

You clearly missed the entire point of the AFL analogy. You cannot predict the half-time score simply by looking the quarter-time scoreboard.

But if you know that the entire mining industry has just shut down (an input), then you can guess that the nation's GDP trend will be downwards.

Similarly, if the whole of Queensland is under water, the whole of NSW ravaged by bush fires, the whole of Victoria and SA in the grip of a long-term drought, and the workers at the mines of WA all hospitalized with cholera, you can be reasonably sure that GDP will take a hit.

Oh, wait. These are all things that "add" to GDP in your calculation, aren't they. Due to the "increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc" that you told us about, all those posts ago.

And that you still trot out today.

>>...including all those [finished goods and services] generated by floods, car accidents, illness….and all of the duplication of everything that goes hand in hand with rapid population growth<<

You still haven't got that complete and utter misconception out of your head after all this time, have you.

But I will keep trying. Consider it my gift to you.
Posted by Pericles, Wednesday, 25 June 2014 2:11:35 PM
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<< I was being polite, Ludwig. >>

<< I know you have a thing about population control, but I was trying to keep it separate from simple number-crunching. >>

Hmmm. That needs clarification: you were being polite by keeping population growth separate from the simple number crunching? But you do really see the connection between population growth and the simple GDP number?

<< You have failed to provide one single example that shows declining GDP to be a good thing. >>

Excuse me; a declining GDP is a completely different thing to a growing GDP that is not a good thing. I have said perfectly clearly previously that a declining GDP would indeed be very bad, especially given how much stupid stuff gets included in it. I have made it clear that by the time the formal GDP number would actually be declining, our real economic position would be in big-time major decline, which of course would be a very bad thing.

<< You clearly missed the entire point of the AFL analogy. You cannot predict the half-time score simply by looking the quarter-time scoreboard. >>

Hey, the GDP number and all the things that make it up are a little bit more stable and predictable than some silly football match. Your analogy is nonsense!

You still haven’t explained why you think all other stats and indicators do have some predictive value while you think GDP has utterly none.

continued
Posted by Ludwig, Wednesday, 25 June 2014 8:36:33 PM
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<< But if you know that the entire mining industry has just shut down (an input), then you can guess that the nation's GDP trend will be downwards. >>

YES!

And if you know that China’s economy is not expanding as rapidly as it has been and the prices of coal and iron ore are falling, then you can predict a lower-than-otherwise GDP for the next financial year, compared to the previous one.

The GDP number for the previous year is a necessary part of this sort of prediction, is it not? You can’t predict a lower number than a number that you don’t know. So, obviously, the GDP number does indeed have some use in predicting the next year’s GDP.

Surely you can appreciate this.

I wrote:

>> ...including all those [finished goods and services] generated by floods, car accidents, illness….and all of the duplication of everything that goes hand in hand with rapid population growth <<

You replied:

<< You still haven't got that complete and utter misconception out of your head after all this time, have you. >>

Hey, you have admitted that all this sort of economic activity does get included in GDP!

Remember? Or do I have to trawl back through past posts to point it out to you?
Posted by Ludwig, Wednesday, 25 June 2014 8:38:27 PM
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So, let's clarify a couple of things, Ludwig.

>>But you do really see the connection between population growth and the simple GDP number?<<

Yes, I do. However, I also see the connection between higher productivity and the growth of per capita GDP, which you seem determined to ignore. More people produce more, consume more, and therefore lift GDP. However, a far more relevant consideration is that despite the increased number of people, per capita GDP is also increasing. The significance of this seems to escape you.

And could you please explain the logic behind this extraordinary statement:

>>Excuse me; a declining GDP is a completely different thing to a growing GDP that is not a good thing<<

You agree that a declining GDP is a bad thing. Yet you also insist that a growing GDP is also a bad thing?

>>You still haven’t explained why you think all other stats and indicators do have some predictive value while you think GDP has utterly none<<

Ok, I'll try again to explain.

GDP has absolutely no predictive value, because it cannot influence the future. It is not a "leading indicator", whereas statistics such as new orders received by factories, the number of hours worked, the number of approvals for new buildings etc. all indicate a potential change in the shape of the economy. Which will, ultimately, be reflected in GDP.

Your position is that because GDP stands at $x, the next calculation will be somewhere close to $x. It's like your bank account. If you have a balance of $1,000, and you have your normal monthly living expenses, the chances are that in a month's time, your balance will be around the $1,000 mark, right? But if you have additional expenses, or additional income, the figure will be correspondingly lower or higher, yes? But it is the difference in inputs that changes the number, not the original number itself - which could have been $100 or $10,000.

None of those starting numbers has any predictive impact on the outcome - only the transactions can do that. Allsame GDP.

Understand now?
Posted by Pericles, Thursday, 26 June 2014 10:24:45 AM
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And this is just willful obstinacy:

>>Hey, you have admitted that all this sort of economic activity does get included in GDP!<<

Of course it is. But my concern was not that, as you very well know. It was your bland assertion that some of these inputs "grow" GDP simply by their nature, as you stated when you described...

>>...increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc<<

The implication being that these activities unilaterally increase GDP, despite the extremely obvious fact that they do the precise opposite.

That is the misconception that you really should rid yourself of, if you genuinely want to understand the reality of GDP.
Posted by Pericles, Thursday, 26 June 2014 10:33:36 AM
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<< I also see the connection between higher productivity and the growth of per capita GDP, which you seem determined to ignore. >>

Is this a deliberate misrepresentation of my position? I have made it patently clear that my issue with per-capita GDP is that it is a highly bodgy indicator because it is based on the highly bodgy GDP number… and hence any increase in per-capita GDP is NOT a realistic increase in economic wellbeing… and that if GDP didn’t include all the stuff which shouldn’t be counted as economically positive, then per-capita GDP wouldn’t be showing any increases year to year.

This increasing per-capita GDP thing sits right at the cornerstone of your whole argument. And yet, as per my previous paragraph, it is just so fundamentally flawed.

<< You agree that a declining GDP is a bad thing. Yet you also insist that a growing GDP is also a bad thing? >>

Surely you are just playing silly buggers here, Pericles. I have clearly explained this, so that even you can be in no doubt as to what I am saying. Do I really have to do it yet again?

continued
Posted by Ludwig, Thursday, 26 June 2014 8:41:58 PM
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Ever-increasing GDP, which includes a whole lot of economic activity that it simply shouldn’t include and is thus a very dodgy indicator of real meaningful economic growth… and which is largely powered by rapid population growth, is NOT a good thing. It doesn’t take into account the constantly increasing impact on our environment, constantly increasing rate of consumption of non-renewable and potentially renewable resources or the huge amount of duplication of all the basic supporting infrastructure and services without leading to improvements for the pre-existing population… to mention just a few of the many things that compromise the integrity of the GDP number.

So you simply cannot assume that a growing GDP = good.

I am at a loss to understand how you can see such tremendous value in GDP but think that it cannot play any part in predicting what the GDP will be in the following year. This is completely crazy!

It is surely not hard to predict what the GDP will be just one year ahead, and two or three years ahead with wider margins of uncertainty. It is not hard to see which contributing factors will remain much the same and which are increasing or decreasing. Looking at these factors, looking at how much they have contributed to GDP in the previous year and looking at the GDP total, will give you a pretty fair estimation of the next GDP total.

Surely you have to agree with this. And part of this forward estimate – an absolutely essential part – is the GDP number. The GDP is thus a fundamental part of this predictive process. GDP does indeed have a predictive element to it.

continued
Posted by Ludwig, Thursday, 26 June 2014 8:43:38 PM
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<< The implication being that these activities unilaterally increase GDP, despite the extremely obvious fact that they do the precise opposite. >>

Economic activity resultant from fires, cyclones and all manner of other bad things does indeed make GPD larger than it would be if it didn’t include this sort of activity. Of course these things decrease GDP by destroying crops, damaging businesses, and by necessitating a whole lot of activity just to get everything back on track. So then, why on Earth would you count all the effort required to get it all back on track as a positive contribution to GDP?? It so obviously should be NEUTRAL!

If we want a true representation of the negative effects of floods, earthquakes, illness and accidents, then how crazy is it to count all manner of activity produced as a result of these things as a positive contribution to GDP?

I am amazed that you continue to speak out against this bleedingly OBVIOUS point, Pericles!

<< That is the misconception that you really should rid yourself of, if you genuinely want to understand the reality of GDP. >>

Hey, I do indeed understand the REALITY of GDP.

And it ain’t pretty!
Posted by Ludwig, Thursday, 26 June 2014 8:44:59 PM
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You say that you do, Ludwig.

>>Hey, I do indeed understand the REALITY of GDP.<<

Yet you contradict this claim with every single post.

>>...any increase in per-capita GDP is NOT a realistic increase in economic wellbeing<<

You have repeated this so many times, you obviously believe it. But it has been demonstrated empirically, across many economies in many countries, and also in a global sense, to be absolutely, completely, utterly wrong.

Name me one economy that justifies your position. Just one.

And this appears to be the foundation-stone of your misunderstanding:

>>Ever-increasing GDP, which includes a whole lot of economic activity that it simply shouldn’t include and is thus a very dodgy indicator of real meaningful economic growth...<<

You have this belief that economic activity associated with cyclones/floods (rescue services, builders) bushfires (fire brigades, builders) illness (hospitals, doctors, nurses) etc. should somehow be excluded from GDP. Which, if you think about the definition of GDP, would render it entirely meaningless.

The only workable solution for you is not to spend your life slagging off a perfectly serviceable measurement of economic activity, but instead invent one of your own. The first problem you will have is working out how to ignore the economic activity created from the work of the SES, firemen, bricklayers, plumbers, carpenters, electricians doctors, nurses etc. who are occupied in those activities you determine "should not be included".

And you still don't get forecasting, either:

>>...part of this forward estimate – an absolutely essential part – is the GDP number<<

But only in the same sense that your future bank balance is based upon your current bank balance. It is the activity between now and the next time you measure, that forms the basis for a forecast. The starting number is fixed, and plays no part in whether the end-number increases, decreases, or stays the same, and is therefore not predictive.

(This is yet another Public Service Announcement on behalf of the Economic 101 Foundation.)
Posted by Pericles, Friday, 27 June 2014 9:52:02 AM
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<< Yet you contradict this claim with every single post. >>

You wish!

<< You have repeated this so many times, you obviously believe it. But it has been demonstrated empirically, across many economies in many countries, and also in a global sense, to be absolutely, completely, utterly wrong. >>

What?

You have repeated your opposition to this so many times that you obviously believe it, despite everything that I have said about it. The most fundamental point being that for all our massive amount of economic growth – 150% increase in the last decade, we are in very bad need indeed of major catching up with all manner of infrastructure and services, let alone achieving significant real improvements. This massive economic growth is at stark and extreme odds with the incredible lack of basic stuff that economic growth is supposed to provide.

How you can say something as emphatic and bizarre as this being “absolutely, completely, utterly wrong”, is just completely and utterly beyond me!

<< Name me one economy that justifies your position. Just one. >>

Australia.

continued
Posted by Ludwig, Friday, 27 June 2014 3:02:47 PM
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<< You have this belief that economic activity associated with cyclones/floods (rescue services, builders) bushfires (fire brigades, builders) illness (hospitals, doctors, nurses) etc. should somehow be excluded from GDP. Which, if you think about the definition of GDP, would render it entirely meaningless. >>

Oh, this really is getting fascinatingly whacky!

If all this sort of stuff wasn’t included within GDP, then GDP would be entirely meaningless?!?!

Wow!! How on Earth did you come up with that one??

It is pretty close to meaningless now. If it didn’t include all this stuff, it would certainly be a little more meaningful, but still with a long way to go to be an accurate economic measure or indicator.

Consider this: http://www.ritholtz.com/blog/2012/03/one-year-after-the-tsunami-japan-is-back/

< Post-tsunami reconstruction is contributing to the turnaround >… in the Japanese economy.

However, all this reconstruction is just attempting to recover lost ground and should not be included within their GDP.

I am not the only person who thinks in this manner. Note the comment under article by constantnormal:

< Seems strange, with their nuclear power grid still hobbled and an unimaginably huge chunk of their national stuff in ruins, but then GDP is a flawed metric, counting repairs and ill-advised or counterproductive spending as equivalent to productive spending. Somebody really needs to create a Qualitative Domestic Product (QDP) metric … >

So yes, we do indeed need a much better means of measuring our real economic state and rate of improvement or decline, such as a QDP.

See also the comment by BrianSJ and the link therein, which shows that various other indicators belie the economic turnaround and increasing GDP in Japan.

I am sure that a detailed study of all indicators and facets of Australian society would similarly show up our GDP, and per-capita GDP, to be at stark odds with the reality of our economic situation.
Posted by Ludwig, Friday, 27 June 2014 3:05:10 PM
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I wrote:

>> ...part of this forward estimate – an absolutely essential part – is the GDP number <<

Pericles, you replied:

<< But only in the same sense that your future bank balance is based upon your current bank balance. >>

YES!

GDP is only useful as predictive tool in that very limited manner, as I have been saying all along.

<< It is the activity between now and the next time you measure, that forms the basis for a forecast. >>

Yes. It is the knowledge of how constant the major contributing factors are or how they might vary, along with the previous year’s total GDP that form the basis for the forward estimate.

<< The starting number is fixed, and plays no part in whether the end-number increases, decreases, or stays the same… >>

Correct.

Wonderful. I think we have actually reached agreement on something that we appeared to have an intractable difference of opinion over.
Posted by Ludwig, Friday, 27 June 2014 7:22:16 PM
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a phenomena that prudent finance men of the age knew was wholly artificial and destined for a thumping post-war depression. This was especially so because America had loaned the Allies massive amounts of money to purchase grain, pork, wool, steel, munitions and ships. This transfer amounted to nearly 15 percent of GDP or $2 trillion equivalent in today’s economy, but it also amounted to a form of vendor finance that was destined to vanish at war’s end.

Carter Glass’ Bankers’ Bank: The Antithesis Of Monetary Central Planning

As it happened, the nation did experience a brief but deep recession in 1920, but this did not represent a thorough-going end-of-war “de-tox” of the historical variety. The reason is that America’s newly erected Warfare State had hijacked Carter Glass “banker’s bank” to finance Wilson’s crusade.

Here’s the crucial background: When Congress acted on Christmas Eve 1913, just six months before Archduke Ferdinand’s assassination, it had provided no legal authority whatsoever for the Fed to buy government bonds or undertake so-called “open market operations” to finance the public debt. In part this was due to the fact that there were precious few Federal bonds to buy.>>>>

NOTE BONDS GO ON LONG TERM[SAY 20 YEAR BONDS]
BANKERS BY SPONCERING WARS/BOUGHT UP 20 YEAR BONDS/CHEAP\THEN DAMANDED IR ALL BACK IN GOLD/SILVER/IMMEDiatly.since then we been under terms of bankruptcy/paying tax on wages as If income

<<..The public debt then stood at just $1.5 billion, which is the same figure that had pertained 51 years earlier at the battle of Gettysburg, and amounted to just 4 percent of GDP or $11 per capita.

Thus, in an age of balanced budgets and bipartisan fiscal rectitude, the Fed’s legislative architects had not even considered the possibility of central bank monetization of the public debt, and, in any event, had a totally different mission in mind.

