" The GDP needs our misfortune"

Pita Sharples is making a big hit in some quarters. He has charisma and presence. He is also off the planet. Here he argues that GDP grows on the back of Maori misery. That building prisons creates economic activity and treating heart attacks, which Maori men suffer more of, brings money into the country.

The construction of new prisons is not just good news for GDP - it is great news! New buildings, new jobs, associated industries and a flurry of economic activity.....

The life expectancy for Maori is significantly lower than the life expectancy of the total population; with a difference of about 7.6 years between Maori and the total population.

Heart attacks are counted to mean something in the GDP.

They bring cash in to the economy - through drugs, hospital beds, medical supplies, nurses, doctors, theatre and intensive care staff, heart surgeons and community workers who support coronary care.

I'm not an economist but this looks like Henry Hazlitt's broken window fallacy.

A vandal throws a brick through a shopkeeper's window. The shopkeeper will have to purchase a new window from a glass shop for a sum of money, say $250. A crowd of people who see the broken window decide that the broken window may have positive benefits:

"After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be ... that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor." (p. 23 - Hazlitt)

The crowd is correct in realizing that the local glass shop will benefit from this act of vandalism. They have not considered, however, what the shopkeeper would have spent the $250 on something else if he did not have to replace the window. He might have been saving that money for a new set of golf clubs, but since he has now spent the money, he cannot and the golf shop has lost a sale. He might have used the money to purchase new equipment for his business, or to take a vacation, or to purchase new clothing. So the glass store's gain is another store's loss, so there hasn't been a net gain in economic activity. In fact, there has been a decline in the economy:

"Instead of [the shopkeeper] having a window and $250, he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window or the suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer." (p. 24 - Hazlitt)

When we lock somebody up, or we treat their heart attack, it takes money that could have been spent elsewhere adding value.

"I know - it sounds crazy," Pita says.

It sounds crazy because it is crazy.