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Waddie
07-20-2014, 12:55 PM
Great book out on the history of GDP and how it's measured has changed over the years.

http://www.amazon.com/GDP-Brief-but-Affectionate-History/dp/0691156794/ref=cm_cr_pr_product_top

Who knew Britain's economy is 5% larger than thought now that they count prostitution and illegal drugs as part of GDP? Now I can say with confidence that I've been helping the economy !!! :)

regards,
Waddie

slug
07-20-2014, 02:28 PM
Gdp..a flawed measurement

"Two Keynesian economists, John Maynard Keynes and Paul Krugman, were walking down the street one day when they passed two large piles of dog ****.


Keynes said to Krugman, "I'll pay you $20,000 to eat one of those piles of ****." Krugman agrees and chooses one of the piles and eats it. Keynes pays him his $20,000.


Then Krugman, feeling richer, says, "I'll pay you $20,000 to eat the other pile of ****." Keynes, feeling bad about the money he lost says okay, and eats the ****. Krugman pays him the $20,000.


They resume walking down the street.


After a while, Krugman says, "You know, I don't feel very good. We both have the same amount of money as when we started. The only difference is we've both eaten ****."


Keynes says: "Ah, but you're ignoring the fact that we've increased the GDP by $40,000. "

Too Little Time
07-20-2014, 03:28 PM
Gdp..a flawed measurement

Most measurements are flawed.

The question is: Does GDP measure anything of interest with the required accuracy?

I am sure some people find it useful. I am sure that $40K of dog **** is noise.

It is noteworthy that Apple products are produced in China, a good portion of the profits go to Ireland, and a lot of sales are in the US. That type of distortion is important.

Gerarddm
07-20-2014, 10:47 PM
Pretty dumb, slug.

I cast a jaundiced eye on charts which purport to show trends in things like GDP and unemployment when the defining criteria change over time, rendering any trend analysis useless.

David W Pratt
07-21-2014, 08:44 AM
Anyone who would eat dog **** is too dumb to be trusted with money

David G
07-21-2014, 09:47 AM
Most measurements are flawed.

The question is: Does GDP measure anything of interest with the required accuracy?

I am sure some people find it useful. I am sure that $40K of dog **** is noise.

It is noteworthy that Apple products are produced in China, a good portion of the profits go to Ireland, and a lot of sales are in the US. That type of distortion is important.

Just so. Most measurements ARE flawed. As is most data collection. But GDP most decidedly IS useful. And until some better measure comes along... we use it as intelligently as we can. And it's true that the methodology changes as we get smarter, and as data collection gets better. So it's wise to keep a weather eye on those changes when one is interpreting or comparing historical data. Some issues - it makes no difference. Some - it makes all the difference. Another reason honest academics (which most mostly are) are important - and why it's good to view interpretation by those with an agenda (and especially those with a history of prevarication) with a jaundiced eye.

Oh... and are there any economics wonks in the Bilge? Maybe Chris... but he hardly visits these days.

Flying Orca
07-21-2014, 02:20 PM
It seems to have become standard practice for the right to disparage and discredit all data that are used to make informed decisions. I suppose that makes it easier to make decisions based upon faith rather than reality...

Too Little Time
07-21-2014, 04:13 PM
It seems to have become standard practice for the right to disparage and discredit all data that are used to make informed decisions. I suppose that makes it easier to make decisions based upon faith rather than reality...

It is unfortunate that the same data can be used to show conflicting claims. But that is life.

Flying Orca
07-21-2014, 08:08 PM
It is unfortunate that the same data can be used to show conflicting claims. But that is life.

That's why we have science - to sort out conflicting claims about the same data.

Too Little Time
07-21-2014, 08:51 PM
That's why we have science - to sort out conflicting claims about the same data.

It is unfortunate that the same data can be used to show conflicting claims. But that is science and math.*


* we can both prove and disprove many propositions of economic interest. Denying that causes a lot of problems.

An example: Does raising or lowering the current tax rates generate more revenue?

We just don't know enough.

David G
07-21-2014, 09:30 PM
It is unfortunate that the same data can be used to show conflicting claims. But that is science and math.*


* we can both prove and disprove many propositions of economic interest. Denying that causes a lot of problems.

An example: Does raising or lowering the current tax rates generate more revenue?

We just don't know enough.

Actually... on that issue we have a pretty good store of data to go by. It seems that the biggest factor is what the rates currently are, but there other factors as well. In our present circumstance - I'd venture that raising the tax rates - in accordion fashion - toward the top would raise more revenues than lowering rates for anyone.

Flying Orca
07-22-2014, 07:06 AM
It is unfortunate that the same data can be used to show conflicting claims. But that is science and math.*

No; if the same data can be used to support conflicting claims, either there is other evidence that supports one better than the other - in which case the claims are not equally valid - or there is not, in which case the claims are no better than conjecture or opinion. Science is the process by which we find the evidence required to support one claim over another.

Some aspects of economics are amenable to scientific research. Others seem to be matters of opinion. I don't trust opinion.

Too Little Time
07-22-2014, 11:49 AM
Actually... on that issue we have a pretty good store of data to go by. It seems that the biggest factor is what the rates currently are, but there other factors as well. In our present circumstance - I'd venture that raising the tax rates - in accordion fashion - toward the top would raise more revenues than lowering rates for anyone.

And some people would disagree. They have the same store of data to work from.

There is a theory that individuals can hold out on paying taxes longer than the government can operate without income. That is reflected by the fact that when capital gains tax rates are cut people tend to recognize their income from capital gains and when tax rates rise they tend not to.

In my position I have 3 sources of income: Roth IRAs I never have to pay taxes on. Non-retirement funds I pay a low tax rate on the gains. Traditional IRAs where I have to pay earned income taxes. I can pay as much or as little tax as I want depending on if I like the tax rate. Those at the top have much better options.