Carrington Clarke

So you had New Zealand's third biggest city completely in ruins, large parts of it from this earthquake.

But ultimately, it was a positive for New Zealand's GDP.

The economy there had been struggling.

And by destroying a large percentage of the buildings that already existed in Christchurch, you had to rebuild them.

And likewise, panel beating services are counted as a positive for GDP because it's work being done.

But it's work being done to repair something that already existed.

And GDP doesn't account for the loss of that existing asset.

So just from a purely financial point of view, surely there are better ways that we can measure economic growth and capture those negative externalities so that we get a true sense of whether we're better off or whether we're just churning through things and it makes our GDP look good because we're treading water, but really we're treading water to stay where we were rather than getting ahead.

Look, I think at best it's a useful comparator because it's the same and it's been measured the same way basically since the end of World War II.

It's a creation of Keynesian economics.

It's a tool for economic managers to basically judge how well the capacity of the economy is being utilised.

So in that sense, it's been a useful measure.

If you want to use it as a measure of how well Australians are doing, then it's a less useful measure.

For a start, you need to look at GDP per capita because one of the problems with the headline number is if you just import more people, then of course they will consume more stuff and there will be more people working just because there are more people.

But per person, you may well be going backwards and that's what people live through.

So that's just a simple way where you need to get below that headline.

And there is information in the national accounts as they're called with within which GDP is just one of the numbers that you can pull that apart.

For instance, you can look at the profit share of national income and compare that to the labor share, the workers share versus, you know, the rent share of national income.

and kind of weigh up where the money is going.

Because again, not much point for the average person if your economy is roaring along, but all the benefit is going to say, you know, the tech bros who run the biggest AI companies, you know, that's great for them, but not for everyone else.