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!

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.

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.

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".

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. >>

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.