GDP – my New Zealand Projection, 2011.

GDP ‘going forward’?

Let’s be very clear about what GDP is. It’s a measure of transactions between us. You sell it to me, I sell it back to you, to me, to you, to…..        do it every nano-second, and you and I would increase New Zealands’ GDP on our own.

Clearly nothing REAL would have changed.

So: what to measure? 

If you accepted that ‘work’ requires ‘energy’, then measuring the amount of energy used, would be a valid starting-point. If that was filtered through a measure of ‘efficiencies’ gained per year – and a coarse average would do – you’d have a very accurate picture of what had been ‘done’.

Sure, some of the ‘done’ things would be discretionary (driving to the beach and buying an icecream) rather than creating permanent infrastructure, but that’s the case regardless.

Applying that premise to where we are now; we can predict that higher prices for energy will curtail the use of it, thus curtailing the ‘work done’.

Can you still increase GDP in that scenario? Yes, you can – and it will be unsurprising if the  politicians alter the stats in that direction. Probably, the sheer mass of transactions mean it will still show up as a ‘negative’, but addressing that (which will inevitably be seen by one and all as a ‘problem’) won’t address the underlying problem – energy depletion.

Time for a conversation about a better measure.

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One Response

  1. How about legs of lamb consumed? 🙂

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