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.

<< 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.

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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!!

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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!! !! !!

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.

<< 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.

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