How to Add 2% to GDP
From a recent Post artice:
Looking at data from every trade made by all investors in Taiwan from 1995 to 1999, Odean discovered that the "aggregate portfolio of individual investors suffers an annual performance penalty of 3.8 percentage points," which includes trading costs. If investors had simply bought the index and not traded at all, they would have done about 3.5 percent better. The amount of money lost was equivalent to 2.2 percent of Taiwan’s gross domestic product.
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This is mostly re-allocation of wealth. Question is whether it results in overall efficiency. My guess is no, because the 2% is more likely to end up with those who have lower marginal utility of wealth; they will slow the velocity of money and increase luxury consumption. So it's probably not a good deal overall.One possibly positive side (someone hited at this) is that more trading might make markets more efficient (improving prices by themselves is just a Ponzi scheme) and hence provide better incentives; I doubt that this is worthwhile.
The favored policy and easiest way to make GDP go up is to understate inflation. Then blame pension funds for seeking non-paper-money assets.