Read more at http://investmentwatchblog.com/sarajevo-is-the-fulcrum-of-modern-history-the-great-war-and-its-terrible-aftermath/#0fWdyGbG8BtJxx2F.99
Posted by one under god, Monday, 30 June 2014 3:54:35 PM
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You are becoming - metaphorically speaking, of course - like dog dirt on the shoe, Ludwig. No matter how hard you try to wipe it of, the smell lingers on.

>>If all this sort of stuff wasn’t included within GDP, then GDP would be entirely meaningless?!?!<<

Why is this so difficult for you to understand? It really is so blindingly straightforward. We have devised a measurement of the volume of economic activity, and use it to measure our economic progress. More is better, less is worse. You have this entrenched, but erroneous belief that the money used by doctors and nurses shouldn't be measured, simply because they look after the sick. Or the houses rebuilt after a bushfire don't really count as economic activity, because they are replacing something that was there before.

How do you deal with situations such as this non-bushfire-related activity?

http://m.smh.com.au/domain/real-estate-news/altona-likely-to-join-other-sydney-mansions-to-be-demolished-20140524-38vgm.html

What, in your view, is the difference between voluntary and involuntary rebuilding? Should neither be included in your version of GDP? If not, why not? And how do you account for the purchase of building materials, the wages of the builders etc. in your version of GDP?

It simply does not make any sense at all.

>>I am not the only person who thinks in this manner.<<

That doesn't make you right. Only that other people beside yourself are wrong. As the article you refer to points out:

"Post-tsunami reconstruction is contributing to the turnaround, as is the recovery in the global economy."

>>I am sure that a detailed study of all indicators and facets of Australian society would similarly show up our GDP, and per-capita GDP, to be at stark odds with the reality of our economic situation.<<

So you keep saying. But you have not offered one skerrick of evidence to this effect; only a mountain of words.

>>GDP is only useful as predictive tool in that very limited manner, as I have been saying all along.<<

It is the activity indicators that can affect the next number, not the number itself. What on earth is so difficult about that?
Posted by Pericles, Tuesday, 1 July 2014 11:19:50 AM
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SEEN ALAN COLAS
http://www.alankohler.com.au/

LATEST GRAPH?
http://www.alankohler.com.au/sites/default/files/styles/ak_graph/public/kohlersgraphs/2014/Jun/financial-dbusiness-ycle.png?itok=DO4zfbeC

http://www.faraday.st-edmunds.cam.ac.uk/CIS/Wright/pdf/Wright_lecture.pdf

http://www.spiritwritings.com/GatewayOfUnderstanding.pdf
Posted by one under god, Tuesday, 1 July 2014 1:47:09 PM
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<< You are becoming - metaphorically speaking, of course - like dog dirt on the shoe, Ludwig. No matter how hard you try to wipe it of, the smell lingers on. >>

That’s not nice, Pericles. I was going to say that I hope you had a nice extended weekend. But now I won’t (:>/

<< It really is so blindingly straightforward. We have devised a measurement of the volume of economic activity, and use it to measure our economic progress. >>

YES!! You don’t say! Blindingly straightforward indeed! Blind to the reality that not all economic activity equates to economic progress!

Ohh Pericles… I do despair of you sometimes!

Your oversimplistic GDP measure is not just fundamentally flawed, it is terribly MISLEADING, as I have said right from the start of this long and sordid debate!

<< More is better, less is worse >>

That is just so amazing! After all the detail presented in this debate, you fall back on this primaeval fallacy… which is so OBVIOUSLY WRONG!

<< How do you deal with situations such as this non-bushfire-related activity? >>

The new development that will replace this mansion is not just replacing it, it is something new, bigger, better, or whatever the case might be. So it is not analogous to rebuilding houses after they get destroyed by a bushfire.

It would certainly be difficult to come up with the parameters for what would or wouldn’t be included in the GDP calculation if we were to exclude economic activity that occurs directly as a result of disasters and which doesn't add to economic prosperity.

continued
Posted by Ludwig, Tuesday, 1 July 2014 10:24:37 PM
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So what’s new? For all manner of things it is hard to define the exact parameters.

Look at unemployment. How many hours a week should one have to work in order to be officially employed according to the national stats? That is a simple question, but the answer certainly isn’t easy. How many people who are out of work aren’t really looking for work? Should everyone out of work be considered to be unemployed or only those who want to work? And many other questions. It is hard to define just what unemployment is and how many people are unemployed…. or underemployed.

There are innumerable other examples of things which are very hard to concisely delimit.

The cut-off between economic activity that should or shouldn’t be included in GDP is just another difficult thing to define.

However, that should be no excuse for including economic activity which patently should NOT be included in the GDP calculation.

I hope you can appreciate this.

I wrote:

>> GDP is only useful as predictive tool in that very limited manner, as I have been saying all along. <<

You replied:

<< It is the activity indicators that can affect the next number, not the number itself. What on earth is so difficult about that? >>

Aww gee, can’t you just be happy that we have agreement here? Seems like you are determined not to agree!

“We agree, yahoo!”

“No we don’t”

“Yes we do”

“No we DON’T!!”

“Oh yes we dooooo!” Sorry…. but as far as I’m concerned, on the issue of GDP as an indicator; we agree!

Sorry! {{:>)
Posted by Ludwig, Tuesday, 1 July 2014 10:27:45 PM
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Thanks OUG. Alan Kohler presents lots of interesting stats. I wonder how they compare to GDP as indicators of how well we are travelling economically, and of how well that economic performance is translating into real meaningful stuff in the lives of Australian citizens?

Thank goodness at least some economists are looking at various other parameters, rather than only at the terribly oversimplistic and misleading GDP.
Posted by Ludwig, Tuesday, 1 July 2014 10:36:28 PM
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Ludwig,

Perhaps an answer/alternative might be to measure net wealth from year to year.
That is, value of public infrastructure, less depreciation (repair/replacement value, amortization);
Plus, total available public funds (nationally) less debt;
Plus value of private physical assets less depreciation;
Plus value of private cash/securities/bonds assets, less debt.

This then divided by population, to give a per-capita 'assets' value.

Then, as an add-on, an assessment of needed/preferred infrastructure development, plus needed/preferred improvements to public services and welfare provision, all weighed up against available and projected net public cash assets - as a means of evaluating the rate of achievement of national services provision objectives against the preferred rate of such achievement.
This relative rate of achievement of objectives could then act as an indicator of the 'health' of the national economy going forward, and a measurable indicator of the sustainability of forward budgetary provisions regarding national revenue/income streams weighed against projected services and infrastructure costs.

Of course, we could all just choose to be happy in our bliss, regardless? (Or plant a veggie patch.)
Posted by Saltpetre, Wednesday, 2 July 2014 12:41:00 AM
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Saltpetre, the most accurate formula could indeed be quite complex. I don’t really feel able to delve into it too much, suffice to say that you would have a better idea than me of what all the various factors are and how they compare in significance.

But we’d definitely want some measure of how increasing population growth makes it progressively harder for our mining and agricultural sectors to meet the demand, both for domestic needs and for profits from export income, and how we need a progressively better rate of value-adding and technological improvement to make the same gains.

In short; a GDP formula that gives a good measure of economic prosperity for the twelve months just gone would not be a good measure for the longer term if it doesn’t take into account the ever-increasing pressures placed on our economy by population growth.

It would not be good enough to just look at the per-capita GDP in the short term. The right formula would have to take into account the ever-increasing demand for everything, compared to our ability to uphold supply.
Posted by Ludwig, Wednesday, 2 July 2014 9:05:04 PM
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TO/REQUOTE......<<...We have devised a measurement
of the volume/of economic activity,>>

LOL..KEY-WURDS..;..'devised'/volume*..[in doolar value]
SO HOW Come we measuring/total/gross\amount..;expenditure/in-toto..?

ITS NOT VOLUME/its gross expenditure
its a faulse name/wrong definition/defining the wrong/thing[volume/may relate''to/the quantity/spending?

w have so many debates/here/re wHAT WORDS/MEAN\'';HERE IS A CLassic egsample..money expended/rather than..volume'..

<<>and use it to measure......our economic progress.>>

INTERESTING..ONLY THE USE OR PROGRESS/[NOT RECEEDING?]

<< More[VOLUME].is better, less..[VOLUME]..is worse.
<<>You have this entrenched,..but erroneous belief..that the money used*..by doctors and nurses shouldn't be measured,....simply because they look/after the sick...>>

NO/BECAUSE..ITS REPARING A NEGATIVE/adverse event correction/increases volume/of negative eco/activity.

its this bull/spin;volume\rather that normalised/meaning defining/WHATS BEING pro-moted*

<<Or the houses rebuilt after a bushfire..don't really count as economic activity,.because they are replacing something that was there before...>>

IF YOUR MEASURING/THE WORTH/of things
you measure the value/there was a book-value/re house/land
its merely being restored[if its improved/its because/it takes money from ann/to give t paul

..[money transphere..is this eco/activity?
how about flash trading/that trades 1000 times a minute?

volume/wtf
Posted by one under god, Thursday, 3 July 2014 7:08:31 AM
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<<How do you deal with situations such as this non-bushfire-related activity?>>

i would carefully dismantle/it..clean everything.in it/have a good look at the BARE/b0nes of it/and/its\value/where-is/by auction/ignoring the insanity/duplicity.of those building in the bush...[in the bush/forbid future building..in that material]

i would advise the property/insured/just like smoking\they didnt declare they too no fire precautions.thus are on their own
'

im=,=minded/of the many 'fires'/that burnt down many hotels[outback]
3 i knOw of in longreach/ALONE..oh dear my hotel burnt down/oh well good thing its insured/i will rebuild it/cause fires attract tourists

[i stayed in the last.'old-one'..the only one in the whole hotel
i could just feel the fire comming on\so i moved on..trouble is gdp/is fake..because it dont go up or down/its so averaged out axccross time as to currently jusat be a feel good/..its up\let the good tmes role

its down..get govt to bail-us out/or burn it down.

<<.between voluntary and involuntary rebuilding?>>
honesty/yet;.regardless..a rebuild=is=a rebuild/of what\was
its like one step up/one step down[but somewhere;.some insurance underwriting sceme/lost its bet/no new money/no new value/plenty of volume/lol

<<.Should..neither be included..in /GDP?>
rebuilds are nett loss.[payed-out]
[regardless of the gain/pay-off pays for.

<<how do you account for the purchase/creation..of building materials>>

thats eco/activity/just like loss is tax deductable
'wind-fall/

<<.the wages. of the builders etc.>>

we have income/tax.;not wage tax
corperations/fees/fines/intrest capital-gain=income
the living earn wage/WE HAVE NO WAGE TAX/WE HAVE in-come/tax..

><<in your version of GDP?>>>>
the loss incured by the insurance=NEGATIVE*
GDP/MINUS INSURANCE/OR REBULDING/OR REPAIR PAYOUT
make rebuilding better/pay more/we used to asses death/taxes
we all know if this is new activity/or theft[when govt bail-in cash/will that be eco-activity..on our gdp?.[such a big change/will go unoted/on gdp?
Posted by one under god, Thursday, 3 July 2014 7:09:32 AM
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That was not a personal observation, Ludwig.

>>That’s not nice, Pericles<<

It was a reference to the misunderstandings that seem to cling to you, no matter how much evidence is presented to refute them, nor how little actual evidence you offer that supports them.

But we soldier on, in the cause of enlightenment and (eventual) understanding.

>Blind to the reality that not all economic activity equates to economic progress!<<

It depends of course on your definition of economic progress. Which is unlikely to be measurable in any useful manner, since it will be uniquely and idiosyncratically yours. In GDP we have a neutral, non-judgmental measurement of aggregate economic activity.

You can trace it back to Adam, in fact:

"The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nation".

That's Adam Smith, of course, describing (essentially) the concept of GDP in the opening sentence of "The Wealth of Nations". His next sentence then describes per capita GDP:

"According, therefore, as this produce, or what is purchased with it, bears a greater or smaller proportion to the number of those who are to consume it, the nation will be better or worse supplied with all the necessaries and conveniencies for which it has occasion."

I can highly recommend it as background reading for you, as it essentially takes you back to first principles.

http://www.gutenberg.org/files/3300/3300-h/3300-h.htm

Wikipedia describes it as follows:

"First published in 1776, the book offers one of the world's first collected descriptions of what builds nations' wealth and is today a fundamental work in classical economics".

You don't have to read all five volumes, of course. Just work through the introduction, let me know which parts you find fault with, and we can move on from there.
Posted by Pericles, Thursday, 3 July 2014 3:29:50 PM
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<< It was a reference to the misunderstandings that seem to cling to you, no matter how much evidence is presented to refute them, nor how little actual evidence you offer that supports them. >>

Right back atcha with that, Pericles.

<< But we soldier on, in the cause of enlightenment and (eventual) understanding. >>

And likewise with that!

One of these days, you will see the light……………………………………………maybe. ( :>/

I wrote:

>> Blind to the reality that not all economic activity equates to economic progress! <<

You replied:

<< It depends of course on your definition of economic progress... >>

Well, at least you haven’t just come back and just reasserted that all growth is good and less is worse!

Of course it depends on definitions. And by any meaningful definitions, there is a BIG difference between all economic growth and real economic progress.

<< …Which is unlikely to be measurable in any useful manner… >>

What?

It obvious CAN be measured in a useful manner, just as all the various indicators related to the economy are useful, despite difficulties with actually defining the parameters.

You seem to be falling back on a fundamental fallacy – that because the good and progressive fraction of economic growth is difficult to separate from the neutral or recovery-phase or duplication-of-everything-to-keep-up-with-population-growth type of economic activity, then we should just simply count it all as good!

That’s wonky thinking at its best!!

Without reading ‘The Wealth of Nations’, I can surmise that its great flaw is directly equal to the criticisms that I have leveled against the simplistic view of economic growth and the GDP concept on this long thread.

continued
Posted by Ludwig, Friday, 4 July 2014 11:08:22 AM
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Pericles, you continue to dodge around the elephant in the living room. Or should I say; elephants.

Things like continuous rapid population growth, along with a whole lot of obviously non-prosperity-producing economic activity that gets counted as good economic growth to exactly the same extent as genuinely good economic growth that has arisen from technological advances and which is directly advancing our average quality of life, national prosperity and future wellbeing.

And other things like the amount of non-renewable resources that we have and the rate of draw-down on them…. and all the increasing stresses on our environment and on the national budget... etc, etc.

In short, you are a million miles away from seeing the REALITY of the situation.

No offence, but you really do have the blinkers on. so much so that you must barely be able to see past them at all!

What’s the point in trying to educate me on the basics of economic growth? All that you are doing there is demonstrating very clearly to me that you are just totally entrenched in the conventional mindset and just not at all open to what I am saying and thus developing a realistic and holistic understanding of what is really happening with our national economy, and what it really means for us in terms of quality of life, prosperity and sustainability.
Posted by Ludwig, Friday, 4 July 2014 11:10:53 AM
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That's a very valid observation, Ludwig.

>>What’s the point in trying to educate me on the basics of economic growth?<<

It is a thankless task, I agree.

But surely you would agree that it is sometimes better to learn about a topic before making confident assertions on its qualities? If you don't, you run an extreme risk of making a complete idiot of yourself.

And to imagine that somehow your thinking processes are superior to that founded upon centuries of careful research and painstaking theorising is just the teensiest bit arrogant, don't you think?

>>Without reading ‘The Wealth of Nations’, I can surmise that its great flaw is directly equal to the criticisms that I have leveled against the simplistic view of economic growth and the GDP concept on this long thread.<<

As I said, you don't have to read all five volumes. Just start with the preamble, think it through, and then make up your mind whether you would like to learn more.

