You are becoming - metaphorically speaking, of course - like dog dirt on the shoe, Ludwig. No matter how hard you try to wipe it of, the smell lingers on.

>>If all this sort of stuff wasn’t included within GDP, then GDP would be entirely meaningless?!?!<<

Why is this so difficult for you to understand? It really is so blindingly straightforward. We have devised a measurement of the volume of economic activity, and use it to measure our economic progress. More is better, less is worse. You have this entrenched, but erroneous belief that the money used by doctors and nurses shouldn't be measured, simply because they look after the sick. Or the houses rebuilt after a bushfire don't really count as economic activity, because they are replacing something that was there before.

How do you deal with situations such as this non-bushfire-related activity?

http://m.smh.com.au/domain/real-estate-news/altona-likely-to-join-other-sydney-mansions-to-be-demolished-20140524-38vgm.html

What, in your view, is the difference between voluntary and involuntary rebuilding? Should neither be included in your version of GDP? If not, why not? And how do you account for the purchase of building materials, the wages of the builders etc. in your version of GDP?

It simply does not make any sense at all.

>>I am not the only person who thinks in this manner.<<

That doesn't make you right. Only that other people beside yourself are wrong. As the article you refer to points out:

"Post-tsunami reconstruction is contributing to the turnaround, as is the recovery in the global economy."

>>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.<<

So you keep saying. But you have not offered one skerrick of evidence to this effect; only a mountain of words.

>>GDP is only useful as predictive tool in that very limited manner, as I have been saying all along.<<

It is the activity indicators that can affect the next number, not the number itself. What on earth is so difficult about that?

SEEN ALAN COLAS
http://www.alankohler.com.au/

LATEST GRAPH?
http://www.alankohler.com.au/sites/default/files/styles/ak_graph/public/kohlersgraphs/2014/Jun/financial-dbusiness-ycle.png?itok=DO4zfbeC

http://www.faraday.st-edmunds.cam.ac.uk/CIS/Wright/pdf/Wright_lecture.pdf

http://www.spiritwritings.com/GatewayOfUnderstanding.pdf

<< You are becoming - metaphorically speaking, of course - like dog dirt on the shoe, Ludwig. No matter how hard you try to wipe it of, the smell lingers on. >>

That’s not nice, Pericles. I was going to say that I hope you had a nice extended weekend. But now I won’t (:>/

<< It really is so blindingly straightforward. We have devised a measurement of the volume of economic activity, and use it to measure our economic progress. >>

YES!! You don’t say! Blindingly straightforward indeed! Blind to the reality that not all economic activity equates to economic progress!

Ohh Pericles… I do despair of you sometimes!

Your oversimplistic GDP measure is not just fundamentally flawed, it is terribly MISLEADING, as I have said right from the start of this long and sordid debate!

<< More is better, less is worse >>

That is just so amazing! After all the detail presented in this debate, you fall back on this primaeval fallacy… which is so OBVIOUSLY WRONG!

<< How do you deal with situations such as this non-bushfire-related activity? >>

The new development that will replace this mansion is not just replacing it, it is something new, bigger, better, or whatever the case might be. So it is not analogous to rebuilding houses after they get destroyed by a bushfire.

It would certainly be difficult to come up with the parameters for what would or wouldn’t be included in the GDP calculation if we were to exclude economic activity that occurs directly as a result of disasters and which doesn't add to economic prosperity.

continued

So what’s new? For all manner of things it is hard to define the exact parameters.

Look at unemployment. How many hours a week should one have to work in order to be officially employed according to the national stats? That is a simple question, but the answer certainly isn’t easy. How many people who are out of work aren’t really looking for work? Should everyone out of work be considered to be unemployed or only those who want to work? And many other questions. It is hard to define just what unemployment is and how many people are unemployed…. or underemployed.

There are innumerable other examples of things which are very hard to concisely delimit.

The cut-off between economic activity that should or shouldn’t be included in GDP is just another difficult thing to define.

However, that should be no excuse for including economic activity which patently should NOT be included in the GDP calculation.

I hope you can appreciate this.

I wrote:

>> GDP is only useful as predictive tool in that very limited manner, as I have been saying all along. <<

You replied:

<< It is the activity indicators that can affect the next number, not the number itself. What on earth is so difficult about that? >>

Aww gee, can’t you just be happy that we have agreement here? Seems like you are determined not to agree!

“We agree, yahoo!”

“No we don’t”

“Yes we do”

“No we DON’T!!”

“Oh yes we dooooo!” Sorry…. but as far as I’m concerned, on the issue of GDP as an indicator; we agree!

Sorry! {{:>)

Thanks OUG. Alan Kohler presents lots of interesting stats. I wonder how they compare to GDP as indicators of how well we are travelling economically, and of how well that economic performance is translating into real meaningful stuff in the lives of Australian citizens?

Thank goodness at least some economists are looking at various other parameters, rather than only at the terribly oversimplistic and misleading GDP.

Ludwig,

Perhaps an answer/alternative might be to measure net wealth from year to year.
That is, value of public infrastructure, less depreciation (repair/replacement value, amortization);
Plus, total available public funds (nationally) less debt;
Plus value of private physical assets less depreciation;
Plus value of private cash/securities/bonds assets, less debt.

This then divided by population, to give a per-capita 'assets' value.

Then, as an add-on, an assessment of needed/preferred infrastructure development, plus needed/preferred improvements to public services and welfare provision, all weighed up against available and projected net public cash assets - as a means of evaluating the rate of achievement of national services provision objectives against the preferred rate of such achievement.
This relative rate of achievement of objectives could then act as an indicator of the 'health' of the national economy going forward, and a measurable indicator of the sustainability of forward budgetary provisions regarding national revenue/income streams weighed against projected services and infrastructure costs.

Of course, we could all just choose to be happy in our bliss, regardless? (Or plant a veggie patch.)