There was an absolutely brilliant take-down of one of the core assumptions underlying the Keynesian economic worldview the other day. It was in the pages of the Daily Sceptic, the creation of Toby Young who is the deputy editor of our parent Spectator publication in London. Along with our very own editor of the Australian version, Rowan Dean here in this country, Young was one of just a handful of brave anti-lockdown journalists in the democratic world during those woeful two-and-a-half years. (By the way, Dean and The Spectator Australia were in my view clearly the most anti-lockdown hard copy publication in the democratic world, orders of magnitude more than the Australian for instance, and that took an accumulated abundance of courage even though they were right on virtually everything.) Anyway, at the start of the lockdowns Young created the online publication the Lockdown Sceptic which, post-lockdowns, has broadened its sceptical focus and changed its name to the above Daily Sceptic. Last week there was an excellent article by one David Craig that pointed out the idiocies of relying on GDP as the sole measure of anything sensible in terms of how individual citizens are faring economically.

Craig reminded readers that GDP measures overall economic activity or output. Government spending counts as economic activity. So when government spends money that increases GDP. Then Craig let the British Tories under the woefully pusillanimous Rishi Sunak have it with both barrels. You see Sunak and the Chancellor of the Exchequer Jeremy Hunt had both been gloating that Britain’s GDP had risen by 0.2 per cent in January of this year. Craig did the maths. UK GDP is about 2.274 trillion pounds per year.  Craig wanted to be generous so he implausibly assumed that the Tories, by election time later this year, would get to GDP growth of 0.4 per cent. That works out to an economy running at about 9.1 billion pounds more than the year before. Got that? That’s the core of why Sunak is gloating. But Craig is devastating. He points out that the Tories are now spending about 50,000 pounds per year to support each illegal immigrant (for accommodation, phones, pocket money, it goes on). There will be some 50,000 illegal immigrants come to the UK in 2024 so that’s about 2.4 billion pounds. And it all has to be borrowed because the UK is running a deficit. All of that spending counts towards ‘an increased GDP for Britain’.

Then Craig throws in the 19,260 added or new civil servants who are over and above the numbers employed in 2023. Leave aside the flat-out scam that myriad more of them now ‘work from home’ – and it is patently plain that so-called ‘working from home’ is less productive and verging on a rort for most all employees, leave aside a few self-motivated authors or entrepreneurs. These public sector employees now make as much, or more, than their private sector equivalents and with basically no chance of being fired, etc. Craig is again incredibly kind to the Tories and assumes the average cost of these newly hired extra civil servants is just 100,000 pounds each, to cover salaries, pensions, office space (apparently they don’t need much of that because they’re at home picking up their kids from school or whatever counts as ‘working from home’), travel allowances, other allowances (do I hear anything super-woke like ‘transitioning leave’?) and the rest. So these extra civil servants will cost at least another 2 billion pounds in 2024. That too will have to be borrowed by the indebted Tory government. Then there is the 5.5 per cent pay increase just granted that will go to existing civil servants this year. Craig conservatively puts the cost of that at one billion more pounds.

Can you remember what Rishi Sunak and Jeremy Hunt were gloating about? It was a GDP increase of 0.4 per cent which worked out to about 9.1 billion pounds more activity/output (including government spending remember) than the year before. But just by looking at the billions wasted on illegal immigrants, the unnecessary new civil servants hired and the pay rise to all civil servants Craig already comes up with 5.5 billion pounds of the supposed 9.1 billion pounds of the yearly economic growth. And all of it, don’t forget, has to be borrowed. It’s an illegal immigrant- and civil servant-led recovery!  Or, more plausibly, it’s total bollocks to think about individual economic well-being just by using national GDP as a measure. Craig then delivers the coup de grâce by reminding readers of all those extra people who no longer want to work and are on benefits. Remember how during lockdowns and all that government thuggery and brutal infringements on civil liberties, combined with plucking out of thin air which businesses were essential, the government also had to pay out huge sums to the myriad people they’d put out of work. Loads of money to do nothing. And not surprisingly, except perhaps to the geniuses who did this to us, some of those people paid to do nothing got a taste for it. Which is why there are record job vacancies in the UK and at the same time a record number claiming benefits. To be precise, there are 355,000 more benefits claimants than a year ago. Some have just got a taste for the life and some were brutalised by the government’s lockdown thuggery. Either way, the benefits bill will rise (from the 2023 total to the 2024 total) by 14.53 billion pounds. That, alone, is more than the supposed yearly increase in GDP!

Now it’s true that government spending is in turn spent by recipients and Keynesians guess at what the ‘multiplier’ effect is. And there are economies of scale loved by big businesses, not so much small ones. But at the end of the day productivity is what counts and none of this does anything for that. In fact, Craig delivers a devastating critique of the limits of using GDP growth by itself as an indicator of economic well-being. In Britain this year the GDP growth turns out to be far less than the new government spending on illegal immigrants, civil servants and benefits payments. Zero productivity growth there. So if you want to know why Australia had one of the biggest drops in individuals’ standards of living last year then just apply this same sort of analysis to Australia.

If you focus on GDP then it should always be per person GDP growth. And on that measure Australia has had two GDP per person recessions in the last decade or so. The legacy press barely mentions that.  Meanwhile the problem in Australia is in some ways worse because we are letting in world’s highest per capita numbers of legal immigrants. What this does is increase GDP almost by definition while doing nothing for GDP per person. In fact, our record in Australia on the GDP per person front is no better than Japan’s, a country with zero immigration – which is in keeping with the fact no study has ever found mass immigration does anything to per capita income either way, beyond the margin of error. Meanwhile the Japanese aren’t suffering the side effects of house prices going up beyond the reach of the young, and clogged up traffic.

Why haven’t Dutton and the Liberals already come out hard against Albanese’s massive immigration intake? And taken on the make-believe world of GDP as the be all and end all? Promise massively to rein in immigration and Dutton will romp to victory. And if that sinks the Ponzi scheme that is keeping our universities afloat, well, I’m pretty sure we could all manage to live with that too. I know I could.