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.

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.

<< 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

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!

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?

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