<< 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.

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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?

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?

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.

<< 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?

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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.

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