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> The discipline’s most prominent statistic, gdp, is gross (as opposed to net) because it leaves out the cost of wear and tear. Net domestic product is an inte
by danans 8y ago
> The discipline’s most prominent statistic, gdp, is gross (as opposed to net) because it leaves out the cost of wear and tear.
Net domestic product is an interesting concept that I haven't considered before.
The Fed appears to track it somehow, despite the difficulty in measuring it, as the article mentions. Here is a graph I configured on the St Louis Fed site that compares GDP to NDP:
https://fred.stlouisfed.org/graph/?g=lErT https://fred.stlouisfed.org/graph/?g=lErT
In general, it seems to track GDP pretty well, although recently it appears to have gotten closer to GDP, though I don't have any idea why.
The article's comparison of "wear and tear" as a % of countries' GDP is interesting.
Since lower income countries (China, India) often have a lower standards for acceptable maintenance level in both the public and private realm than wealthier ones, it kind of makes sense that they spend less of their GDP on wear and tear.
Also, a lot of the expensive modern infrastructure (airports, freeways, etc) in those countries is relatively new, so a big repair bill might just be further down the road (no pun intended).
Britain in this view is an anomaly, being a high income country with low maintenance spend as a % of GDP.
- fyfy18 8y agoI'd say there are three main reasons for Britain's lower maintenance spending: 1) Compared to France and Germany the climate and environment is a lot simpler. We don't have lots of mountains with tunnels, the temperature barely dips below freezing. Even though we have roughly the same population size, we have roughly half the length of motorways [0]. 2) In the 80s a lot of public infrastructure was privatised. Taking the railways as an example, First Group is a company listed on the London Stock Exchange which owns a large majority of train and local bus services across the country [1]. Infrastructure projects are still funded by the government, but they are often funded in the way of loans, that at some point they expect to be repaid, so don't impact the GDP. 3) After the financial crisis, fixed capital spending was greatly cut (as well as public spending in general), but as a % of GDP it still hasn't returned to its 2008 levels [2]. I suspect a lot of what was cut was really improvements and new projects that have been shelved. If we were to compare it to other countries over a greater timeframe, I'd expect to see the spending closer to that of France and Germany. It'll be interesting to see what happens after Brexit as a large percentage of both the construction labour force and building supplies are imported from Europe. [0] http://www.nationmaster.com/country-info/stats/Transport/Road/Motorway-length http://www.nationmaster.com/country-info/stats/Transport/Roa... [1] https://en.m.wikipedia.org/wiki/FirstGroup https://en.m.wikipedia.org/wiki/FirstGroup [2] https://tradingeconomics.com/united-kingdom/gross-fixed-capital-formation-percent-of-gdp-wb-data.html https://tradingeconomics.com/united-kingdom/gross-fixed-capi...
- rrcaptain 8y agoMuch of the maintenance of Britian's infrastructure is still done by the government. Rails, for example, are government maintained but we just don't get the profits anymore.