If crime goes up and more police are hired and prisons built,guards hired, and contracts let for all kinds of services required for prisons, does all this economic activity get added to the GNP or is considered a net drain on the economy and subtracted from GNP?
These things count (as postitives) and are a major reason why the national accounts are at best a rough proxy for national welfare. You could have lots of other examples. As a proxy it is a useful measure over time assuming the proportion of unproductive activity doesn’t change too much.