And if there is a single sentence that you have the slightest problem with, publish it here and we can discuss it.

Can't say fairer than that.
Posted by Pericles, Friday, 4 July 2014 12:25:06 PM
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As I predicted Pericles, you have skipped straight past my abovementioned ‘elephants’ and refused to be drawn out of your very narrow conventional economic paradigm.

<< But surely you would agree that it is sometimes better to learn about a topic before making confident assertions on its qualities? If you don't, you run an extreme risk of making a complete idiot of yourself. >>

Says he who asserts such extraordinary things as: more is better, less is worse.

I’ll make a deal with you: I’ll look at the preamble of ‘The Wealth of Nations’ and comment on it accordingly, if you give me a considered response to my ‘elephants’ in relation to what GDP indicates.

My points are directly relevant to this discussion whereas I would think you are clutching at straws with this archaeic Adam Smith reference.

But, I’ll have a look…. if that is what it takes to get you to properly consider the significance of the points that I mentioned as elephants in the living room, and thus to start considering the real link (or lack thereof) between GDP and prosperity… and sustainability.

Can't say it fairer than that.

Just let me know if you agree to my offer or not. Thanks.

I look forward to discussing both the preamble and the elephants.
Posted by Ludwig, Friday, 4 July 2014 6:51:13 PM
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ALAN CHOLAS GRAPH TONIGHT
it was very interesting spike[89/?straight down
but the next run up/looked just like the 89.s spike
whatever that graph was satying//means to all a goodnight[as in bad 80's..twice the fall..to get to the twice lowest-base level

bottum spikes

night mare/fall\twice the rise of 89]
i should go get it/but too busyreading pericules last book

four volumes

this is going t0 take all night
a bit dated/possably obsolete\does it mention the dutch tulip boom?
Posted by one under god, Friday, 4 July 2014 7:38:16 PM
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http://www.google.com.au/search?q=the+wealth+of+nations+pdF
5 VOLUMES MY BUTT/WHICH VERSION?

PS/if we are reading how aboUT YU READING/
http://www.google.com.au/search?q=the+creature+JECKLE-ISLAND&

NAW ONLY KIDDEN
Posted by one under god, Friday, 4 July 2014 7:48:11 PM
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Enough is enough, Ludwig.

>>My points are directly relevant to this discussion whereas I would think you are clutching at straws with this archaeic Adam Smith reference.<<

If you are not prepared to make even the slightest effort to learn even the most basic fundamentals on the topic, it is hardly likely that you will ever be able to understand where you are going so wrong.

Adam Smith's work is seminal, and as relevant today as it was ground-breaking then.

Your "elephants" are in fact illusions. They bear absolutely no relation to the discussion at hand, being irrelevant to any examination of the nature and utility of GDP statistics. They exist in the same part of your brain as your infatuation - obsession, even - with immigration. Until you are able to logically differentiate between the two - population and GDP statistics - this discussion can make no further progress.

Unfortunately, only by reading Adam Smith will you be able to understand why this last paragraph of mine is accurate.

Chicken, meet egg.
Posted by Pericles, Friday, 4 July 2014 10:35:28 PM
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its like a cross between a tRainwreck.AND A TENNIS MATCH

LUDWIG SEEMS TO BE..serving for the first set
per ridicules has layed down the hard test of a 5 page intro
[that really just outlines im not needing to read the 5 books

mercyfully 5 pages.
http://www2.hn.psu.edu/faculty/jmanis/adam-smith/wealth-nations.pdf

and its game set and match/ludwig
per ridicules will ignore the elephants and run..sadly for everyone
but the old boy is on the run..but its been fun

can i unsubscribe now?
Posted by one under god, Friday, 4 July 2014 11:40:20 PM
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You must be looking at the big print edition, one under god.

>>...the hard test of a 5 page intro<<

In my copy, it is a smidge over a thousand words. Ten paragraphs.

But the essence is still in those first two sentences - even if Ludwig were only able to comprehend those two, we would be well on our way to understanding his elephant problem.

I'll repeat them, just so we don't get any wires crossed.

"The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations.

According, therefore, as this produce, or what is purchased with it, bears a greater or smaller proportion to the number of those who are to consume it, the nation will be better or worse supplied with all the necessaries and conveniencies for which it has occasion."

There it stands, in all its brilliant simplicity: GDP, in its sense as an aggregate of all economic activity in the first sentence. And GDP per capita, showing that people are "better or worse supplied", if the number is higher, or lower, in the second.

It is only necessary to wade through the rest of the five volumes, once the elegance and pellucid perfection of those two definitions is completely understood.

So far, we haven't even made it to the starting gate.
Posted by Pericles, Friday, 4 July 2014 11:57:43 PM
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http://1.static.australianindependentbusinessmedia.com.au/sites/default/files/styles/ak_graph/public/kohlersgraphs/2014/Jul/dow-hits-170000.png?itok=Bmbtit1p

LETS/BREAK-IT/DOWN

<<..THE ANNUAL LABOUR\of every nation>>
IS A LOOSE MEASURE/how-to dfferentiate/free volunteer..'labour;
/from recorded/paid/labour/or...good worker/poor work/labour/
or fixing-up a/botched-job-wurk...we stuffed-up/or the owner refuses/to pay

we need/one source/but who/is/reportiNG WHAT?

as trainee manager/i wasnt..allowed overtime
the annual-labor/of..a nation..<<..is\the fund>>..

the annual*labor../is A FUND?
LOL''<<..which/originally..supplies it>>.

it being 'state"....this labor/pool/fund..\
>>..with all/the necessaries..and..conveniencies..of life/which..*it* annually&,,consumes,"

WHICH/*THE STATE CONSUMES*..[IE \CONVENIENCES/NESSSTIES/
[LEST WE FORGET/DEAD..corperate/STATE-HOODS/HAVE..NO NECESSITY[CAUSE THEIR DEAD]

state..consumes/subsumes/necessities/[of state
[..and conveniences..[of statehood/legislations]

<<>.and/which\consist..*always either
in\the/..immediate_produce*of..*that labour,>>

ie their product*..\and/harvest;produce/*is/the_fund?

<<..*or*..[its]..in=..what is purchased*..
*with..that produce/from\other*/*nations.>>

IE/..BETWEEN/FICTIONS.[OTHER/NATIONS]

hang_on mate/your reading/it blindly
lets read-it backwards\

<<>.THE ANNUAL LABOUR/of every nation
is-in..*what*..*is purchased..*from other nations...
the fund..[IS that produce]..which..originally supplies..*it
IE/STATE\..with all the necessaries and..conveniencies of life which it annually consumes,..and..which consist..*always/either*in the immediate produce..*[PRODUCT]..of that labour..[in/kind/or coin]

<<>.According,..therefore,..as this*produce,
or..what is purchased with..it, bears a greater*
LOL..*or smaller proportion/to the number\of those who
are-to consume it,..he nation/will be better\or/worse supplied*with
all the necessaries*..and conveniencies..*for which it/has occasion.[?]

But this proportion [THAT/HAS\OCCASION/..must*
in..every_Nation..*be regulated*by two/different circumstances:
*first,=by the skill,..dexterity,..and judgment
with which/its labour is generally applied;>>

what about/invention/patent;rights/intellectual capital?
my bankers dictionary is much/more\relitive

<<<..and,

secondly, ..by the/proportion*between the number\of thosewho are employed /in/useful labour,..and that of those who are not so employed.

nation, the abundance or scantiness of its annual supply must, in
that particular situation, depend upon those two circumstances.
The abundance or scantiness of this supply, too, seems to depend
more upon the former of those two circumstances than upon
the latter. Among the savage nations of hunters and fishers, every
individual who is able to work is more or less employed in useful
labour, and endeavours to provide, as well as he can, the necessaries
and conveniencies of life, for himself, and such of his family
or tribe as are either too old, or too young, or too infirm, to go ahunting
and fishing. Such nations, however, are so miserably poor,
that, from mere want, they are frequently reduced, or at least think
themselves reduced, to the necessity sometimes of directly destroying,
and sometimes of abandoning their infants, their old people,,
Posted by one under god, Saturday, 5 July 2014 12:52:08 AM
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<< If you are not prepared to make even the slightest effort to learn even the most basic fundamentals on the topic, it is hardly likely that you will ever be able to understand where you are going so wrong. >>

Hey Pericles, what are you saying??

I said that I was willing to look at the stuff you want me to look at. And that I was looking forward to it.

But fair’s fair - you’ve got to stop ignoring the really important things here that I keep bringing to your attention.

<< Your "elephants" are in fact illusions. They bear absolutely no relation to the discussion at hand… >>

Hells bells, you‘ve lost it completely!

Ohhh, I can’t read any more of your whacky post!!

I’m going to go and read something that has surely got to make more sense than that. Now, where’s my copy of ‘The Wealth of Nations’ gone (:>/
Posted by Ludwig, Saturday, 5 July 2014 8:47:19 PM
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<< LUDWIG SEEMS TO BE..serving for the first set
per ridicules has layed down the hard test of a 5 page intro >>

<< and its game set and match/ludwig
per ridicules will ignore the elephants and run..sadly for everyone
but the old boy is on the run..but its been fun >>

Heheheheeee! I can’t disagree with that OUG! ( :>)
Posted by Ludwig, Saturday, 5 July 2014 9:23:29 PM
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Correction, Ludwig.

>>I said that I was willing to look at the stuff you want me to look at.<<

Your offer was conditional upon my agreeing to the fact that there were, in fact "elephants in the room". Which is no more than a variation on "when did you stop beating your wife".

First, teach yourself a little about economic theory, then frame your concerns about the impact of population growth in the light of that knowledge.

Here's my analogy-of-the-day for you.

You and I are in the pub, having a chat about a new building that is going up in the middle of the CBD.

Ludwig: "I reckon it's dangerous. It's wider at the top than at the bottom, it's bound to fall over. Gravity, innit?"

Pericles: "I'm pretty sure the architect wouldn't have designed a building that falls over. After all, he had to learn all about geometry and stuff before he could get a design accepted".

Ludwig: "Geometry? Load of old rubbish. What's that got to do with a building that's going to fall over and kill thousands of people?"

Pericles: "But geometry was invented so that builders could actually model their work so that the buildings didn't fall over. Check out Thales, Pythagoras..."

Ludwig: "You are clutching at straws with this archaic Pythagoras reference. What has the square on the hypotenuse got to do with screaming people running away from tons of falling masonry..."

A lack of basic understanding of geometry is preventing the pub version of you from understanding how a building, wider at the top than the bottom, is still a stable structure. Just as a lack of basic understanding of economic theory is preventing you from understanding how a nation's economy is measured in relation to its people.

Adam Smith is the Pythagoras of economics. GDP is an arithmetic, rather than geometric construct, but is as valuable a building block as a² + b² = c²

Have a great day
Posted by Pericles, Sunday, 6 July 2014 8:13:15 AM
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ITS NICE/of pericules*2..[lol]]to build/another/elephant
for us blind-men..to feel-up..so lets get into the eco-grope

persee/quotee//<<Here's my analogy-of-the-day for you.>>2

You and I/are in the pub,>>
you/bying-your-booze[top-of/the\shelf]
and/me/waterd-down..IN A pot/of\coke/no ice..

<<../having a chat/about a new building/that is going up in the middle of the CBD.>>

you speculate/its yanki investers/spending 2 billion/plus
with govt tax breaks/and other subsidy..of 55 percent
we get a 4 billion dollar asset
every bit of the rental income/GOES DIRECTLY OFFSHORE INTO MY AMSTERDAM TAX HAVEN

ANYHOW/as i recall/my side of the conversation

Ludwig:."I reckon\it's dangerous.>>
[ie investing in a sure longterm loss

ludwig.<<.It's wider>>

THE LOSS-GRAPH..<<.WIDER/at the top\than at the bottom>

BECAUSE/WE GET/SOME SALESSOME WORK/wages[got taxes as if income]
then allows the income/exported to blow-up in our faces

<<>it's bound to fall over...[basic/eco-Gravity,.innit?">>

as i recall/by-then/my.,,gl,ass[was half-full.]

<<Pericles:"I'm pretty sure..the architect>>
here/we were..unsure..the architect/WHO-set/up the tax scam/or the finacnce planning.or the govt regs/that dont tazx tRUE-income/only wage?

<<>wouldn't have designed an/investment/vessel/instrument/that falls over...After all,/he had to learn\all about\INVERTED ACCOUNTING-\geometry./an\..ALL THAT TREATY-stuff./before he could get a designed/TAX SCHEME/accepted".

Ludwig:."Geometry?..Load of old rubbish..What's that got to do with a.building/that's going to fall over and kill/THE INVESTMENTS/OF HUNDREDS/thousands of people?".WHEN NO-ONE CAN AFORD/TO PAY THE RENT

LOOK PERICULES/I FEEL WE WERE ALL A LITTLE DRUNK
AND TO BE HONEST MOST THE TIME I WANT LISTENING
i do recall we felt dome remores[some/of-us]/the daze after.

but we were drun..

Pericles: "But geometry was invented/so that builders could actually model their work.so that the buildings didn't fall over.
/my/gods web-site/Check out "

Ludwig:.."You are clutching/at\straws with..this archaic Pythagoras reference..What has the square/on the hypotenuse got\to do with screaming people.running away from tons of fallingMONETARY VALUE/IN THE INFALTION-CYCLE/bankers need to break the banko*..."

/[BLANKED-OUT/WAS WATCHING THE VISION

LUDWIG..<<A lack..of basic understanding>BLANKO<..is preventing you from understanding=/how a nation's economy.is measured in relation to its people.>.BLANKO<<.a building block/as a² + b² = c²

LET A=ASSET
minus[not/plus].b=deficite
=gdp

Have a great day>..:..a-b=c.[DONE PROPERLY]*
Posted by one under god, Sunday, 6 July 2014 8:42:53 AM
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Hahaha. Very funny Pericles.

You are a most interesting study in psychology!!

Consider this:

You and I are on the beach, having a chat about GDP and sustainability.

Ludwig: “I reckon that the way GDP is calculated is contributing enormously to us NOT achieving a sustainable society.”

Pericles (looking at me as though I’m completely bonkers): “WTF’s GDP got to do with suss… susty… how do you say it…..sustability?”

Ludwig: “GDP promotes never-ending growth, or feeds straight into the madness of blind economists that worship never-ending growth…. which is at complete odds with a sustainable future”

Pericles (glancing at Ludwig with a very puzzled look, as if to say; I wouldn’t have a clue what you just said): “But growth is good and faster growth is better…. and slower growth is worse. That’s the absolute fundamental bottom line with GPD!”

Ludwig: “YES…. …….. ……… ……… and how does that fit with us achieving a sustainable future?”

Long silence.

Pericles: “WTF is this susta…. saisty…..saystunnability thing that you are always on about?”

Ludwig (realising that it is pointless continuing this conversation): “Hwaaw, look at that itsy bitsy bikini. Now, she’s deffnitly got saystunnability!”

Pericles: "Ahhh, now I understand you........... I think?!"
Posted by Ludwig, Sunday, 6 July 2014 9:39:03 AM
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<< Adam Smith is the Pythagoras of economics. >>

Ohhh puuuleeease! (:>(

From ‘The Wealth of Nations’

The very first sentence in the introduction reads:

< THE ANNUAL LABOUR of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes. >

¿What?

