GDP doesn’t measure anything other than the amount of money in circulation. Socialists the western world over have enthusiastically embraced the use of GDP as a measure of a country’s economic well being. It just isn’t that simple.

While govts like the National Party in NZ push GDP rates as a sign of their ever increasing ability to manage the economy well (where does it end) a little bit of analysis can show why this is JUST SO DAMN FALSE.

Say the GDP growth for any given year is 5%. Hooray, what brilliant economic management..!!!. But hang on. What say 100,000 people entered the country, bringing a tonne of cash with them and spending it here and there. Clearly the GDP growth in this instance is nothing to do with the economic management, but merely a measure of how much money came into the country.

You can test this  with a slightly more accurate measurement. That is GDP per person. GDP per person might be say 5%. Say there are 1 million people in the country. Bringing in an extra 100,000 people actually reduces the real GDP per person by 10%. Meaning the GDP per person is reduced to 4.5%. No real improvement.

GDP per person and productivity per hour worked are better measures of economic well being than GDP. Funny how in socialist societies, records of these measures are difficult to locate.  NZ’s productivity is weak and over the last 5 years has been getting weaker. New Zealand’s real GDP per hour worked has fallen steadily since the seventies (see chart above). Over this time Australia’s productivity has improved more than 5 percent.

Applauding GDP figures is more a measure of the gullibility of NZ citizens and the cynicism of their government than economic performance.The National govt should have used its years in power to cut govt spending by 30% at least, rather than pushing immigration to preserve the unaffordable status quo.