<< 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!

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.)

<< 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

<< 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.

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.

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