The ‘fund’ is the resource base. The labour is the intermediary between the resources and the useful endpoint of those resources!

Labour is not the fund. If we had heaps of labour and very limited resources, we wouldn’t be getting very far.

This is very telling indeed about the enormous fallacy inherent in basic conventional economics.

Surely the resource base, the draw-down on it, the renewability or once-off use of it, the constancy or rate of change in consumption of it and all its components…. is the real bottom line.

And surely any primary measure of our economy that doesn’t take into account these things is critically flawed.

Pericles, I don’t know how on earth you can see great wisdom in this opening sentence with reference to GDP.

I see great folly, right from the most fundamental level!

More later
Posted by Ludwig, Sunday, 6 July 2014 9:43:14 AM
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Nice try, Ludwig.

>>You and I are on the beach, having a chat about GDP and sustainability.<<

For a start, only you are talking about sustainability. My brief is to educate you on the meaning and significance of GDP, so that in future you can avoid such infelicities as this:

>>...GDP... is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol, etc, etc<<

GDP, as you should know by now, does not have a positive and negative side to its ledger. It simply adds stuff together. Your opinion as to whether this is beneficial to your particular lifestyle is, I regret to say, irrelevant in economic terms.

Once you have genuinely understood the foundation stone of the GDP calculation, you may use it in any way that you like.

>>I reckon that the way GDP is calculated is contributing enormously to us NOT achieving a sustainable society.<<

If I was sure that you actually do understand "the way GDP is calculated", I might let that stand as a genuine, if idiosyncratic, view on the topic of sustainability. Since it is a fact that you clearly don't understand, and seemingly do not wish to understand, the fundamentals of GDP, there is little value in pursuing this train of thought.

>>GDP promotes never-ending growth<<

You see, with statements like that, you prove my point perfectly. GDP does nothing of the sort. It is a number. More is generally better, less is generally worse, while with per capita GDP, more is certaiunly better, less is certainly worse. You have been consistently unable to show one example where this has been shown to be false.

And I can assure you that I have never made such a claim as this, that you ascribe to my avatar...

>>But growth is good and faster growth is better…. and slower growth is worse<<

Speed of growth is a totally different matter. Ask the Chinese.

Or even the Japanese.
Posted by Pericles, Sunday, 6 July 2014 5:56:47 PM
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If this is the best you can do as a critique of Adam Smith, you really need to try a lot harder.

>>¿What? The ‘fund’ is the resource base. The labour is the intermediary between the resources and the useful endpoint of those resources! Labour is not the fund. If we had heaps of labour and very limited resources, we wouldn’t be getting very far. This is very telling indeed about the enormous fallacy inherent in basic conventional economics.<<

Ok, let's look at that in a little more detail, and see where we get to.

You assert that "if we had heaps of labour and very limited resources, we wouldn’t be getting very far."

That is patently wrong. As well as its being logically false, empirical evidence is strongly against it.

As examples of successful economies with "heaps of labour and very limited resources", have a look at Singapore. Or Hong Kong. Or, on a slightly bigger scale, Japan, of which country the CIA Factbook observes...

"...with virtually no energy natural resources, Japan is the world's largest importer of coal and liquefied natural gas, as well as the second largest importer of oil".

Think of it this way. If we had "heaps of resources, and very limited labour", what would be the state of our GDP? And would we, individually, be as well off as we are?

Now have another look at this observation of yours:

>>Surely the resource base, the draw-down on it, the renewability or once-off use of it, the constancy or rate of change in consumption of it and all its components…. is the real bottom line.<<

Can you see the inherent fallacy now?

>>Pericles, I don’t know how on earth you can see great wisdom in this opening sentence with reference to GDP.<<

Stick with it, Ludwig. Keep your mind open, in particular avoid colouring what you read with your virulent anti-immigration views.. You will be amazed at what you will find.
Posted by Pericles, Sunday, 6 July 2014 6:15:31 PM
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<< For a start, only you are talking about sustainability. >>

Sadly, yes. (:>(

<< Keep your mind open >>

Hmmmm. It seems that yours is closed tightly.

If you are not willing to talk about sustainability in relation to GDP and economic growth, then basically you are not even willing to think about the future at all. With such an incredibly narrow view, it is no wonder that you can’t see the enormous error in your simplistic assertion that more growth is good and less is bad. Please, open ye mind!

<< My brief is to educate you on the meaning and significance of GDP… >>

Oh really. Sorry, but this is not a teacher / pupil relationship, it is a discussion between two people who both know a bit about economics and related stuff, neither of whom are experts, and who happen to have fundamentally different views.

We are learning from each other here. Well… I am considering everything that you say very closely, while you seem to be just dismissing a lot of what I say without much critical thought at all, and hunkering down in the old conventional economics corner.

<< GDP, as you should know by now, does not have a positive and negative side to its ledger. It simply adds stuff together. >>

Er… I think we’ve thoroughly been over this point. Yes, it adds all sorts of stuff together, regardless of whether it advances prosperity, helps recovery from disasters, is neutral in terms of countering the negative effects of illness and injury or is just duplicating everything for the ever-increasing population.

continued
Posted by Ludwig, Sunday, 6 July 2014 9:34:37 PM
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<< Your opinion as to whether this is beneficial to your particular lifestyle… >>

What? Please, don’t make silly comments.

<< … is I regret to say, irrelevant in economic terms. >>

YES. Different types of economic growth are irrelevant in GDP, and of little relevance in CONVENTIONAL economic terms. But of course in REAL economic terms, they are enormously important.

I wish you could get your head around this.

Crikey, half of what you espouse as being good about GDP are things that are fundamentally wrong with it!

<< Once you have genuinely understood the foundation stone of the GDP calculation, you may use it in any way that you like. >>

Whaaat??

So how does this bizarre statement sit with the fact that it is just a single simple number, which is the sum of all economic activity, minus exports…. regardless of the ‘prosperity’ of that economic activity?

Pray tell; what do you mean by ‘any way you like’? In what many and varied ways could it be used?

<< Since it is a fact that you clearly don't understand, and seemingly do not wish to understand, the fundamentals of GDP >>

Why do you keep saying this? Don’t you think that I understand GDP by now? What is it about GDP that you think I don’t understand?

How does your bizarre assertion sit with the fact that GDP is really very simple, the definition of which we went over right at the start of this discussion, or I think on a previous thread.

<< More is generally better, less is generally worse… >>

Whoa! What’s this ‘generally’ bit?? Are you now saying that there could actually be some instances in which more is not better and less is not worse?

continued
Posted by Ludwig, Sunday, 6 July 2014 9:37:47 PM
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<< If this is the best you can do as a critique of Adam Smith, you really need to try a lot harder. >>

Scuuze me, I have responded to the first sentence only. I am sure I will find much more to criticise him about as I read on…. if I can bring myself to do that!

It is fascinating that you have gone into considerable detail regarding the labour / resources bit, and yet you tow such a simplistic line with GDP.

Yes, resources and labour are somewhat complex. Some countries do well with very little of their own natural resources…. but with a great deal of imported resources… a la Japan.

<< If we had "heaps of resources, and very limited labour", what would be the state of our GDP? And would we, individually, be as well off as we are? >>

Interesting question. If we had limited labour, we would presumably have a much smaller population. So we’d have a much smaller GDP. But we’d have a much larger amount resource per capita and a slower rate of exploitation and hence much more for the future. I can’t imagine that we’d be worse off….. and we’d certainly be better off in the longer term, all else being equal.

<< Keep your mind open, in particular avoid colouring what you read with your virulent anti-immigration views. >>

It is a pity you have to make statements like this. You know full well what my issue is with very high immigration / population growth, and that it does amount to being anti-immigration.

I’ve said this to you many times – please refrain from making false assertions, and try to just say things as they really are, as you know they are, and not in an exaggerated or outrightly false manner.

And please also get away from this idea that you are the teacher here, and let’s bring it back a level-playing-field discussion…… please.
Posted by Ludwig, Sunday, 6 July 2014 9:41:39 PM
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.... and that it does NOT amount to amount to being anti-immigration.

Sheesh!

fcknmngrlpftrtypos!! ):>{
Posted by Ludwig, Monday, 7 July 2014 8:25:07 AM
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master/ludwig/docter/of getting it correct

quote<<and that it does NOT amount to being anti-immigration.

Sheesh!>>>>>>>>>>>>>>>

dont be distracted/thats how the old fox gets us
we follow his redirection/even directed accusation

but he is/as we all are
weary of putting his beloved pearls of wishdom/before the great unwashed masses/only shrugging their shoulders and scratching their grrrasses

but i can help clarify/the codeed meaning of demons/revealed in the letter of the word

each letter=a word/emotion/feeling

f=few
[or fall/or follow[ie lacking individual choice

c=see

k=king/regal\rOYAL-MESS/

N=GOOD FRIEND
n=NOT-YET

m=Marriage/union\mutual advantage

R=rightious
g=god[the-sun]natures/nuture

r=correct/[re-ASSURENCE;PROPER/AUTHORITY

l=FREINDHIP/STANDING[upright]
p=propaganda[proper ganger

f=intercourse[of course]
t=balance
r=rightfuly/deliverd

t=balance
y=why!
p=proper-seeing
o=completion
o/GREAT COMPLETION
0-NONconclusive/accounting
s=serphant/[servant/the lord\satan

!!
OO

(00):>{-*$=securitised/under=written

the mark f the beast=your signature
your signature/created\your sig*-nature
[ie/the\person-under/the\act.satan only controls those who sought his advantage
they app-lied/by beggig[apply=beg/same/same

govt gave/you/licence[permission to do that otherwise
unlawfukll*[for a personA/created under the act/to do\
by controling the fictions they control you

gdp=
gods[ie;sun/ie\satans
destructive/propaganda*

G*D*P/=\see?
Posted by one under god, Monday, 7 July 2014 9:41:19 AM
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But I am, Ludwig.

>>If you are not willing to talk about sustainability in relation to GDP and economic growth, then basically you are not even willing to think about the future at all.<<

Just as soon as I am convinced that you actually know what GDP is, then we can usefully have a discussion on its relationship with sustainability. Until then, you are simply blowing hot air.

>>Sorry, but this is not a teacher/pupil relationship, it is a discussion between two people who both know a bit about economics and related stuff<<

When one half of the discussion team airily dismisses Adam Smith's contribution as irrelevant, then it is clear that a significant amount of teaching and learning is essential, merely in order to get to the starting gate of a meaningful debate.

>>Different types of economic growth are irrelevant in GDP<<

Quite so. Which brings into question why you keep harping on about GDP in the context of sustainability. GDP, as you say, is entirely indifferent to the "type" of growth or decline that it is measuring. Which of course is in complete contradiction to your illusion that GDP is somehow used as a forecasting tool.

Here's a good pair of questions:

>>Don’t you think that I understand GDP by now? What is it about GDP that you think I don’t understand?<<

No, you don't understand it at all. Take for example your views on Adam Smith's first paragraph.

>>If we had limited labour, we would presumably have a much smaller population. So we’d have a much smaller GDP. But we’d have a much larger amount resource per capita... I can’t imagine that we’d be worse off<<

You would have more resource per capita, but fewer resources to create value from it - iron ore doesn't mine itself, you know. Therefore the actual economic activity would be lower. Your assumption that we'd somehow not be worse off is based on nothing more than wishful thinking on your part.

Which does not support a view that you know anything at all about GDP, let along economics in general.
Posted by Pericles, Monday, 7 July 2014 11:38:10 AM
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between persed-lips

*<</
Here's a good pair of questions:

>>Don’t you think that I understand GDP by now? What is it about GDP that you think I don’t understand?<<

Adam Smith's first paragraph.

>>If we had limited labour, we would *presumably
have a much smaller population.><

sire/you could construe/to presume/WRONGLY
LIMITED LABOUR[in an aging population]
AS/MORE NEED BE CARRIED/AND FEWER TO carry-on
thus presumption hits reality/stagflation/bail-in//bubble goes on

if more/retirees/that jobs
or than workers?

<<>>,,So we’d have a much smaller GDP./But we’d have a much larger amount resource per capita...""

YES WE GOT THE SCRAP VALUE OF THEM STAINLESS STEEL BEDS
WE COT INDUSTRY BY TYING A LITER SIZE BOTTLE OF UNSUSED HANDGEL/ON EVERY BED/THERE IS JOBS IN CHECKING THE EXPIRY DATES/BUT THAT USUALY COUNTS AS A LOSS

<<I can’t imagine that we’d be worse off<<

<Your assumption that we'd somehow not be worse off is based on nothing more than wishful thinking on your part.::

GDP=GODS DEVELOPMENT PLAN
[thats spin for satans destructive pain
blowing up bigger bubb-le troubles yet again

<<Which does not support a view that you know anything at all about GDP, let along economics in general.""

how come the media obsesses about it
were in the $$$hit/that well known abriviation was a big part of the diversion/as our bankaccounts get bailed-into wortles non voting shares in a bankrupted/mortgaged to the hilt big too big to fail wann k
Posted by one under god, Monday, 7 July 2014 1:08:51 PM
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Sorry Pericles, you’re getting too far into la la land.

Can you just tell me exactly, succinctly, what you think I don’t understand about GDP.

Tell me exactly what GDP is if you think I don’t know.

Thankyou.
Posted by Ludwig, Monday, 7 July 2014 10:44:39 PM
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Let's save us some time on this, Ludwig.

>>Can you just tell me exactly, succinctly, what you think I don’t understand about GDP<<

It would be much, much quicker if you explained what you do know about GDP.

If you could not even recognize the signals in Adam Smith's opening remarks, we are not going to be spending too long on this exercise, I suspect.
Posted by Pericles, Monday, 7 July 2014 11:20:04 PM
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IT OCCURS TO ME/TO ASK
DOES THE SHARE TRADING
[like flash-trades/get recorded/by volume/or money turnover or proffits?

Shades of 1930 in Wall Street Banks’ Dark Pools?
http://wallstreetonparade.com/2014/07/shades-of-1930-in-wall-street-banks-dark-pools/

On June 2 of this year, the Financial Industry Regulatory Authority (FINRA), a self-regulator of Wall Street’s broker-dealers, dropped a bombshell. For the first time, FINRA released trading data for Wall Street’s dark pools – unregistered stock exchanges that the SEC recklessly allows to trade stocks without making the bids and offers public, along with many other details.

The bombshell, that mainstream business media has yet to comprehend, was that the same mega Wall Street banks whose share prices crashed in the 2008 financial crisis are today not only running dark pools for stock trading but they’re trading the stock of their own corporate parents – to the tune of tens of millions of shares a week. Those Wall Street banks include JPMorgan Chase, Bank of America Merrill Lynch and Citigroup.
http://patriotrising.com/2014/07/07/badly-screwed/
What could possibly go wrong in this arrangement?

http://investmentwatchblog.com/governments-from-around-the-world-including-western-islamic-asian-and-african-nations-admit-they-carry-out-false-flag-terror/

http://rinf.com/alt-news/usa-news/profiteers-cashing-nations-catastrophic-water-crisis/

soon we can tax thought
http://www.intellihub.com/coming-soon-tsa-mind-reading-scanners-catch-terrorists/

think while your still able to do it for free[freely/feely]
http://www.washingtonsblog.com/2014/05/enron-2-0-wall-street-wants-manipulate-state-energy-markets-just-like-manipulates-every-market.html

http://investmentwatchblog.com/video-sorry-we-spied-on-you-five-interesting-corporate-apologies/

working on the number/watchers
http://whatreallyhappened.com/IMAGES/keepwatch.jpg
Posted by one under god, Tuesday, 8 July 2014 7:18:23 AM
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Ok, maybe that was a little too dismissive Ludwig. But it was late.

