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Macro-analyses like this aren't particularly representative of any relevant point. For one thing GDP is a poor measure of the general increases of wealth. The U
by boh 6y ago
Macro-analyses like this aren't particularly representative of any relevant point. For one thing GDP is a poor measure of the general increases of wealth. The US's pivot to services isn't represented in GDP since it only accurately measures physical production (Microsoft/Google/Facebook etc. aren't accurately represented). The actual increases that wind up going into salaries (particularly at the top half) are heavily impacted by these intangible aspects of the economy (so if you isolated this report to just Mark Zuckerberg you'd see billions in wealth but no growth to account for it). At the lower end of the income spectrum, you'd miss the growth of surplus labor. Only 25% of people in the US have an undergraduate degree or higher, and of the people that don't, labor participation is only around 49%. So seeing limited gains in the people who still have jobs isn't that shocking. Whatever general idea of "inequality" this shallow report is meant to convey isn't particularly instructive. Enough data is available to make more interesting analyses.
*edited for clarity
- alexpetralia 6y agoCan you elaborate on how services aren't factored into GDP? That was not my understanding.
- boh 6y agoDigital services have always been either improperly factored or not factored at all. Software was only included after 1999, tech growth from Google and Facebook are still not included since they offer "free" services.
- JMTQp8lwXL 6y agoIt would seem services like cloud services, ad services, etc (Google, FB, MSFT) would be included in GDP. > GDP is perhaps the most closely-watched and important economic indicator for both economists and investors alike because it is a representation of the total dollar value of all goods and services produced by an economy over a specific time period. https://www.investopedia.com/ask/answers/what-is-gdp-why-its-important-to-economists-investors/ https://www.investopedia.com/ask/answers/what-is-gdp-why-its...
- boh 6y agoNot exactly: https://www.forbes.com/sites/timworstall/2016/10/25/were-doing-gdp-wrong-facebook-and-google-add-zero-to-the-economy/?sh=2fed35539b99 https://www.forbes.com/sites/timworstall/2016/10/25/were-doi... And as far as Microsoft: software was only added after 1999 and its relevance is only measured in sales not actual productivity. GDP assumes the production of more of something is growth--software doesn't work like that so its inclusion still fails as an accurate measure.
- BoiledCabbage 6y agoI'm trying hard to understand your point, but it still feels to me like you're off the mark here. GDP is not a measure of productivity. It's a measure of output per capita. If you're saying that productivity when up due to software, then output (per capita per hours worked) must have gone up somewhere due to using that software. And as a result it would be captured in GDP. Imaging for example I sold a manual tool to tend the field when growing crops. If I suddenly invent a new tool that makes you twice as productive, then yes I may sell the exact same number of tools (so it's not captured in GDP), but now every farmer buying it will be making twice a much crop which will be captured in GDP. Or they'll be making the same amount of crop in half the time which would show up as reduced hours worked (which is not what we see).
- JMTQp8lwXL 6y agoHaving twice as many crops may decrease the price per unit of crop. So, in this economy consisting of nothing other than the crop, we might not see 2x dollar valuation in products sold even though the technical innovation doubled the number of crops. Diminishing returns, etc.
- akamaka 6y agoServices make up 80% of US GDP, so it is definitely being measured to a large degree. I think you have a valid point to make about GDP being a poor measure of certain things, but I think you would find it worthwhile to study more about what exactly it is measuring and why it is still so useful.
- boh 6y agoIt is useful. Just not in the context suggested by this article. Highly broad "what if" studies like this are shallow but offer suggestive assumptions that aren't particularly helpful to understand aspects of the economy like wealth, incomes and inequality