3 ms·

GDP is a measure of the size of the economy to allow comparison between different years and different countries. Putting things in fractions of GDP allows the s

GDP is a measure of the size of the economy to allow comparison between different years and different countries. Putting things in fractions of GDP allows the same comparison to be made meaningfully. > Putting it mathematically correct "11 months" sounds much less scary. Yes, and for exactly this reason it's dishonest: It implies that you could, if you wanted, repay the debt in 11 months - which is impossible. Anyway, 90% debt is only scary if we decide that there is a threshold below 90% that is un-scary. If the threshold was 150%, then Greece is scary but UK isn't. If it's 10% then everywhere is scary. Personally, I'm more scared and/or outraged by the way the money is wasted than by the exact size of the debt.

petercooper 13y ago
100% agree with your last sentence. Now, I'm not really replying to you as such, but I don't quite understand the alarmism over, say, a debt of 100% of GDP. UK tax revenues are 39% of GDP (so, very naïvely, the government's "income") and with a debt of 90% of GDP, that's 2.3x income. Or a typical £25k earner having a long term debt, like a mortgage, of £57.5k. I confess this is an extremely naïve analysis since personal and government budgets are chalk and cheese, but it doesn't strike me, as a taxpayer, as being a number to get alarmed over. Or am I totally missing something?
- mseebach 13y ago
  What you're missing is the fact that having a mortgage implies having an asset (a house) worth something more than the mortgage principal. The government does spend on investment, but the vast majority of the budget in sunk into running costs. Then, the more appropriate comparison would be a £25k earner with £57k in credit card debts, which is obviously a lot more scary - but again not completely comparable as the guy would be paying 20-30% interest while the government pays close to 0%, mostly because they have the power to raise their income on demand if they need to in order to service their debts.
computer 13y ago
> Yes, and for exactly this reason it's dishonest: It implies that you could, if you wanted, repay the debt in 11 months - which is impossible. It does not imply that. It's simply the mathematical truth of the units. I'm arguing that using percent is factually _false_, with as aim scaring people. I prefer truthful facts with explanation. Feel free to use a different thing than debt/GDP, but don't use something that's equivalent to claiming that 1+1=3.
- chii 13y ago
  while i understand the unit, what does 11 months _mean_? When you put debt as a percentage of GDP, it is understood to mean the "size" of the debt, with the implied "size" of 100% being bad (whether this is true or not, i m not sure).

petercooper 13y ago

100% agree with your last sentence. Now, I'm not really replying to you as such, but I don't quite understand the alarmism over, say, a debt of 100% of GDP. UK tax revenues are 39% of GDP (so, very naïvely, the government's "income") and with a debt of 90% of GDP, that's 2.3x income. Or a typical £25k earner having a long term debt, like a mortgage, of £57.5k. I confess this is an extremely naïve analysis since personal and government budgets are chalk and cheese, but it doesn't strike me, as a taxpayer, as being a number to get alarmed over. Or am I totally missing something?

mseebach 13y ago
What you're missing is the fact that having a mortgage implies having an asset (a house) worth something more than the mortgage principal. The government does spend on investment, but the vast majority of the budget in sunk into running costs. Then, the more appropriate comparison would be a £25k earner with £57k in credit card debts, which is obviously a lot more scary - but again not completely comparable as the guy would be paying 20-30% interest while the government pays close to 0%, mostly because they have the power to raise their income on demand if they need to in order to service their debts.

computer 13y ago

> Yes, and for exactly this reason it's dishonest: It implies that you could, if you wanted, repay the debt in 11 months - which is impossible. It does not imply that. It's simply the mathematical truth of the units. I'm arguing that using percent is factually _false_, with as aim scaring people. I prefer truthful facts with explanation. Feel free to use a different thing than debt/GDP, but don't use something that's equivalent to claiming that 1+1=3.

chii 13y ago
while i understand the unit, what does 11 months _mean_? When you put debt as a percentage of GDP, it is understood to mean the "size" of the debt, with the implied "size" of 100% being bad (whether this is true or not, i m not sure).