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> Don't believe GDP as an indicator of real growth, they keep on adding fictitious sources to these numbers. Did you know that rent is part of GDP? And even ren
by epups 3y ago
> Don't believe GDP as an indicator of real growth, they keep on adding fictitious sources to these numbers. Did you know that rent is part of GDP? And even rent that homeowners would have paid to a landlord had they owned their home?
Of course renting is an economic activity that should be reflected in the GDP, and it is as "real" as anything else. To focus solely on international trade feels shortsighted as well. When a doctor sees you and charges you $200, that's going into the GDP but not into any trade balance.
The world is richer since 2008 by almost any metric you can think of, including inflation-adjusted per capita income which is independent of GDP.
- tuatoru 3y agoSo the country is better off if prices of non-tradable services are increased by their suppliers? That sounds like the broken window fallacy.
- iso1631 3y agoIf I own a house (outright) and live in it, I pay nothing, and no impact on GDP If my neighbour owns a house (outright) and lives in it, I pay nothing, and no impact on GDP If I rent from my neighbour for $10k a year, and he rents from me for $10k a year, GDP increases by $20k a year, but nothing has really changed, expect the amount of money paid in taxes. So that's why you have imputed rent as part of GDP. Fine, I get that. How about this scenario I have a kid and look after it, I pay nothing, and no impact on GDP My neighbour has a kid and looks after it, he pays nothing, and no impact on GDP I look after my neighbours kid 3 days a week and he looks after mine, in an exchange, no impact on GDP I look after my neighbours kid 3 days a week and he pays me $300, and he looks after mine 3 days a week and I pay him $300. GDP increases $600 a week, and more money is taken in taxes. Do we include all unpaid work? If I (a painter) pay my neighbor (a gardener) to garden my front yard and he pays me to paint his garage, then GDP increases. If I do the gardening myself, and he does the painting himself, GDP doesn't increase. How about me looking after my old parent vs me working overtime and paying a care home to do it?
- epups 3y agoThe GDP is a measure of economic activity, meaning the exchange of money for products or services. Of course there are activities, such as the ones you describe, that will not be accounted because they are done for free or in exchange for something else. > How about me looking after my old parent vs me working overtime and paying a care home to do it? Yes of course the latter will have an impact on the GDP, and the former not. You are producing more work for money and you are buying more work for money.
- brvsft 3y agoThe point is that the country is no wealthier in either scenario, yet people use GDP as a proxy for the productive output and wealth of a country.
- epups 3y agoBut the country is wealthier in the scenario where you produced and sourced more labor for money. Arguably more productive too, because you expanded the pool of labor when you worked more hours, which your employer (presumably) transformed into more money.
- MichaelZuo 3y agoCan you explain how? If someone is paid to dig holes and fill them up right after, the country is not any wealthier even though GDP is increased, in fact slightly less wealthy because of wear and tear on the shovel/excavator.
- antisthenes 3y agoGPD is an estimate that relies on most people being rational. A company that pays contractors to do nothing but dig up holes and fill them back up again will quickly go bankrupt, so most people aren't going to engage in such enterprise. Just because you found a way to hack the GDP in an online argument doesn't immediately throw its usefulness in the real-world.
- timuzhti 3y agoThe GDP, by virtue of having the basket of things under comparison already picked out, has this very convenient thing called the implicit price deflator.
- epups 3y agoThe sentence "the country is better off" is subjective. The country's GDP will go up if all prices go up, yes. But this will also mean that inflation will go up, and in adjusted terms no one will be richer. The price deflator mentioned by the sibling is one of the ways to make that adjustment.
- __MatrixMan__ 3y agoEquating a high GDP with "better off" is problematic. It could be backed by products that nobody wants (wars and such) or it could be at the expense of other quality of life metrics such that the juice is not worth the squeeze. It's like lifting weights to get huge instead of to get strong or healthy, you can end up some undesirable results.
- deleted 3y ago[deleted]
- laratied 3y agoSo often I read so many utterly ridiculous economic opinions expressed here by people who should know better and be better educated. How can a smart, presumably educated person not know that rent counts as economic activity? To say the world is poorer than in 2008 is just utterly preposterous. Per capita GPD in China went from 3500 to 12500. India 1000 to 2200. There is half the world. US, Canada and Europe is only 15% of the population but I don't know how the case can be made we are poorer than in 2008 either.
- deleted 3y ago[deleted]
- empyrrhicist 3y agohttps://en.m.wikipedia.org/wiki/Rent-seeking https://en.m.wikipedia.org/wiki/Rent-seeking
- antisthenes 3y agoFor the 1000th time, regular rent (e.g. you pay $1000/mo for an apartment) is not the same as rent-seeking.
- empyrrhicist 3y agoIt's just correlated with ALL sorts of rent seeking: https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
- Dylan16807 3y ago> How can a smart, presumably educated person not know that rent counts as economic activity? Of course it's "economic activity". But if I sublet to someone that sublets to someone that sublets to someone that lives in an apartment, that's a 4x increase in money flow but there's no production of goods or services at all. It makes sense to have the cost of building and maintaining homes represented somewhere, but rent is a poor proxy for that.
- mordae 3y agohttps://www.youtube.com/watch?v=XndsyYUjMv8 https://www.youtube.com/watch?v=XndsyYUjMv8 Watch this. Counting rent is about as sensible as counting financial services.
- epups 3y agoNo thanks - if you are interested in an argument, please present yours in written format.