>>Can you just tell me exactly, succinctly, what you think I don’t understand about GDP<<

The theme that you come back to time and again is this idea that there are "good" and "bad" components to GDP. That alone demonstrates a depth of misunderstanding that is difficult to move past. All the people who work in those areas you call "bad", such as firefighters, doctors, nurses, builders etc. are all part of the economy, and buy goods and services from shops, insurance companies etc. You cannot arbitrarily dismiss their activities as being detrimental to the economy, they are simply part of it.

This flows into your misunderstanding about the impact of adverse events, such as bushfires etc. They are in themselves detrimental to the economy, and this shows up in a reduction of, not an increase of, GDP.

(Reminder: you still haven't withdrawn your original assertion, that "GDP. It is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol")

The second major roadblock you have is this concept that GDP is somehow used as a forecasting tool. It is not. It cannot be.

Put together, these demonstrate clearly that you are unable to grasp the simple fact that GDP is a measurement tool of the general prosperity of our nation. Higher is therefore better - as you can find countless examples in recent years where entire economies have been forced to take drastic remedial action, when their GDP diminishes.

If you were able to give examples where your theories on GDP can be demonstrated, rather than operate entirely on the emotional generalizations about how we just have to "look around and see how bad it is", we might just get someplace.
Posted by Pericles, Tuesday, 8 July 2014 9:16:25 AM
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Hahaha. Just as I thought Pericles. You can’t even accede to my simple request, to just cut through the crap and tell me exactly what your issue really is. Surely my request is directly in line with what you are trying to achieve here, isn’t it?

I have to conclude that you are just full of bluff. It is all just another diversion from one who has been totally trumped, who knows that GDP is fundamentally and critically flawed but is never going to admit it.

Tell me what it is that you think I don’t understand about GDP, oh great guru……please.

Come on… after all the exchanges that we have had on this thread, how can you really say that I don’t understand GDP? It is nonsensical.

I’ll tell you what I think you understand about it….

It is a simple number, made up of all economic activity within the financial year lead up to the release of that number. The only thing that is not absolutely added to GDP is imports. Exports are included, minus imports. So, only the net export total is included in GDP. Other than that, there are simply no considerations about what should or could be subtracted. And there is no thought in your mind that anything else should be subtracted.

You think that a higher GDP is better and a lower one is worse, and a falling GDP is very bad, end of story.

You take GDP as an indicator of economic growth, and per-capita GDP as a better indicator how our economy is travelling with respect to the growing population. You seem to think that economic growth, and especially per-capita economic growth equals prosperity.

And you don’t look at GDP in the wider context of the folly of never-ending rapid growth, the ever-increasing demand for everything, the ever-more rapidly shrinking non-renewable and potentially renewable resource base, or the sustainability of our society.

What else can I say?
Posted by Ludwig, Tuesday, 8 July 2014 9:37:11 AM
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Pericles, you might want to look at the article by Allison Orr, published on OLO today:

http://www.onlineopinion.com.au/view.asp?article=16474

< Often the calculation of dividing GDP by the population is held up as the definitive picture. It's a neat number, easily compared among countries and across time. But it is a crude measurement, giving a one-dimensional picture of one aspect of a nation's economy. It doesn't come close to illustrating the real state of a nation. >

< If we want to build a fair, inclusive society, then we need to value things beyond their dollar value. We need to be measuring government policies using multiple metrics and indexes to have a full understanding of their social impact. This will not only ensure our continued prosperity, but will enrich our democracy. Our political leaders are more than just bookkeepers for our tax dollars and our public discourse should be about more than economics. We want a real narrative that can inspire us. >
Posted by Ludwig, Tuesday, 8 July 2014 9:45:45 AM
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<<..The second major/roadblock you have is this concept that GDP is somehow used as a forecasting tool...It is not...It cannot be.>>

http://www.google.com.au/search?q=GDP+is+a+measurement+tool+&

en.wikipedia.org/wiki/Measuring_GDP
&#8206;

GDP is designed*to measure/the market value..[of production/that flows through..]

en.wikipedia.org/wiki/Gross_domestic_product
&in 1944,
GDP became the main tool for measuring a country's economy.
http://www.greenpeace.org/international/Global/international/publications/RioPlus20/Beyond-GDP.pdf
Ahead of Rio+20, the need to (finally) go beyond GDP has grown stronger. This was also acknowledged in
the “zero draft” negotiation document, which in January 2012 claimed to “recognise the limitations of GDP as
a measure of well-being” and suggested to “develop and strengthen indicators complementing GDP that
integrate economic, social and environmental dimensions in a balanced manner”.
New ways of measuring progress and wealth could mean true progress for sustainability, because what we
measure affects what we do, and if our measurements are flawed, decisions get distorted.
GDP was never meant to be a measure of well-being or development. It’s an indicator that grows by the
number of car crashes, purchase of private guns, funerals, loss of primary forests, overfishing, and so forth. It
also doesn’t account for the impacts our current choices will have in the future, which is a key question for
sustainability. Yet, a myopic focus on GDP growth has been – and still remains – at the core of what human
development is perceived to be by political leaders.
The criticism of GDP is as old as the tool itself, but the economic crisis – coupled with looming resource
scarcity and multiple environmental challenges – has created new momentum for adopting better
measurement tools and going “beyond GDP”, a slogan frequently used today even by the World Bank. The
UN, OECD, UNEP and others are all developing and testing different measuring tools.



<<>.Put together, these demonstrate clearly that you are unable to grasp the simple fact that GDP is a measurement tool of the general prosperity of our nation. >>

LOL

<<..Higher is therefore better>>

HIGH ROLLING
double up till ya win

lets talk of special drawing rights/
[the unspoken/new world currency*]
sdr/armogeddon...2hour/mark
http://rss.infowars.com/20140707_Mon_Alex.mp3

lesT we forget/the secreT bailouts/
too bIg to fail/ONLY got bigger/DEFAULTS.
Posted by one under god, Tuesday, 8 July 2014 9:50:15 AM
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That’s interesting. Pericles I didn’t see your post of 8 July 2014 9:16:25 AM wasn’t to be seen when I posted this morning, even though I religiously refresh the page every time just before posting!

Thankyou for reconsidering your dismissiveness.

I'll reply in detail later.
Posted by Ludwig, Tuesday, 8 July 2014 10:05:44 AM
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I am going to write that again......

That’s interesting.

Pericles I didn’t see your post of 8 July 2014 9:16:25 AM before I posted this morning, even though I religiously refresh the page every time just before posting!

Thankyou for reconsidering your dismissiveness.

I will reply in full later.

[aaaaarrrgh!]
Posted by Ludwig, Tuesday, 8 July 2014 10:08:34 AM
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At worse, simplified, aggregated indicators can be dangerously misleading, by ignoring
interconnectedness of natural systems and the possibility of tipping points and abrupt changes. Not everything can or should be
monetised and valuing must not be equal to trading. Also, valuing natural capital must not be equal to privatising the
commons...a bail out may be too late,/and no money in
the world will be able to help us.

So one needs to be very careful about what we are measuring and for which purpose; what\we can control and what not; that assumptions made are fully transparent, and that when we’re leaving out invaluables from\calculations, it doesn’t mean that they are ignored, it means that they are paid special attention.

We tend to prepare for\what we can comprehend, so we undermine (or undervalue) uncertain things and the uncontrollables until they start unfolding,/and it may be too late to act.

i noted this
The True Costs of Coal
Traditionally considered the cheapest fuel around,
the market price for coal ignores its most significant costs. These
so-called “external costs” manifest themselves as respiratory diseases, mining accidents, acid rain, smog pollution, reduced
agricultural yields, water use impact and climate change that society is paying for in hospital bills, prices of water and food,
climate impacts, and so forth.

If governments required polluters to pay for the negative impacts their profit making is causing,the kWh prices of coal electricity would be much higher,/revealing the true cheapness of renewable energy and energy-efficiency.[THESE PEOPLE SHOULD BE SUED]

sure they got green credit/daytimes
but not times they are slurping off the grid for free
things is day power/is the lie/they feel GOOD NOT BECAuse/their doing the right thing/but that their getting that free ride/we pay them 55 cents/for their day power[so we slow down the coal during the day[ie more p[oluting[BECAUSE AT NIGHT IT HAS TO FIRE UP FOR THOSE WITH FEE SOLAR CREDITS/TO their discredit

the free lunch must end
but then/the;private/scam only coverS THE high treason of those wiTH ACRES/or govt gifted greeN CREDIT/BY BLACKHEARTS

GREENIES/WENT..BUST/iTS NOW run\by account*ants
http://www.greenpeace.org/international/Global/international/publications/RioPlus20/Beyond-GDP.pdf
Posted by one under god, Tuesday, 8 July 2014 10:32:00 AM
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Yep, saw that, Ludwig.

>>Pericles, you might want to look at the article by Allison Orr, published on OLO today:<<

Allison Orr uses Joseph Stiglitz to help push her own agenda of half-baked wishy-washy "progressive" socialism. Fair enough. Some of Stiglitz' work has been illuminating, particularly the work on Information Economics, for which he was awarded a Nobel Prize.

http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2001/stiglitz-lecture.pdf

And if you're looking for soundbites to throw at me, there's a doozy for you in his Nobel lecture...

"The set of ideas that I will present here undermined [Adam] Smith’s theory and the view of government that rested on it"

Unfortunately, you won't be able to use it as evidence of anything, simply because you do not understand the rationale behind that statement. Nor will you find any evidence in the rest of the lecture, since you won't know what to look for. If only you had made the effort to learn just a little bit...

Ah well.

You might also be interested to know that one of Stiglitz' more famous traits is his propensity to contradict himself.

"Stiglitz regularly seeks to elevate regulation as the path to financial health, but then contradicts himself in decrying a 2004 SEC decision in which investment banks were allowed to increase their debt-to-capital ratios “from 12:1 to 30:1, or higher”. The question Stiglitz fails to ask is whether regulation was in fact the problem. Indeed, the ’04 SEC decree essentially allowed risk-oriented banks to hide behind the very regulations that Stiglitz would like more of."

http://www.realclearmarkets.com/articles/2008/12/joseph_stiglitz_and_the_foolis.html

Stiglitz is just another voice amongst the cacophony, each convinced they have the recipe for saving the world from itself

So, before you pat yourself on the back over your perspicacity, take some time to work out what is actually being talked about. Just picking up a word or two here and a phrase or two there, won't cut it for credibility.

Unfortunately, this has never been clearer that in the comment you posted on the Allison Orr article. Which demonstrates, more than I possibly could, that you don't actually know what you are talking about.
Posted by Pericles, Tuesday, 8 July 2014 5:49:12 PM
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I asked:

>> Can you just tell me exactly, succinctly, what you think I don’t understand about GDP <<

Thankyou Pericles for a full response.

Ok, so firstly, regarding “good" and "bad" components to GDP:

You have surely got to admit that not all economic growth is equal in terms of contributing to prosperity. And yet it is all treated as equal within GDP.

You can surely see that economic growth that occurs as a direct result of a flood is simply attempting to get us back on track to the same level that we were at before the flood, and should therefore not be counted as contributing to prosperity.

Disasters shouldn’t increase economic growth. All economic activity that results from them should not be added to GDP. If you are entrenched in your disagreement with this well so be it. But you won’t be changing my mind on this one.

Likewise with illness and accidents….. and the duplication of everything to meet the demands of population growth.

Ok, so we differ profoundly on what GDP should and should not include. But I know that GDP DOES include it all. I DO understand GDP. You know I do, at this advanced point in this discussion. So your continued assertion that I don’t understand it is wrong and always has been.

<< …you still haven't withdrawn your original assertion, that "GDP. It is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol" >>

More to the point is that you still haven’t conceded that this is true!

continued
Posted by Ludwig, Tuesday, 8 July 2014 9:47:48 PM
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Why can’t you simply agree that not all economic activity is equal in terms of prosperity, or legitimacy to be included in GDP at the same value as the best types of economic growth?

There is a great deal of economic activity which is simply serving the community in a neutral manner, not in a manner that is advancing our quality of life, not improving prosperity and not taking us towards a sustainable society.

Surely you agree with this.

<< The second major roadblock you have is this concept that GDP is somehow used as a forecasting tool. >>

Hey come on, we’ve reached agreement on this! Why are you hell-bent on upholding disagreement here?

GDP is only useful as a predictor of the following year or so’s GDP by way of it presenting a number which should be the same in the following year if all the contributing factors are the same, and different depending on how the contributing factors might vary. That’s it. It isn’t useful as a predictor of anything beyond that.

So your “second major roadblock” is non-existent.

<< Put together, these demonstrate clearly that you are unable to grasp the simple fact that GDP is a measurement tool of the general prosperity of our nation. >>

You are just so wrong. I understand GDP. And it is NOT a good measurement tool of prosperity. Not by a very long way. It is a VERY HIGHLY FLAWED AND MISLEADING tool.

You and just about all other people with any interest in GDP do indeed use it as an indicator of prosperity. And therein lies the great problem with it.

Your explanation of what you think is wrong with the way I think about this whole issue has galvanised in my mind just how off-track you really are about it all.

I understand GDP perfectly well. So do you.

I understand its great folly. You do not. And therein lies your great fault.
Posted by Ludwig, Tuesday, 8 July 2014 9:50:16 PM
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You really cannot see it, can you Ludwig. Every time you tap on your keyboard, you demonstrate a comprehensive misunderstanding of GDP and its role in our economy.

>>Ok, so firstly, regarding “good" and "bad" components to GDP: You have surely got to admit that not all economic growth is equal in terms of contributing to prosperity. And yet it is all treated as equal within GDP<<

GDP is not itself a measure of growth. Only the comparison between one measurement and the next can show growth - or decline. The measurement itself is completely static. It has fixed components that are added together.

There can be no "good" or "bad" components. Only components.

Whether any element of economic activity contributes to prosperity depends entirely on your personal definition of prosperity. GDP only measures the aggregate of economic activity within an economy. It doesn't ask "does Ludwig see this as good activity, or bad activity".

>>You can surely see that economic growth that occurs as a direct result of a flood is simply attempting to get us back on track to the same level that we were at before the flood, and should therefore not be counted as contributing to prosperity.<<

It could indeed "contribute to prosperity", if the flood had washed away an area of derelict and run-down slums, releasing land that is then developed with increased value.

But whatever the case, GDP is not in a position to make value judgments on the impact of the flood rectification. If the rebuilding effort is the same in each case - one where parity is achieved with the prior set-up, one where additional value is created - GDP measures it identically.

>>Disasters shouldn’t increase economic growth.<<

Of themselves, they don't. This is still your greatest blind spot. Until you understand how this cannot be the case, you will never be able to come to grips with the concept of GDP. And only when you understand what Adam Smith was on about, will you be able to grasp its simple logic.
Posted by Pericles, Tuesday, 8 July 2014 11:10:00 PM
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<< Every time you tap on your keyboard, you demonstrate a comprehensive misunderstanding of GDP and its role in our economy. >>

You wish Pericles!

You’ve said this so many times that you have thoroughly convinced yourself that it is true. Either this or you are deliberately making false assertions just for the sake of maintaining disagreement, because you’ve got nowhere else to go with your argument!

