Natural disasters, like Hurricane Sandy, provide periodic
reminders, not of the shortcomings of GDP necessarily, but what
GDP is designed to measure and what it is not designed to
measure. The definition of GNP I think I recall from my college
days is that it is the total dollar value of all goods and
services produced during a year. The shift from GNP to GDP a few
years back put the emphasis on production by labor and property
located in the United States rather than production by U.S.
entities worldwide. Production of new cars, new houses and
haircuts count, but purchases of used houses and used cars don’t
count. There is a spending side (consumption, investment,
government spending, etc.) and there is an income side (wages,
interest, profits, etc.). Generally and loosely speaking, a
higher GDP, reflecting both higher spending and higher incomes,
is a good thing. However, if the higher GDP is boosted by
hurricane clean-up and repair, that’s not so good. The problem
is we don’t get a subtraction for the dest