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"GDP PPP can increase whilst your economy contracts." Still, if PPP GDP increases, with all else being equal (eg. stable population) it would imply the standar

• dogma1138 3y ago
  No it does not, PPP is calculated based on a basket of 3000 fungible goods and services as well as other costs such as major infrastructure construction projects. It has zero account for quality or outcomes. It doesn’t care if you have access to healthy foods, it just cares how much would X calories costs, it doesn’t care what is the quality of the housing stock or the outcomes of your healthcare system. You can very much have a situation where your economy shrinks, the quality of life tanks and your GDP PPP stays the same or grows, communism is rather good example of just how a situation can be where things are on paper very cheap from food to infrastructure mega projects and where housing is free but no one would claim that life in 1970’s Soviet Union was particularly great. In 1990 the USSR had the 2nd highest GDP PPP in the world, if you honestly think that it was a good place to live I’ll build you a time machine myself.
  • kranke155 3y ago
    I know people who lived in the USSR in the 1970s and missed it.
    • dogma1138 3y ago
      Good for them, I know plenty others who didn’t including my entire family. That still isn’t the point, the quality of life in the USSR wasn’t a close 2nd to the US in fact when the USSR economy started to fall apart in the late 70’s and 80’s it too switched to PPP because hey our bread is cheap even if you need to stand in line to get it. And Guyana today isn’t a better place to live in than France or Canada, and Bulgaria is definitely a 1000 times better place to live in than Russia.
      • weard_beard 3y ago
        Don't you dare besmirch the name of Doctor Sausage! https://tasteofartisan.com/doctors-sausage/ https://tasteofartisan.com/doctors-sausage/
      • beebeepka 3y ago
        With climate change, today's Russia will end up the best prime estate in the world. Unless we flood them and turn it all to shit once we're driven up there due to draught, famine, war
      • midoridensha 3y ago
        >Good for them, I know plenty others who didn’t including my entire family. There's a YouTube channel where an interviewer talks to people in various Russian cities today about the war and other topics. Loads of middle-aged and older women and men (esp. women it seems) say they want the Soviet Union back. Your family was one of the malcontents that left. The people still there really do miss the authoritarian Soviet Union and want it back, and they fully support any warmongering necessary to achieve that goal.
        • FirmwareBurner 3y ago
          >Loads of middle-aged and older women and men (esp. women it seems) say they want the Soviet Union back. Because they have no marketable skills in the current economy. During soviet times they were basically state parasites, paid to sit around and do nothing, or pretend to work in some unproductive factory, and got free housing from the state without worrying about paying for electricity or heating as the state took care fo that too. Now that they actually need to work to support themselves they find out capitalism works for those with actual productive skills not for those who are good at pretending to work or used to work as informants to the secret police for a living. The sudden switch from communism to capitalism without a proper long term plan to reintegrate those people into the workforce really shocked them.
        • jhgfjhgfjhfgjhg 3y ago
          What percentage want the old Soviet Union back? I don't think you know what you're talking about.
  • thomasz 3y ago
    Despite all its shortcomings, the USSR did pretty well in areas they really cared about, like tank production. And it’s very difficult to compare the value of a t80 with the value of a m1, especially when there was little trade between both blocks. The USSR sold energy to Western Europe in order to get dollars which were then used to buy grain from the US. And that was just about it. Your problem isn’t with PPP but with the Soviet societal tendency to falsify reports on absolutely every level and with the inherent incomparability between planned and market economies.
• landemva 3y ago
  >> it would imply the standard of living is increasing. In USA, GDP includes the explosion of numbers of hospital admin staffers, energy prices doubled, and production of munitions which are given to Europe. That GDP does not increase my quality of life.
  • mrb 3y ago
    "That GDP does not increase my quality of life." I agree. As I said in my first post: "prices of goods [eg. healthcare] are inflated in the US compared to similar goods in the EU". So concretely, if healthcare prices increase in the US, but remain constant in the EU, this would increase the PPP GDP of the EU. What I meant to write is: if the PPP GDP increases in the EU faster than in the US, with all else being equal (eg. stable population) it would imply the standard of living is increasing faster in the EU than in the US.
    • dogma1138 3y ago
      GDP PPP in the US is identical to the nominal GDP in the US since the purchasing currency in the US is the US dollar. > What I meant to write is: if the PPP GDP increases in the EU faster than in the US, with all else being equal (eg. stable population) it would imply the standard of living is increasing faster in the EU than in the US. No it doesn’t mean anything of the sort in fact high nominal GDP to GDP PPP ratio usually indicates a low standard of living and a developing economy the Eurozone is an anomaly in this regard mainly due to its developed infrastructure and social institutions. And don’t forget that your GDP PPP can be twice that another county whilst your median income is can be 10 times lower. Median income per capita adjusted for PPP would be a better albeit an imperfect measurement of it since the standard of living is dependent on so many other things. In which case there are only 4 countries which have higher median income PPP than the US, UAE, Luxembourg, Switzerland and Norway. AIC/household final consumption expenditure is another good indicator for standard of living and wealth in which case the US is #1.
      • FredPret 3y ago
        US economic performance is all the more OP if you take into account that it's a huge country of 350m people and has a diversified economic base. For a tiny banking nation or petrostate to be rich is unsurprising. But when it's half a continent, the world really ought to take out their notebooks and go into full copycat mode - at least as far as economic policy and attitudes are concerned.
• nonethewiser 3y ago
  Despite a shrinking economy. If we’re measuring economy size we’re not measuring purchasing power. I cant tell if you recognize this and just think we shouldn’t care about economy size or if you are actually conflating PPP with economy size. Mainly because you keep presenting it as a rebuttal to claims about economy size.