Your insistence on disagreeing with me regarding the predictive aspect of GDP, after my repeated explanations that it is of no predictive value except that we can expect a number similar to the last number, plus or minus a bit, depending on the various variables, is very telling.

You have been told repeatedly that I do understand GDP, which you can’t deny, given how simple it is and how much we have discussed it….. and yet you insist that I don’t understand it.

Again this is very telling about the way you think.

I said in my last post:

>> There is a great deal of economic activity which is simply serving the community in a neutral manner, not in a manner that is advancing our quality of life, not improving prosperity and not taking us towards a sustainable society. Surely you agree with this. <<

Do you agree? Do you really think that all economic activity is equal?

continued
Posted by Ludwig, Wednesday, 9 July 2014 9:16:52 AM
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What about the value of GDP as a tool of comparison over time and with other countries? How can this be of any use at all when the fundamental contributing factors vary over time and are very different in different countries?

How can the GDP of say Japan, which is very highly technology-based and very minimally primary-resource and population-growth-based be compared in any meaningful way with Australian GDP which is very largely the opposite in its composition?

What sort of an incredibly blunt tool is GDP in that it does not differentiate the types of economic activity that contribute to it, nor the extent to which various economic activities advance prosperity or not?

It is such a blunt tool, or indicator, so as to be nigh on useless. Trouble is of course that it is much worse than useless, as it misleads us terribly.

What an incredibly misleading thing it is regarding high population growth, demand/supply balance, resource base security, quality of life, national prosperity, etc, etc.

I don’t know why you have got hung up on Adam Smith. After reading the introduction to ‘The Wealth of Nations’, I can’t see any great inspiration there at all. The very first sentence was a major turn-off, being fundamentally counterintuitive to the very fabric of economics!!

Ok, I just wrote this post very quickly, out of frustration at your apparent inability to see the most basic principles here.

Now I will have a closer look at your last post and respond directly to it in detail.
Posted by Ludwig, Wednesday, 9 July 2014 9:19:41 AM
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<< GDP is not itself a measure of growth >>

What?? Fascinating!

So, do you think that our politicians and economists feel the same way about it? Do you not think that they absolutely see it as a measure of growth?

<< There can be no "good" or "bad" components. Only components. >>

There are no differentiated "good" or "bad" components, or prosperity-generating and prosperity-neutral components, within GDP, which of course is its fundamental flaw.

It is very interesting that imports are the only thing that is excluded from GDP, and yet imports generate a whole lot of economic activity. I wonder how that really works. Obviously lots of businesses sell imported goods. Their profits get counted within GDP, do they not? So, exactly what is it about imports that doesn’t get included in GDP?

<< Whether any element of economic activity contributes to prosperity depends entirely on your personal definition of prosperity. >>

Phoowey! The concept of prosperity is pretty clear. But for the purposes of developing a much better indicator than GDP, which includes only activity that contributes to prosperity, an exact definition would need to be clarified.

continued
Posted by Ludwig, Wednesday, 9 July 2014 9:57:45 AM
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<< It could indeed "contribute to prosperity", if the flood had washed away an area of derelict and run-down slums, releasing land that is then developed with increased value. >>

Yes. And we would hope that this would always be the case – that whenever we need to rebuild after a disaster, we will do so to a higher quality than what previously existed. There will be an element of improved prosperity.

So then an assessment would need to be made as to what extent this has occurred after a building effort following a cyclone for example. Perhaps 5 or 10% of all the economic activity generated by Cyclone Yasi three years ago up here in north Queensland could legitimately be included in a realistic version of GDP.

I wrote:

>> Disasters shouldn’t increase economic growth. <<

You replied:

<< Of themselves, they don't. This is still your greatest blind spot… >>

You keep going back to things that we have thoroughly discussed, as though we hadn’t discussed them at all. I have made it patently clear that I agree with you that disasters reduce economic activity overall, via loss of crops, businesses, etc.

We are talking about the economic activity they generate in the rebuilding process. Where’s the logic in your acceptance that disasters reduce economic growth but then contribute to it by way of all the economic activity generated in the recovery process? This is entirely illogical!
Posted by Ludwig, Wednesday, 9 July 2014 10:00:08 AM
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I'm not sure we are making much progress on this, Ludwig. You seem unable to place the simplest piece of information in its correct context.

Nor can you accept the tiniest of flaws:

>>...my repeated explanations that it is of no predictive value except...<<

If you had left out the "except" part, we wouldn't be in disagreement. You didn't. So we are.

You insist on introducing red herrings:

>>There is a great deal of economic activity which is simply serving the community in a neutral manner, not in a manner that is advancing our quality of life<<

This has absolutely nothing to do with GDP. Only with your personal concept of components that are variously good, neutral or bad.

>>Do you really think that all economic activity is equal?<<

All economic activity is equally counted as part of GDP.

>>What sort of an incredibly blunt tool is GDP in that it does not differentiate the types of economic activity that contribute to it<<

It is GDP. Nothing more, nothing less.

>>What an incredibly misleading thing it is regarding high population growth, demand/supply balance, resource base security, quality of life, national prosperity, etc, etc.<<

None of these is a component of GDP. Your opinion is therefore aimed at entirely the wrong target.

>>The very first sentence [of Adam Smith] was a major turn-off, being fundamentally counterintuitive to the very fabric of economics!!<<

The fact that you cannot understand it does not diminish its extremely cogent and methodical insights.

>>Do you not think that [politicians] absolutely see it as a measure of growth?<<

Growth - or decline - is the difference between two measurements, not the measurement itself.

>>There are no differentiated "good" or "bad" components, or prosperity-generating and prosperity-neutral components, within GDP, which of course is its fundamental flaw.<<

Once again, you are looking for something that isn't there.

In your terms, it is a "fundamental flaw" that the Harbour Bridge does not connect the Sydney CBD with, say, the Cannon Park racecourse. The fact that it was not designed to do so does not seem to enter into your calculations.
Posted by Pericles, Wednesday, 9 July 2014 4:06:17 PM
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And Ludwig, for someone who insists that they "rooly, rooly do" understand GDP, this is a major faux pas.

>>It is very interesting that imports are the only thing that is excluded from GDP, and yet imports generate a whole lot of economic activity. I wonder how that really works. Obviously lots of businesses sell imported goods. Their profits get counted within GDP, do they not? So, exactly what is it about imports that doesn’t get included in GDP?<<

I'll try to keep it very simple for you: exports are things that we produce but don’t buy and imports are things that we buy but didn’t produce. So we include in GDP the net of exports minus imports.

>>Phoowey! The concept of prosperity is pretty clear<<

Ok, I'm game. Give me a workable definition. Then tell me how you would measure it.

>>I have made it patently clear that I agree with you that disasters reduce economic activity overall, via loss of crops, businesses, etc.
We are talking about the economic activity they generate in the rebuilding process<<

There, you've done it again. GDP sees no difference between activity caused by slum clearance or new road building, nursing victims of road accidents or sufferers of lung cancer, firemen clearing firebreaks or fighting bushfires etc. etc.

The minute you see the light on this fundamentally simple fact, you will understand why I keep telling you that you do not yet understand GDP.
Posted by Pericles, Wednesday, 9 July 2014 4:07:03 PM
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Pericles, you know that really loud honking goose that just keeps on and on and on about the virtues of GDP… you just cooked it!! ( :>)

Firstly: you say that GDP has absolutely no predictive value whatsoever.

I wrote:

>> There is a great deal of economic activity which is simply serving the community in a neutral manner, not in a manner that is advancing our quality of life <<

You replied:

<< This has absolutely nothing to do with GDP >>

Yes, correct!

So secondly: GDP does not differentiate between these very different types of economic growth.

And thankyou for accepting that there is indeed much economic activity that is neutral.

<< All economic activity is equally counted as part of GDP. >>

YES!!

I wrote:

>> What sort of an incredibly blunt tool is GDP in that it does not differentiate the types of economic activity that contribute to it <<

You replied:

<< It is GDP. Nothing more, nothing less. >>

YES!!

GDP is indeed an incredibly blunt tool.

I wrote:

>> What an incredibly misleading thing it is regarding high population growth, demand/supply balance, resource base security, quality of life, national prosperity, etc, etc. <<

You replied:

<< None of these is a component of GDP >>

Absolutely!

So thirdly: GDP has got nothing to do with these all-important parameters.

I wrote:

>> There are no differentiated "good" or "bad" components, or prosperity-generating and prosperity-neutral components, within GDP, which of course is its fundamental flaw. <<

You replied:

<< Once again, you are looking for something that isn't there. >>

CORRECT. Those components aren’t there. They’re not anywhere to be seen, neither within the formula for calculating GDP, nor in any way connected to it.

continued
Posted by Ludwig, Thursday, 10 July 2014 9:26:31 PM
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To summarise:

1. You say that GDP has absolutely no predictive value whatsoever.

2. GDP does not differentiate between very different types of economic growth.

3. GDP has got nothing to do with these all-important parameters: population growth, demand/supply balance, resource base security, quality of life, national prosperity, etc.

So then… … ……. …….. ………… what on Earth is GDP all about??

You will presumably say that it is about giving us a number each financial year, which can be compared over time, and with other countries.

But what on earth are we actually comparing?

Pericles, I really think it is time that you conceded that GDP is pretty damn useless, and terrible as an economic indicator or measurement.

Then after you’ve done that, we can start working on the next level:- that it really is a whole worse than useless, and is actually very highly misleading and counterintuitive for a future healthy economy and society.

.
And that’s just my reply to your first post of 9 July. My response to your other post is pending….
Posted by Ludwig, Thursday, 10 July 2014 9:29:11 PM
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At least you appear to have stopped associating GDP with all sorts of irrelevancies, Ludwig. That's a start.

As a result of which, you obviously now regret that blithely ignorant comment of yours that started this little conversation...

>>GDP. It is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol<<

We can now put that furphy to bed, at least.

>>So then… what on Earth is GDP all about??<<

GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. I thought that we had finally agreed that.

>>...giving us a number each financial year, which can be compared over time, and with other countries. But what on earth are we actually comparing?<<

GDP. What would you like to compare?

>>Pericles, I really think it is time that you conceded that GDP is pretty damn useless, and terrible as an economic indicator or measurement.<<

No, I disagree. It is a pretty good indicator of what has worked, and what has not, in fiscal policy terms. It is a pretty good measure of the impact of a downturn, e.g. the GFC, and the need for remedial action. When used on a per capita basis, it also tells you how much the economy has improved along with any population change.

The problem you have is that you want it to measure your personal happiness too. Which it is not qualified to do, unfortunately.
Posted by Pericles, Thursday, 10 July 2014 11:18:39 PM
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Rightio then, now where was I before the latest round of computer problems….

Oh yes, I was going to reply to Pericles’ other post….

<< …Ludwig, for someone who insists that they "rooly, rooly do" understand GDP, this is a major faux pas. >>

Fascinating comment, given that you have in no way demonstrated this and that there is no ‘faux pas’ there whatsoever….

I wrote:

>> It is very interesting that imports are the only thing that is excluded from GDP, and yet imports generate a whole lot of economic activity. I wonder how that really works. Obviously lots of businesses sell imported goods. Their profits get counted within GDP, do they not? So, exactly what is it about imports that doesn’t get included in GDP? <<

You replied:

<< I'll try to keep it very simple for you: exports are things that we produce but don’t buy and imports are things that we buy but didn’t produce. So we include in GDP the net of exports minus imports. >>

Well, you kept it simple alright: you simply didn’t answer my question. You AVOIDED it…. which strongly suggests that you don’t know the answer. Seems like yoo rooly rooly doont oonderstand the basics of GDP very well at all!

Clearly, economic revenue is gained from the selling of imports by retailers. So can you tell me, oh great GDP gooroo, if economic growth derived directly from imports is added to GDP or not? And what about all the secondary economic activity associated with imports – the transport, the money that importers and retailers of imported goods spend when they buy other goods and services, etc?

continued
Posted by Ludwig, Friday, 11 July 2014 8:10:26 PM
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>> Phoowey! The concept of prosperity is pretty clear <<

You retorted:

<< Give me a workable definition…. …how you would measure it. >>

For goodness sake, the concept is clear enough. It encompasses quality of life and future wellbeing, including sustainability. We would measure it by determining which sorts of economic growth contribute to it and which don’t and only counting those that do. We’d also take into account resource draw-down, environmental damage and whole bunch of other things.

I’ll leave it to the experts to concisely define it and devise a formula for measuring it most effectively.

<< GDP sees no difference between activity caused by slum clearance or new road building, nursing victims of road accidents or sufferers of lung cancer, firemen clearing firebreaks or fighting bushfires etc… >>

Der…. you don’t say!

And then you say in direct relationship to that statement:

<< The minute you see the light on this fundamentally simple fact, you will understand why I keep telling you that you do not yet understand GDP. >>

You have said something that has never been in dispute. So then, are you now willing to accept that I do indeed understand GDP?

.
Crikey, there’s a whole nuther post I’ve still got reply to. ( :>(

Stay tuned…

[Oh and that's 142 posts on this thread, which is a new record for me, and probably a record for all of OLO!!]
Posted by Ludwig, Friday, 11 July 2014 8:15:55 PM
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<< At least you appear to have stopped associating GDP with all sorts of irrelevancies, Ludwig. >>

Never did, Pericles, and you know it. The crux of my argument is that GDP is NOT ‘associated’ with ANY of the numerous very important economic and social parameters… which you amazingly brand as ‘irrelevancies’!!

Then you wander off into some weird state of self-delusion with this…

<< As a result of which, you obviously now regret that blithely ignorant comment of yours that started this little conversation...“GDP. It is a most terribly flawed economic indicator, which adds all sorts of negative factors to the positive side of the ledger, such as increased economic turnover as a result of fires, floods, cyclones, illnesses due to smoking or alcohol” >>

Sorry to disappoint you, but that statement remains rock solid.

I asked:

>> …what on Earth is GDP all about?? <<

You replied:

<< GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. I thought that we had finally agreed that. >>

Um…Yes….Wow….Wonderful. That helps enormously! (:>|

I asked:

>> ...giving us a number each financial year, which can be compared over time, and with other countries. But what on earth are we actually comparing? <<

You replied:

<< GDP >>

Haahahaa! Thankyou so much for that wonderful insight!

<< What would you like to compare? >>

Um….how about standard of living, quality of life, quality of environment, quality of resource base, rate of increase in renewable energy sources as a percentage of total energy consumption, rate of increase in value-adding industries as a percentage of all industrial produce, rate of increase in poverty-alleviation, rate of decrease in population growth and hence increase in progress towards a stable population and sustainable society, percentage of economic growth that actually contributes to an increase in prosperity, and many other parameters that indicate how well we are really travelling economically and socially….ALL of which have got NOTHING to do with GDP!!

Comparing GDP over time and with other nations tells us sweet STUFF ALL!!
Posted by Ludwig, Friday, 11 July 2014 11:01:04 PM
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Ok, I give up.

Stay ignorant.
Posted by Pericles, Saturday, 12 July 2014 12:55:03 AM
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OK, three big posts was a bit overwhelming.

