Is GDP an Accurate Measure of Reality? \ stacker news ~econ

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Is GDP an Accurate Measure of Reality?mises.org/mises-wire/gdp-accurate-measure-reality

268 sats \ 10 comments \ @Undisciplined 10 Sep econ

By Frank Shostak

Mainstream economists speak of GDP as though it is the economy itself, however, GDP is not a good measure of economic reality. Instead, it presents a distorted picture of genuine economic activity and leads to mistaken conclusions about the economy.

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50 sats \ 3 replies \ @grayruby 10 Sep

For context: Yes to the quote not the fact that GDP is an accurate measure.

71 sats \ 2 replies \ @Undisciplined OP 10 Sep

I'm sure someone has talked about this, but the longer we rely on GDP the worse it's going to get. There's the business adage "What gets measured gets managed." Politician's being focused on GDP for decade after decade is distorting the economy towards the inputs of GDP and away from unmeasured valuable things (leisure, family, etc.).

47 sats \ 1 reply \ @grayruby 10 Sep

Good point.

71 sats \ 0 replies \ @Undisciplined OP 10 Sep

I hadn't even considered that before, but now that I have it seems like it's probably pretty important.

25 sats \ 5 replies \ @Bell_curve 10 Sep

Government spending should not be counted for economic activity

21 sats \ 4 replies \ @Undisciplined OP 10 Sep

It's funny how even mainstream economists basically understand this, but keep doing it anyway because they understand how severe the ramifications would be of omitting it.

I recall Rothbard arguing that, if anything, government spending should be subtracted, rather than added.

39 sats \ 3 replies \ @Bell_curve 11 Sep

1000 percent

Government spending is taxation which is legal plunder

21 sats \ 2 replies \ @Undisciplined OP 11 Sep

An interesting note on this is that they are actually consistent in how regular crime is treated.

They don't subtract the monetary value of stolen goods, because they assume the thief gains just as much utility as the rightful owner would have, which is exactly the same assumption they're making with government spending.

25 sats \ 1 reply \ @Bell_curve 11 Sep

But there is a zero sum effect with crime. One person benefits at the expense of the victim. It’s not a voluntary transaction

21 sats \ 0 replies \ @Undisciplined OP 11 Sep

They count the spending in different places in these two cases, but it's the same idea.

You spend X on something that gets stolen. X counts towards GDP.

The government steals Y from you and spends it themselves. Y counts towards GDP.

It's conceptually the same mistake. X and Y weren't acquired voluntarily by their ultimate consumer, so we can't say that the consumption was worth X or Y.