It doesn’t measure up

GDP - Gross Domestic Product. A very lazy definition if it is a definition at all. It is nothing of the sort.

From Jim Bolger’s comment the other day in the Waikato Times it is a measure of the financial transactions that take place.

It doesn’t matter if they are positive or negative, they still add to the total. The larger the total the more activity there is and that apparently is good. Unfortunately, if we sold all our farmland and half our cities to overseas interests our GDP would go through the roof. The problem is we would have lost our farms and would have an even bigger housing problem than we have now.

GDP no longer measures how much we produce. As the economy tilts away from farming and manufacturing towards finance and the service industries, GDP loses its value as a measuring tool.

I suspect a good proportion of our current GDP is generated by our housing market bubble and people gambling on an overinflated stock market.

Yes they are gambling, not investing. They are gambling that somewhere out there there is a bigger fool who will buy their shares for more than they paid for them. (Tax free, more the pity.)

The mainstream media insist on calling them investors but no investor would invest in a stock market that is outstripping GDP, for all its failings, by a multiple of 10.

That is simply not sustainable, so eventually it will correct itself as it always does.

Geoff Orchard, Ohaupo