Drugs and Prostitution vital to the economy
- Thread starter Ausprop
- Start date
Haha de-railed to say the least.
Not sure how anyone can claim that GDP growth data isn't important. Just take one look at market reactions the minute they come out to get a sense for the importance placed on this data by regulators, markets, anyone/everyone (other than Freckle).
Why? It is a measure of how activity has changed from one period to the next. GDP growth has a direct influence on employment growth. We need to grow at 0.7%+ per quarter to have any real reduction in unemployment. It feeds through to inflation data (increased activity/income increases demand and thereby prices). Nominal GDP growth has a significant impact on the taxes we pay and the amount the government spends - it is one of the largest input into any federal budget.
In terms of international data comparisons, there is a long history of work by various reputable international institutions that work to promote consistency in data between countries. Given the data is so 'macro' - there will be some activity that is measured differently from country to country. Nonetheless, on the whole, its relatively standardised for developed economies.
Freckle may have a point about GDP growth figures being overused/over analysed.
What gets measured gets done. If you use alternative measures to measure 'activity/performance' you are likely to incentivise different activities. Long talked about by economic theorists (e.g. happiness measures, etc) - but never really used in mainstream commentary.
Cheers,
Redom
Not sure how anyone can claim that GDP growth data isn't important. Just take one look at market reactions the minute they come out to get a sense for the importance placed on this data by regulators, markets, anyone/everyone (other than Freckle).
Why? It is a measure of how activity has changed from one period to the next. GDP growth has a direct influence on employment growth. We need to grow at 0.7%+ per quarter to have any real reduction in unemployment. It feeds through to inflation data (increased activity/income increases demand and thereby prices). Nominal GDP growth has a significant impact on the taxes we pay and the amount the government spends - it is one of the largest input into any federal budget.
In terms of international data comparisons, there is a long history of work by various reputable international institutions that work to promote consistency in data between countries. Given the data is so 'macro' - there will be some activity that is measured differently from country to country. Nonetheless, on the whole, its relatively standardised for developed economies.
Freckle may have a point about GDP growth figures being overused/over analysed.
What gets measured gets done. If you use alternative measures to measure 'activity/performance' you are likely to incentivise different activities. Long talked about by economic theorists (e.g. happiness measures, etc) - but never really used in mainstream commentary.
Cheers,
Redom
Great indicators Freckle, if only there was a way to combine most of these into one useful indicator.
GDP is measured by adding: Consumption in the domestic economy (C) + Business Investment (I) + Government (G) + Net Exports (NX).
[*]export product and markets --- Feeds into NX
[*]debt (private and public) --- Feeds into I (and G).
[*]liabilities --- aka debt.
[*]employment --- feeds into everything, particularly C.
[*]demographics --- drives long term GDP variables
[*]ToT --- big impact on NX.
[*]balance of payments --- NX...
[*]foreign reserves --- Was very important under the gold standard. See history section of your Econ textbook. Australia holds next to none relative to Asian counterparts. Doesn't mean much.
[*]FX -- replace 'F' with 'N'.
[*]foreign investment -- drop the foreign.
[*]education standards --- aka, long long run driver.
[*]geopolitical relationships --- Ahhh...No.
[*]government policy --- G.
[*]technical capabilities --- I.
[*]R&D --- I.
[*]budgets (surplus or deficits) --Havent we already done this one? G.
[*]competitiveness -- its always good to be competitive.
[*]industrial manufacturing capability/capacity --- I.
I get a giggle watching you guys chit chat...it's like watching a couple of preschoolers talk gobbledygook..
If you had a company that turned over $100k last year and then $105k this year and was trending for 5% annual growth what would it tell you.
Absolutely nothing of value. Worse the CEO and CFO goose the numbers anyway to enhance their bonuses and assure investors alls well.
That's GDP in a nutshell and you guys still think it's relevant..
If you had a company that turned over $100k last year and then $105k this year and was trending for 5% annual growth what would it tell you.
Absolutely nothing of value. Worse the CEO and CFO goose the numbers anyway to enhance their bonuses and assure investors alls well.
That's GDP in a nutshell and you guys still think it's relevant..
GDP/capita LOL.. another questionable if not limited indicator.
I've lived in Aus and NZ. The difference in per capita GDP is stark. Problem is I can't find a difference in the standard of living or quality of life. In fact I find the quality of life better in NZ overall. Your mileage will vary depending on where you live.
GDP related indicators are nominal not real which substantially limits their usefulness and unless you understand these limitations (which most don't) information can quickly become garbage. Worse if the quality or varicity of inputs is poor it becomes garbage in garbage out.
I would say I get giggles in schooling you - but its far to easy to bother 'giggling' about. Before you throw your toys, i'm just joking.
Anyway, using your example mate, you've included the little till that million dollar businesses have in their 'petty cash' as more important than an increase in their total revenue.
That's what 'international reserves' mean as a measure of a countries performance. Useless indicator that means nothing in terms of a developed economies performance.
See attached chart.
Cheers,
Redom
Attachments
I must be losing the plot. I have no idea what you're talking about.
That's a completely new tangent that has what to do with the relevance or not of GDP as a KPI??
Quality of life is a totally personal set of choices and by no means any form of indicator. What may be an important factor in quality of life for one person, may be totally irrelevant to another. I always laugh at the "best cities to live " surveys as the criteria is so personal to the authors.
Standards of and access to;
education,
employment,
healthcare,
recreation,
equality,
security,
human rights, etc
These aren't personal choices but conditions conducive to and/or enabling one to attain comparable qualities of life.
If you have health problems and can't access medical care your quality of life can be substantively diminished. This is not a matter of choice.
Well now we know your choices.
It's always foolish to assume that everyone's needs or choices will be the same.
Well now we know your choices.
It's always foolish to assume that everyone's needs or choices will be the same.
We're talking about QOL in the context of GDP/cap. The GDP/cap stat for AU suggests a much higher standard of living in comparison to NZ. My experience indicates otherwise. If one was to measure QOL metrics they would find very little difference in the areas I've listed.
My conclusion is that if GDP/cap can't identify, suggest or point to any meaningful information then you have to look at other data to uncover any meaningful knowledge. They kinda makes GDP/cap moot in my book.
The problem with GDP base data is that it's engineered to accomplish a desired outcome by the powers that be. That pollutes the quality of any related data stat like GDP/cap.
When you start to get your head around how GDP is simply a make believe number you'll find it amusing to watch people talk about as if it's real.
It's alright Rusty. One day you'll be as big as the other boys and girls. Now it's half time. Go fetch the oranges like a good lad.
I agree with you and it applies to most government statistics. It's the reason sites like shadowstats exist. Long term trend stats are skewed by changes in the calculation method and make comparisons difficult. A lot of the statistical methodology is regularly reviewed by organisations such as the ABS or the government of the day.
Most of these feed into quality of life indicators. GDP per capital/Income levels obviously need to be added to the equation given its impact on one standard of living.
Also pretty sure most parts of Australia > NZ, although we're talking at the margins here. Both have world class standard of livings.
Cheers,
Redom
They don't feed in they are QOL indicators
That's the point. GDP/cap isn't an indicator of QOL nor standard of living. Be aware that QOL is something you attain depending on your environment and your standard of living is largely based on the choices one makes. There's a difference.
A key number implies it holds the solution or answer to a question and/or is the defining metric among others that describes something.
If it is engineered or fabricated to fit an agenda it fails as a KPI in my mind. Key data should unlock answers not obscure the real picture.