So lets take it one step at a time. Can you answer this:

>> It is very interesting that imports are the only thing that is excluded from GDP, and yet imports generate a whole lot of economic activity. I wonder how that really works. Obviously lots of businesses sell imported goods. Their profits get counted within GDP, do they not? So, exactly what is it about imports that doesn’t get included in GDP? <<

Clearly, economic revenue is gained from the selling of imports by retailers. So can you tell me if economic growth derived directly from imports is added to GDP or not? And what about all the secondary economic activity associated with imports – the transport, the money that importers and retailers of imported goods spend when they buy other goods and services, etc?
Posted by Ludwig, Saturday, 12 July 2014 5:18:55 AM
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Good to see Big Clive has had his eyes opened and now sees what lying SKUNKS Abbott and co really are. Don't trust em' Clive!
Posted by Paul1405, Saturday, 12 July 2014 7:01:56 AM
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<< Stay ignorant. >>

But Pericles, I am trying to learn.

I want to know about the real relationship of imports to GDP. I would have thought that this is a very worthwhile aspect to get a handle on, and that you could tell me all about it.
Posted by Ludwig, Tuesday, 15 July 2014 10:06:49 PM
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LUDWIG/QUOTE..<<.But Pericles, I am trying to learn.>>

but teachers only need stimulate the wiLL TO KNOW
BUT I WILL CHANNAL THIS SPIRIT OF P

http://en.wikipedia.org/wiki/Pericles

Pericles also fostered Athenian democracy
to such an extent that critics call him a populist.

ludwig simply asks the oricol OF POPULARISM..<<..I want to know about the real relationship of imports to GDP.>>

thats simple its a different set[both are SELF SUFFICIENT;as collectIVES OF SPECIFIC NUMBERS;GDP;EXCLUDES IMPORTS]..thaNK YOU SIRE*]

<<>.I would have thought/that this is..a very worthwhile
aspect to get a handle on,..and that you could tell me all about it.>>

If the mountain woNT COME TO MAHAMOUD
some go the mountain/others maINTAIN/THEN AGAIN;OTHERS GIVE UP

BUT QUITTERS NEVER WIN
AND whiners never quit/thank you for your wIT LOKI
Posted by one under god, Tuesday, 15 July 2014 10:37:23 PM
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There must indeed be quite a conflict between imports not being counted in GDP, or being subtracted from exports, and the fact that imports must contribute towards GDP by way of profit margins for wholesalers, transporters and retailers and all the secondary economic activity that they generate by way of buying goods and services.

The idea that GDP is a useful measurement with which to compare different countries is just full of knobs.

GDP in different countries has very different contributing factors – such as…

…population growth and the ratio of economic effort put into servicing the growing population with their basic requirements to that put into real long-term improvements in services and infrastructure…

…the ratio between imports and exports and how much both of these contribute to GDP…

…the ratio between economic activity generated from primary resources, simple value-adding industries and ‘technosavvy’ enterprises…

… and the degree of change in all of these.

We are not comparing apples with apples. Not by a very long way.
Posted by Ludwig, Wednesday, 16 July 2014 9:15:26 PM
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I was talking to a retailer shop-owner friend today who deals in imported goods.

When I pointed out that GDP includes exports minus imports, she agreed. And then when I said: but all the stuff you import and sell goes onto GDP by way of your profits and your secondary economic activity when you are purchasing goods and services. She agreed.

She appreciates the quandary and could offer no explanation, despite being an astute business person of many years’ standing.

So Pericles, we need you to tell us how this aspect of GDP works…. Please.
Posted by Ludwig, Saturday, 19 July 2014 8:33:21 PM
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ludwig..its clear the old guy..has exceeded his gnosis

YOU MUST RECALL that the ex banker now no longer a mere shadow minester;is in real stress[atending the b 20..no less]
and informing rupert/of what he can do for him;[

Rupert..is trying to buy;..[corner the market]..by buying time-warner*
for 85 billion dollars..[us?]..anyhow the point being..

*if you had a spare 85 billion..what would you spend it on?
HOW WILL THAT TAKE-OVER AFFECT GDP[ITS MAKING NEW DEBT]
BUT NO VALUE-ADDING UP ASSET.

SURE ASETS.have only a limited life
if we returned to proper ..patent right its all long gone

ruperts living off past glories
and colluded exclusive licence
but the media lies[ie he is infit;as he owns the lying media\

[to reply my own question
i would make mew media/not buy up the old media
[but if i did ..i would imortalise myself../rupert\..by giving it back to the people..the last man to ever control he media..thus the world..then helped us to harvest..in its time

is our media too powerfull?
is centralising the media..into one pair of hands wise?

And I wonder why it is so difficult to think a little, to get it into our heads that television news and photojournalism manipulate our thoughts and emotions. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x1689647

oh and shadow[wheres the satalite photoes
we can search them just like we searched the sea..inch by inch
but they reveal the stoRY/USA MOSAD AND AMSTARDAM;WOULD RATHER NOT BE TOLD.
Posted by one under god, Sunday, 20 July 2014 8:10:48 AM
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But why, Ludwig?

>>So Pericles, we need you to tell us how this aspect of GDP works…. Please.<<

You will undoubtedly fail to understand the answer, in the same way that you have failed to understand every other aspect of GDP to date.

Let me see if am right.

You are confusing the economic activity generated by imports and exports, and the value of the imports/exports themselves. Try to think of them as two separate items.

Once you have accomplished that, you will be able to follow the logic of the formal explanation contained in the following:

"When a country exports goods, it sells them to a foreign market, that is, to consumers, businesses, or governments in another country. Those exports bring money into the country, which increases the exporting nation's GDP. When a country imports goods, it buys them from foreign producers. The money spent on imports leaves the economy, and that decreases the importing nation's GDP."

http://www.infoplease.com/cig/economics/imports-exports.html

This refers only, repeat only, to the monetary value of the goods and services themselves. The economic activity generated in the creation of those exports, and the economic activity generated by the handling, marketing, selling etc. of the imports are a separate measurement entirely.

Next question.

Or are you going to argue with that explanation?
Posted by Pericles, Monday, 21 July 2014 9:20:10 PM
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HellOOOOw Pericles!

I almost fell awff me chair just then when I got an email notification of your post.

Thankyou for returning.

I shall respond in full later.
Posted by Ludwig, Monday, 21 July 2014 9:51:08 PM
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<< You will undoubtedly fail to understand the answer, in the same way that you have failed to understand every other aspect of GDP to date. >>

It does your credibility no good at all to make this sort of statement. You know full well that I understand GDP pretty damn well, and when I find something that I don’t understand, I seek to learn.

There is much about it that we agree on. As this thread has progressed, it seems that we are finding more and more agreement…. and it is becoming clearer all the time as to just how incredibly ‘blunt’ GDP is, how unrelated it is to all sorts of important parameters, as you keep emphasising, and how terrible it is as an indicator or measure of anything useful, which you incongruously seem to refuse to accept!

Ok, to the matter at hand: Thanks for the Infoplease link. But…. Dare I say it…. it doesn’t answer my question.

The closest it comes to pertaining to my question is this:

< The economic activity generated in the creation of those exports, and the economic activity generated by the handling, marketing, selling etc. of the imports are a separate measurement entirely. >

YES, completely separate.

So, on one hand, imports are subtracted from exports to give a net figure to add to… oow, I mean; include in, GDP!

And on the other hand, they are treated completely separately and do actually contribute to our GDP when they are sold or consumed and when the profits of this activity is used for secondary purchases.

It would appear that you agree with this. So you must agree then that imports are treated in a totally duplicitous and contradictory manner as it concerns GDP…. and that this yet another glaring flaw in the way in which GDP is formulated, yes?
Posted by Ludwig, Tuesday, 22 July 2014 9:12:02 AM
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Pericles: >>You will undoubtedly fail to understand the answer, in the same way that you have failed to understand every other aspect of GDP to date.<<

Ludwig: >>So, on one hand, imports are subtracted from exports to give a net figure to add to… oow, I mean; include in, GDP!. And on the other hand, they are treated completely separately and do actually contribute to our GDP when they are sold or consumed and when the profits of this activity is used for secondary purchases. It would appear that you agree with this. So you must agree then that imports are treated in a totally duplicitous and contradictory manner as it concerns GDP…. and that this yet another glaring flaw in the way in which GDP is formulated, yes?<<

QED
Posted by Pericles, Tuesday, 22 July 2014 2:52:43 PM
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Pericles, with respect you are not furthering my knowledge of GDP here. What you are doing is confirming my suspicion that there is a glaring anomaly in the way GDP is formulated.

It is also apparent that the real QED here is my previous assertion that you cannot answer this query.

I’ll try asking it in different words:

How can it be that imports which are subtracted from exports as part of the GDP calculation, then contribute to GDP when they are sold or consumed?

Isn’t it true that everything that is imported actually adds to our GDP by way of this process?
Posted by Ludwig, Tuesday, 22 July 2014 3:48:30 PM
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For heaven's sake Ludwig. I am getting the strong view that you are arguing for the sake of arguing - much as you appear to be doing on the Rolf Harris thread.

>>It is also apparent that the real QED here is my previous assertion that you cannot answer this query. I’ll try asking it in different words: How can it be that imports which are subtracted from exports as part of the GDP calculation, then contribute to GDP when they are sold or consumed?<<

It is such a blindingly simple issue, I cannot imagine that you genuinely cannot see it, and must therefore be wilfully feigning ignorance. Nevertheless, just in case...

As I pointed out earlier, in order to understand its rationale, you need to separate the value of the goods and services themselves from the economic activities that are caused by them. This is because those activities are entirely indifferent to the source - someone filling a supermarket shelf with tins of pineapple performs the same work whether the product was canned in Northgate or Bangpakong. Similarly, the Golden Circle cannery in Northgate and the Star Cannery in Bangpakong will perform the same work whether their product is sold in Woolworths Neutral Bay or Hock Choon in Jalan Ampang.

In fact, if all Golden Circle's tinned pineapple was sold in Neutral Bay, and all Star Cannery's tinned pineapple was sold in Jalan Ampang, the GDP of both Malaysia and Australia would remain unchanged. So the only GDP variable in the equation is the amount of product that is imported and exported between the two countries.

Now translate that individual example to the economy as a whole, and you have your answer.
Posted by Pericles, Wednesday, 23 July 2014 8:14:29 AM
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<< For heaven's sake Ludwig. I am getting the strong view that you are arguing for the sake of arguing… >>

Oh Pericles, for heaven’s sake, why do you have to insist on seeing everything I write with a negative connotation?

OBVIOUSLY, I have a perfectly LEGITIMATE query here. I don’t know why you would have a problem with that.

Thankyou for your explanation. It is exactly as I have presumed it to be.

Imports are indeed viewed totally differently when subtracted from exports to what they are when they are sold or consumed.

<< It is such a blindingly simple issue… >>

Yes! Blindingly simple in its duplicity!

Those bad little imports get subtracted from exports, but then they magically become good little imports and all contribute directly to GDP!!

This weird GDP character wants us strive to maximise exports and minimise imports. But then he brazenly welcomes all imports with open arms!

Surely you can see a fundamental ‘blindingly simple’ contradiction in terms here!?

This is just the same sort of thing as Mr GDP telling us that disasters, illness and injury is all bad for him, but then brazenly accepting ALL the economic activity that is generated as a result of these things as being good for him!
Posted by Ludwig, Thursday, 24 July 2014 10:55:51 AM
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Ok, let's try again

>>Those bad little imports get subtracted from exports, but then they magically become good little imports and all contribute directly to GDP!! This weird GDP character wants us strive to maximise exports and minimise imports. But then he brazenly welcomes all imports with open arms!<<

Imports are subtracted from GDP. Which directly contradicts your assertion that "they magically become good little imports and all contribute directly to GDP!!"

That is precisely what they do NOT do.

They do however create economic activity, indirectly. And in doing so, they do contribute to GDP. Indirectly.

So, what exactly is the manner in which they create this indirect economic activity? Take a plasma TV Screen from Taiwan as an example. It makes work for customs officials, transport companies and their drivers, clerks, marketing staff, personnel managers etc., wholesale companies and their warehouse staff, more transport companies and their truck drivers, retail stores and their warehouse grunts, clerks, shop assistants and sundry management.

Would this economic activity occur without the importation of the plasma screen? No, it wouldn't. Because we don't produce them here. But it is incontrovertible that part of the end-price paid by the consumer goes to support the lifestyles of all these worker bees along the supply chain.

>>Surely you can see a fundamental ‘blindingly simple’ contradiction in terms here!?<<

Absolutely not. Because there is no contradiction, whatsoever.

And precisely the same applies here:

>>...disasters, illness and injury is all bad for [GDP], but then brazenly accepting ALL the economic activity that is generated as a result of these things as being good for [GDP]!<<

The ingredient that you have ignored in all of this, is that someone, somewhere, actually has to pay the price. If the money isn't there, the plasma screens stay unsold, the flooded buildings stay flooded, and the sick will remain untended and die.

Which, in low-GDP economies, is exactly what happens.
Posted by Pericles, Thursday, 24 July 2014 1:24:30 PM
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<< “…they magically become good little imports and all contribute directly to GDP!!"

That is precisely what they do NOT do.

They do however create economic activity, indirectly. And in doing so, they do contribute to GDP. Indirectly. >>

Oh puleease. Such pedanticism! Directly or indirectly, they do indeed contribute to GDP.

So…. what is it about imports that actually gets subtracted from exports? It is simply the total monetary income that we get from exports in a given financial year minus the total monetary cost of all imports?

And what is it about imports that then contributes to GDP? Is it the total cost of items such as a Taiwanese plasma screen TV? Or is it the retailer’s (and wholesaler’s and transporter’s ?) profit margin over and above the import price? Or is it only the secondary (indirect) economic activity by way of retailers (and others ?) spending their profits on other goods and services?
Posted by Ludwig, Thursday, 24 July 2014 9:16:49 PM
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I need to remind you, Ludwig, of your earlier protestation:

>>You know full well that I understand GDP pretty damn well, and when I find something that I don’t understand, I seek to learn.<<

This latest outburst, for example, demonstrates perfectly that you are making no attempt whatsoever to "seek to learn":

>>So…. what is it about imports that actually gets subtracted from exports? It is simply the total monetary income that we get from exports in a given financial year minus the total monetary cost of all imports?<<

Why the question mark at the end? You already know this to be the case. I even went to the trouble of finding the simplest possible explanation for you:

http://www.infoplease.com/cig/economics/imports-exports.html

I then summarized it for you:

>>This refers only, repeat only, to the monetary value of the goods and services themselves.<<

So, why the question mark? Either you did not believe me, in which case you need to explain what is wrong with the definition, or you don't understand it. Which is it?

And I also spent a great deal of care describing this to you:

>>And what is it about imports that then contributes to GDP?<<

It is the sum total of economic activity created by the product in its journey from its source (our plasma screen f.o.b. Pyrmont, for example) to its destination. Its status on the dockside has fulfilled the "import value is subtracted from GDP" part of the equation. From that point on, it creates the same type and amount of economic activity as it would, if it had just left a factory here in Australia.

Because once it is on the dockside, paid for, it behaves no differently within the economy than a home-made product. Which is why you need to separate the value of the goods or services themselves, from their source - refer to my previous canned pineapple example for more detail.

http://forum.onlineopinion.com.au/thread.asp?discussion=6365#193279

I need some evidence that you understand at least a part of this, Ludwig, if you are interested in learning more.
Posted by Pericles, Friday, 25 July 2014 7:04:56 AM
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Some more detail, Ludwig, in case you want to suggest that I am avoiding your questions.

I'll use them as a starting point.

>>And what is it about imports that then contributes to GDP?<<

It is the sum total of economic activity that results from their existence. But remember, this activity is identical to the activity created by a home-grown product - it is entirely agnostic to the source.