  • conjecTech 3y ago
    Size is denominated in terms of some measure. You don’t eat dollars, and you can’t build a house out of one. GDP has doubled, but so have US prices. Does that mean the economy is actually stronger? Using PPP simply chooses to denominate GDP in terms of things other that fiat currency.
    • FredPret 3y ago
      PPP is usually meant to compare economies and control for differences in cost of living, not comparing time periods. Inflation is when you compare the same economy in two time periods. Furthermore, economic growth is measured in "real" dollars, aka, excludig inflation. If US prices doubled as you say, then their economy is therefore now four times as large in the new, inflated dollars. None of this has anything to do with fiat currency. The same would be true if you measured in kg's of gold, but you'd have to account for the gold-cost of living ratio instead of fiat dollar inflation.
      • deleted 3y ago
        [deleted]
      • conjecTech 3y ago
        Inflation isn't a scalar value, and all of this complexity is just trying to account for that. This thread is about whether an increase in effective income from prices going down is the same as your notional income going up while prices stay the same. My point is they're not, but feel very similar in most cases. I used an example with inflation rather than deflation since people understand that more intuitively.
      • 3y ago
• codedokode 3y ago
  PPP is a misleading figure. If your PPP-adjusted income is 2 times higher than someone's else does it mean that you can buy 2 times more MacBooks or trips to Korea?
  • ivan_gammel 3y ago
    If I earn $100k somewhere in Eastern Europe, then deducting all taxes and recurring costs like health insurance, rent or mortgage, from what’s left I may be able to buy more MacBooks or trips to Korea than someone from San Francisco. It is misleading to compare just a few imported goods to make conclusions as well.
    • dogma1138 3y ago
      You’ll be surprised at how much housing costs in Eastern Europe these days…
      • oneTbrain23 3y ago
        Still cheaper and sturdier than the cardboard house in USA. European houses typivally made of brivks and mortar. Cant say that in USA. Even 5mil house in San Fra, a significant portions the house is made of wood and drywall. Pounching through American wall is hollywood pastime. Cant find a similar think in other countries hollywood.
        • jandrewrogers 3y ago
          I’d like to see a European brick and mortar house survive a Magnitude 8 earthquake, which is a requirement in San Francisco. The US used to have lots of brick and mortar construction, just like Europe. After those buildings were all destroyed by strong earthquakes, they switched to steel and wood, which can survive a strong earthquake. Europe style construction is not allowed in much of the US because it demonstrably isn’t safe.
          • hibikir 3y ago
• seanmcdirmid 3y ago
  > Still, if PPP GDP increases, with all else being equal (eg. stable population) it would imply the standard of living is increasing. PPP is weird. Many of my costs were higher when living in China since imported things were more expensive, and there were lots of extra taxes to consider. It didn’t feel like I had more PPP except when eating out and consuming services. You definitely can’t use PPP to buy imports.
  • thomasz 3y ago
    PPP is meant to account for things like a haircut in San Francisco creating way more economic output than a haircut in rural China, and therefore inflating the numbers. It doesn’t completely solve the problem of comparing the economic output of a 747 to the economic output of a haircut in rural China. If you are used to the lifestyle of the western upper middle class and consume the associated products, the effects of the PPP adjustment will not be that meaningful to you. The same isn’t true for people who have to use most of their income to buy basic necessities like shelter, food, transportation and so forth.
    • seanmcdirmid 3y ago
      Average Chinese costs are lower, however, not because their PPP is higher, they just have lower LCOL. So that hair cut that is only 20 kuai is done by a guy outside in the alley who maintains one very long finger nail (and yes, I actually experienced that before). If we were to compare the average Chinese bought car with the average American bought car, you would see a similar effect.
• ffhhttt 3y ago
  If you want to measure the standard of living there a much better indicators than GDP per capita for that. PPP is also a deeply flawed concept because comparing the quality of goods and services in the context of different consumption patterns. However if you really want to use you should look at median income (with social transfers etc.) rather than GDP.
  • dereg 3y ago
    Median income is not a better measure because it is blind to changes in population composition over time. Series of median income figures doesn't actually track anything. For instance, a country that accepts more lower-skilled immigrants will see its median income figures grow less than countries that accept fewer of those immigrants. Is the immigrant-accepting country poorer as a result? The only way that median income would be a valid measure of wealth or QoL would be if you isolated the cohort of those considered "median" in 2008 and tracked their wealth over time.
    • ffhhttt 3y ago
      Or you could look at inequality, Gini and/or the 20th, 80th etc. percentiles instead. > Is the immigrant-accepting country poorer as a result? Yes, in this specific case it would be poorer per capita.
• Gareth321 3y ago
  > Still, if PPP GDP increases, with all else being equal (eg. stable population) it would imply the standard of living is increasing. With some important caveats: 1. Balance of trade. The goods and services in the poorer nation are worth less, comparatively. Any trade with the richer nation will lead to a wider balance of trade deficit. This causes all kinds of structural economic and budget problems in the long term. 2. Foreign purchasing power. Customers have to substitute goods and services away from the richer nation to poorer nations. If one’s preferred television, for example, is produced in the richer nation, these will become more expensive, and will force consumers to purchase other options. This is especially acute in cases where a nation has a de facto monopoly on certain industries. In reality, both nominal and PPP GDP figures are important to monitor for different reasons.
• andrewjl 3y ago
  > Still, if PPP GDP increases, with all else being equal (eg. stable population) it would imply the standard of living is increasing. That's not necessarily true, depending on how the PPP is calculated it may not reflect the cost of imported food or energy or other necessities.