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Yglesias is just repeating arguments that have been mode over and over by people who do in fact know what they are talking about (Noah Smith makes the argument

Yglesias is just repeating arguments that have been mode over and over by people who do in fact know what they are talking about (Noah Smith makes the argument well here https://www.noahpinion.blog/p/imports-do-not-subtract-from-gdp https://www.noahpinion.blog/p/imports-do-not-subtract-from-g...) The moon base example I think makes the argument very clearly. If you have an economy which produces nothing then it has a GDP of 0. If the increase imports for whatever reason, their GDP is still 0, which means that imports doesn't subtract from GDP, otherwise their GDP would be negative which is nonsensical. But all this is sort of beside the point because arguments from accounting identities are almost always nonsense.

gruez 2y ago
>The moon base example I think makes the argument very clearly. If you have an economy which produces nothing then it has a GDP of 0. If the increase imports for whatever reason, their GDP is still 0, which means that imports doesn't subtract from GDP, otherwise their GDP would be negative which is nonsensical. It's technically true that imports don't decrease GDP, but that's only true if there's no substitution effects. But for most goods substitution effect does exist, and therefore we should expect a GDP drop from imports.
- the_optimist 2y ago
  Correct. It’s a very straightforward algebraic correction that reflects both supply and demand. The demand is implicit and equal to production. You consumed it but you didn’t produce it. The demand is internal but the supply is not. This equation is tautologically true. It is not some “almost always wrong” blah blah. People here know almost nothing about economics and are vulnerable to the most specious of arguments.