>>Is it the total cost of items such as a Taiwanese plasma screen TV?<<

No. The amount that is paid to the Taiwanese manufacturer is already taken care of in the "import cost" column. The importer has paid this, usually on a "free on board" (f.o.b.) basis.

http://www.investopedia.com/terms/f/fob.asp

From that point on, as I said, the economy is indifferent to its point of manufacture.

>>Or is it the retailer’s (and wholesaler’s and transporter’s ?) profit margin over and above the import price?<<

Gross margin is (largely) the difference between the price paid, and the price received (Sale price minus cost-of-sale). This differential is used to fund the worker bees, and the resources they use such as warehouse space, trucks etc. Part of the net profit gets released into the economy via dividends, the rest retained to grow the business.

>>Or is it only the secondary (indirect) economic activity by way of retailers (and others ?) spending their profits on other goods and services?<<

By now you should be able to see the full money trail. So you can see that it is not "only" the spending of net profits that we are looking at here, but the utilization of gross margin to fund the everyday activities of the business - paying salaries, paying the mechanic to service the trucks, paying for the advertisements etc.

But again, the key message to understand imports and exports in relation to GDP is to isolate the product itself from the activities that a) go into producing it for export or b) go into realizing the value created within the economy following its importation.
Posted by Pericles, Friday, 25 July 2014 11:08:29 AM
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<< This latest outburst, for example, demonstrates perfectly that you are making no attempt whatsoever to "seek to learn": >>

( :>|

This statement of mine:

>>So…. what is it about imports that actually gets subtracted from exports? It is simply the total monetary income that we get from exports in a given financial year minus the total monetary cost of all imports?<<

…is an ‘outburst” ?!?!?

It is an entirely neutral question simply seeking clarification on an important point directly related to the matter at hand, without ANY negative connotations attached to it whatsoever!

Crikey Pericles, is it any wonder that I take EVERYTHING you say with a very large grain of salt!

You are enormously enigmatic. You are willing to continue this conversation and to put a fair whack of time into it, and yet you seem incapable of doing it without constant parade of put-downs. This just seems to sit at stark odds with your willingness to continue the debate.

<< Why the question mark at the end? You already know this to be the case. >>

I wouldn’t have asked if I’d categorically known. Even if I am pretty sure about something, it is still well asking in order to become certain, is it not?

But hey, you have gone to considerable lengths to address my queries. So I thank you for that. I will study your comments and respond in full later.
Posted by Ludwig, Friday, 25 July 2014 11:43:18 AM
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You're welcome, Ludwig.

>>You are willing to continue this conversation and to put a fair whack of time into it, and yet you seem incapable of doing it without constant parade of put-downs.<<

The time it takes to rattle out (yet another) explanation for you is minimal, but thanks for the thought.

As for the "put-downs", they would not happen if you gave any of the previous answers even the most cursory attention.

>>This statement of mine:<<

Look again. It was a friggin' question:

>>So…. what is it about imports that actually gets subtracted from exports? It is simply the total monetary income that we get from exports in a given financial year minus the total monetary cost of all imports?<<

Two friggin' questions, in fact.

>>It is an entirely neutral question simply seeking clarification on an important point directly related to the matter at hand, without ANY negative connotations attached to it whatsoever!<<

This is a classic example. I had already explained the situation, in great detail and very clear English. Yet you insist that repeating the question, as if it were some bone of contention that required further explanation.

That's what gets you the impatient response from me.

(Total answering time: 1m 56s)
Posted by Pericles, Friday, 25 July 2014 12:59:20 PM
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So what am I supposed to say to you Pericles?

It seems that anything other than complete agreement with you would just be completely unacceptable.

.

Your explanation is just as I would have believed it to be. It makes perfect sense. And thankyou again for going to the trouble of laying it all out.

So then, the fact remains that imports are on the one hand subtracted from exports and hence are a negative factor in the GDP equation, and on the other hand do indeed contribute (indirectly if you like) to GDP.

Alright, let’s accept this as being a valid state of affairs rather it seeing it as being contradictory. As I said, it does make sense for it to be set up in this manner.

Using similar reasoning then; why can’t economic activity that is clearly of a remedial nature following a flood be excluded from the GDP calculation and only the secondary indirect activity included?

Surely if this was to happen, it would be one significant step closer to developing a more accurate and meaningful GDP measure, yes?
Posted by Ludwig, Friday, 25 July 2014 1:51:34 PM
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We are still working with facts here, right Ludwig?

>>Using similar reasoning then; why can’t economic activity that is clearly of a remedial nature following a flood be excluded from the GDP calculation and only the secondary indirect activity included?<<

Because all the economic activity takes place within the borders of Australia, therefore it needs to be counted as belonging to GDP. The exception being, of course, if for example we hired one of those firefighting aircraft from Canada, that would count as an import.

The remedial work required after a flood employs many people, and consumes a great deal of material. Again, all this economic activity is simply business-as-usual for SES personnel, builders etc., and is part of the GDP calculation - again, with the exception of imports.

The cost is just one of the many factors involved in national "housekeeping". You presumably have your car maintained at the local garage. If some of the work is remedial in nature - wiping the blood of unfortunate cyclists off your bull-bar, for example - it still makes work for the mechanic.

And if you don't have the cash to have your car serviced, then it doesn't get serviced. Similarly, if the country cannot afford to rebuild after a flood, or a bushfire, then it simply doesn't do it. If it does, it is counted in GDP; if it doesn't, it isn't.

Leaving facts behind for a moment, what exactly is it that you would like GDP to achieve? If you want to separate it into "good" GDP and "bad" GDP, then all you have to do is draw up a list of each, drop the expenditures in their appropriate categories, and off you go. You have a "Ludwig index of happiness" that meets your need to measure good stuff versus bad stuff.

You will still have a problem when it comes to measuring the impact of immigration though. Would you count their contribution to the nations's economy as only "bad" GDP?

That might be a little tricky, given that they tend on the whole to be productive little buggers.
Posted by Pericles, Friday, 25 July 2014 4:12:57 PM
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<< Because all the economic activity takes place within the borders of Australia, therefore it needs to be counted as belonging to GDP >>

Yes, as GDP is defined.

But GDP shouldn’t be defined like this. GDP should be defined in order to give us the best possible indication of economic wellbeing and of the true prosperity that comes from a healthy economy, in the short term and projected into the long term.

Surely this NEEDS to be the basis of a good GDP measure. Surely the basic principle of just including all economic activity that takes place within this country is fundamentally flawed…as I have suggested in my 150+ posts on this thread!

<< The remedial work required after a flood employs many people, and consumes a great deal of material. Again, all this economic activity is simply business-as-usual for SES personnel, builders etc.,and is part of the GDP calculation - again, with the exception of imports. >>

Yes. So it would take quite a bit of working out as to just what is remedial activity which just replaces what was there before, what is activity that would make things better than they were before and what is secondary activity. But I’m sure that the experts could come up with a meaningful formula. And even if they don’t get it quite right, the resultant input into GDP would still be a whole lot more meaningful than it currently is.

<<…what exactly is it that you would like GDP to achieve? >>

We’ve thoroughly been over this on this thread. I think my third paragraph above explains it.

<< If you want to separate it into "good" GDP and "bad" GDP, then all you have to do is draw up a list of each, drop the expenditures in their appropriate categories, and off you go.>>

Hmmmm. Well, if we were to get the experts to formulate GDP so that it only includes the ‘good’ stuff, then we’d be on a winner.

But I thought you were of the view that there is no good or bad GDP, just GDP.

continued
Posted by Ludwig, Friday, 25 July 2014 10:00:36 PM
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So…. maybe you can see my point – that not all GDP is equal, and that there is indeed ‘good’ stuff, which is useful as a realistic economic indicator, and ‘bad’ or neutral stuff which shouldn’t get counted in GDP, and which badly biases the GDP number (and hence the per-capita GDP number) by getting included in it.

<< You will still have a problem when it comes to measuring the impact of immigration though. Would you count their contribution to the nations's economy as only "bad" GDP? >>

There would no doubt be problems all over the place in working out just what should be added to GDP to make it the best possible economic indicator.

The big thing about economic activity generated by immigration is of course that most of it is just duplication of services and infrastructure and increase in resource consumption in order to provide just the same standard of living for the new residents… all of which simply does NOT indicate a healthy economy. It is all NEUTRAL to our real economic wellbeing.

So most of the economic activity generated by immigration should be seen as neutral and not be added to GDP.

This, as I have said many times, is the biggest factor of all. All that economic activity that just duplicates all the basic requirements gets fully added to GDP, which ultimately gives us a HUGELY inaccurate measure of economic wellbeing, as it indicates directly that high population growth is very good for our economy and that higher growth is better and that we should maintain this forever.

So it is fundamental importance, above all else, that the NEUTRAL economic activity associated with population growth NOT be included in a best-indicator GDP.
Posted by Ludwig, Friday, 25 July 2014 10:02:52 PM
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No, Ludwig.

>>So…. maybe you can see my point – that not all GDP is equal<<

That is not only a ridiculous notion, but it also illuminates how little you have actually learnt from your copious posts on this thread, and my (mostly) extremely patient attempts to educate you.

This is your problem, in a nutshell:

>>But GDP shouldn’t be defined like this.<<

But it is. Anything else would not be GDP.

>>GDP should be defined in order to give us the best possible indication of economic wellbeing and of the true prosperity that comes from a healthy economy, in the short term and projected into the long term.<<

You may prefer an indicator of this type. But it would not be GDP.

>>Surely the basic principle of just including all economic activity that takes place within this country is fundamentally flawed<<

No, it is not. GDP is the indicator that includes all economic activity. Anything else would not be GDP.

>>But I thought you were of the view that there is no good or bad GDP, just GDP.<<

That's why I used inverted commas, Ludwig. They are your terms, not mine. There is only GDP. If you don't like it, use another measurement.

>>The big thing about economic activity generated by immigration is of course that most of it is just duplication of services and infrastructure<<

You forget, that these services and infrastructure are paid for through the increased economic activity. And they are not "duplication". They are in addition.

>>So most of the economic activity generated by immigration should be seen as neutral and not be added to GDP.<<

There is no such thing as "neutral" economic activity. Either there is economic activity, or there is not.

Since it is clear that you are merely posting for the sake of posting - as you are also doing on the Rolf Harris thread - I shall now leave you alone to continue to kid yourself that you understand even the simplest basic fundamentals of our economy.

You don't. And on this sad showing, you never will.
Posted by Pericles, Saturday, 26 July 2014 10:49:09 AM
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<< Anything else would not be GDP. >>

That depends on how the esteemed authorities may wish to define it. If they want to call it GDP, then it would be GDP.

<< You may prefer an indicator of this type. But it would not be GDP. >>

It would not be GDP as we currently know it.

<< …these services and infrastructure are paid for through the increased economic activity… >>

YES! The increase in economic activity spurred by population growth by and large goes into producing the stuff that that population growth needs…. with no gains for the existing community and hence no significant gains in prosperity. It is all +/-neutral!

<< …And they are not "duplication". They are in addition. >>

They are both. You can’t duplicate something without adding it to what already exists.

<< There is no such thing as "neutral" economic activity… >>

Oh yes there is. And there is good economic activity, which take us forward in terms of prosperity. And bad economic activity which takes us backwards, such as activity which causes a lot of pollution or illness or other bad consequences.

If you leave this thread at this point, I will take it I am cutting too close to the truth and that you do indeed see the merit of my argument.
Posted by Ludwig, Saturday, 26 July 2014 11:45:42 AM
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So be it, Ludwig.

>>If you leave this thread at this point, I will take it I am cutting too close to the truth and that you do indeed see the merit of my argument.<<

But if you do, then you will be kidding yourself. You haven't the slightest understanding of basic economics. Or even simple logic, if it comes to that.

Face it, Ludwig. You have shown yourself to be woefully ignorant every step of the way. More importantly though, you have demonstrated a complete inability to comprehend even the simplest terms and concepts.

You may consider writing so many pointless, pontificating, not to mention frequently contradictory posts as demonstrating cleverness. But it is such a barren exercise, that in the final analysis it can only be described as mental masturbation.

You are probably too old to change your ways now, Ludwig. But if you are not, I strongly suggest that you do so.
Posted by Pericles, Saturday, 26 July 2014 3:42:57 PM
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Fascinating Pericles, given that there are many instances on this thread where I have agreed with you.

You know what, I reckon we agree to a very high extent on what GDP is and what it achieves.

Let’s take a look at that –

According to GDP, there is no good or bad, or neutral, economic growth. It is all treated as having just the same value.

GDP does not take into account, and cannot be used as an indicator, for all sorts of things, such as future prosperity, or any prosperity for that matter, health of the resource base or natural environment or urban environment or our quality of life.

GDP doesn’t include imports but it does include indirect economic activity generated via those imports.

GDP is in general lowered by disasters, injuries and illness, but economic activity generated by those things gets included in it.

GDP is a blunt tool. It measures gross domestic product. And that’s about all it measures. It is useful in comparing GDP over time, and of some value in comparisons with other countries.

I think we agree on all of this.

We’d also agree that if we wanted more meaningful indicators, which would be defined in quite different ways as to just what economic activity was included in them, then those indicators would not be GDP… unless we changed the definition of GDP accordingly.

Given all this agreement, why then are you so down-putting, my dear Peri?

After all of the discussion on this long thread, I reckon I can conclude that I have about the same level of understanding as you do (which is a fair bit more than I had to start with).

The essence of our disagreement seems to be that you are happy with GDP as our primary economic indicator, while I am most definitely not.

So.... is there anything here that you disagree with??
Posted by Ludwig, Monday, 28 July 2014 1:48:02 PM
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Apparently there is nothing there that you disagree with.

So Pericles, is that it? Is that the end of this conversation?

Do we finally have this matter settled?

Can you concur that we do actually agree on what GDP is on all the different things that contribute to it?

Or is all this agreement just too much for you to bear?
Posted by Ludwig, Wednesday, 30 July 2014 10:24:21 PM
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You can believe whatever you wish, Ludwig.

>>Apparently there is nothing there that you disagree with.<<

But if you believe this, then you will be kidding yourself. You haven't the slightest understanding of basic economics. Or even simple logic, if it comes to that.

Face it, Ludwig. You have shown yourself to be woefully ignorant every step of the way. More importantly though, you have demonstrated a complete inability to comprehend even the simplest terms and concepts.

You may consider writing so many pointless, pontificating, not to mention frequently contradictory posts as demonstrating cleverness. But it is such a barren exercise, that in the final analysis it can only be described as mental masturbation.

You are probably too old to change your ways now, Ludwig. But if you are not, I strongly suggest that you do so.
Posted by Pericles, Thursday, 31 July 2014 12:22:17 AM
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Pericles, you appear to be losing your marbles.

You’ve already posted that post.

You’ve done nothing whatsoever to indicate any disagreement. So, you have effectively agreed that we agree!!

And yes, it would appear that me agreeing with you on everything regarding GDP is just too much for you to bear!!

Well, sorry, but I think we have reached a good conclusion to this very long discussion.

If you feel otherwise, well that is your prerogative. But really, after all the effort you gone to on this thread, it is a damn shame that you insist on feeling that way.

Think about the ‘no-win’ position you have put yourself in – you hate me agreeing with you and yet you… um…. hate it and launch into personal insults when I disagree with you!!

Damn weird that is! { ;~/
Posted by Ludwig, Thursday, 31 July 2014 9:21:03 AM
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