We calculate GDP by adding the market value of all officially recognized final goods and services.
In reality, if we are going to try and get some worth while measurement, one that relates just a little to how much money, not value, the mean average person in the country gets out of what they do then we need do this sum.
% GDP change - % population change - inflation.
So lets put some optimistic pre-2008 figures in
(GDP growth 1%) - (Population growth 0.6%) - (Inflation 2%)
That's -1.6% that we get out of what we do (if we count tax advice as getting) hardly progress is it.
The current situation is more like
(GDP growth 0.7%) - (Population growth 0.7%) - (Inflation 2.5%)
So -2.5% per year.
This figure is historically negative so ruling parties ignore it.
But even GDP taking into account inflation and population is is just a load of old twaddle unless we include value.
Much if what is included in GDP is of no value.
Lets say someone like you buys a bomb and blows up your house.
The bomb is manufactured, your house is rebuilt. The legal work, admin, tax calculations. It all had no value. There is plenty of GDP.
What else has no or negative value in our economy?
The PPI insurance fiasco. Marketing it, sending out letters and training staff to sell it. FSA decides it's a bit mean five years too late. Companies buy tele sales data and cold call people who may have been miss sold PPI in a bid to win the legal fees. All these people needed a place to do their work, transportation, electricity, computers etc. No value
Land Lord. If someone owns homes they do not need then the need for homes goes up, making them less affordable. Other must pay inflated property prices plus bank interest for the owners unwanted service. The landlords pointless annoying role has to check the condition of the property because they still own it and those occupying therefore have no personal insensitive to maintain it. The tenant never builds a nest egg the landlord uses it to grow the problem. GDP, negative value.
Speculative land owner. If someone buys land with the view to gaining planning permission and selling it on or holding land it in an area where the land value is likely to increase in value then their profit is simply debt passed onto new home owners house prices GDP or land owners. No Value. Since the property is bought on debt we then have additional unwanted interest payments and other 'services'.
Land change of use. The UK is a net importer of food. with an assumed 1.2 acres of farm land needed per person the UK's 45 million acres is not going to cut it. this means that the GDP we gain now from changing farm land into property has a long lasting negative effect. Effectively taking on a lifetime of resource import debt for future generations. High GDP, off the books real monetary local debt.
All resource consumption and damage caused by mining.
If the over all effect of mining a reusable resource is unsustainable damage to the environment then that is again a debt that does not show up in the deficit.
If the resource is consumable then again we are literally spending reserves. The off the books deficit is huge.
Many bank activities. Hedging, credit default swaps, encouraging, 'Buy Now Pay Twice Later' on people who will be poorer in the long run. No value. Factor in fractional reserve banking and that all wealth must reside somewhere and it is clear that the systems we have in place have allowed market forces to turn ursery into the backbone of economies who leaders profess to believe in god.
And while all this false GDP is being created we are running a deficit. There should be no deficit. On and off the books combined. We should aim for a national profit just like the companies who's representatives run the government.
Greater value would be created if people did not undertake these GDP activities and left the workforce.
With the gift of time those people may have become active members of the 'Big Society'. Bringing happiness and taking the strain from state resources. This has 'Value'.
They may have restored items to a greater value and not have traveled so far twice a day in the rush. Saving on consumption.
They would have cared for their home during the day and perhaps shared a mutual appreciation in the evening with their wife or husband.
They would not have been doing something they hate 40 hours / week. Being unhappy should be the main negative value.
Where would they live, how would they eat without money?
This is the crazy thing. If they had done nothing of value and yet the value resources were available in that economic model then where did the resources go?
Those 'value' resources were still produced by value creators.
The GDP figure is simply the calculation for distribution of available value. The higher the figure, the less each unit of value is worth in money (inflation).
Many hopeless unfortunates correctly choose to give up on working as part of the system. For them the sums will now never add up. Even if they give 100%, which is no way to live and should not be necessary. They raise a family with their hand out and a swelling bitterness at the injustice of it all. And the cycle continues.
A GDP model in the absence of strict banking rules results in debt.
A GDP model in the absence of wealth distribution rules results in poverty for most.
A GDP model in the absence of sustainability rules results in accelerated consumption.
A GDP model in the absence of enforced political integrity result in lax rules.
The above result in hardship to breaking point then painful revolution.
How can we fix this?
Step 1 is to get vested interests out of politics. Be part of a simple and painless revolution on the 28th of August visit www.goodegg.org.uk. Put it in your calander now.
An MP should be treated like any other full time company director with incentives for reaching their goals. The question is what should those goals be?
Increase GDP? No!
Here are some ideas.
- Reliable prompt health care.
- Breathing space.
- Comfort and security.
- Sustainability.
- The number of hours per day the lowest paid workers must work per week to meet their needs, insure against illness and contribute toward society.
Click here to read a comic about two kids, an island and GDP.
Great explanation of GDP measurement.
I'd love to see a real GDP survey response from a bank. Remember #Libor. I doubt 'what counts' is clear cut and there is big money to be made in the markets.
Here is one way we can start taming the life consuming beast that is GDP.
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