11–20 of 116 posts
Elon Musk is wrong about a lot of things. I'm not sure why people keep asking him questions outside his area of expertise...
I've talked to a few economists about this and non agree with Elon on this. The biggest issue one person raised is how do you separate out government spending form GDP? If a US town has a big military base, does that mean the entire towns' GDP is just government spending so ignore it? The government essentially pays for everyone's salary in the town. Where do you draw the line at what is government spending and priva…
Maybe the problem is that it's called Gross Domestic Product but we're talking about spending. Spending isn't producing. Sometimes spending promotes production, but may times it doesn't, and a lot of the stuff that gets counted as GDP is just moving dollars from one entity to another.
But is a government dollar really as productive as a private sector dollar?
$1b billion for the local school district. Compare that to $1 billion spent by a private operator?
Standard GDP might overstate. Maybe you need a 50% haircut on government spending in the calculation.
I am not an expert, but this was noted elsewhere as being the reason why Russia's economy looked to be doing relatively well even after years of sanctions: the government was spending as a wartime economy, and so any loans, any sovereign wealth, and other measures to fund that spending all prop up an economy that might in future have many problems. (Not that they're really propping it up, but that GDP is a common pro…
Russia has been selling large amounts of long-term sovereign bonds, going into debt, at an annualized interest rate in the mid 20%'s (!). While under a looming demographic crisis featuring very large numbers of elderly pensioners being supported per young worker. A non-negligible fraction of those young workers are fleeing the country or dying in Ukraine, which further deepens demographic issues. This is destabilizin…
wow, that is kinda dumb. Governments can and do target GDP with their spending, with predictable results. The classic example is "ghost cities" in China. They have ghost cities nobody lives in, ghost roads nobody drives on, and ghost bullet trains that go nowhere useful. All because regional governors are expected, one way or the other, to match GDP targets for their regions. Goodhart's law applies here. "Any observe…
wow, that is kinda dumb. Governments can and do target GDP with their spending, with predictable results. The classic example is "ghost cities" in China. They have ghost cities nobody lives in, ghost roads nobody drives on, and ghost bullet trains that go nowhere useful. All because regional governors are expected, one way or the other, to match GDP targets for their regions. Goodhart's law applies here. "Any observe…
For historical finance-culture reasons (they're reflexive savers, and there aren't many other investments allowed), China does have a lot of real estate investment relative to population, even considering their rapid urbanization, and not all of it is looking to be sustainable; In retrospect there's been a bit of a bubble. But >90% of it? There are hundreds of third/fourth-tier cities housing hundreds of millions of people that might have drawn fire originally under "Ghost City" theory.
In a worst-case scenario, what Chinese people get instead of a return on their nest egg investment is inexpensive houses/apartments with more living space, and maybe the option to support themselves without a DINK family.
I've talked to a few economists about this and non agree with Elon on this. The biggest issue one person raised is how do you separate out government spending form GDP? If a US town has a big military base, does that mean the entire towns' GDP is just government spending so ignore it? The government essentially pays for everyone's salary in the town. Where do you draw the line at what is government spending and priva…
Maybe the problem is that it's called Gross Domestic Product but we're talking about spending. Spending isn't producing. Sometimes spending promotes production, but may times it doesn't, and a lot of the stuff that gets counted as GDP is just moving dollars from one entity to another.
Now you've ruled out lots of other stuff though. Is loaning money "production?" Is spending for services (like, software development!) "production"? Is investing in assets like real estate "production"? All those activities create wealth!
Now you've got a definition where only primary production, like farms and construction and mining, have any value. And that's silly too.
No, all economic activity creates wealth. The idea of "spending" being separate from "producing" only holds at the microeconomic level where you are playing a zero sum game with a single bank balance.
wow, that is kinda dumb. Governments can and do target GDP with their spending, with predictable results. The classic example is "ghost cities" in China. They have ghost cities nobody lives in, ghost roads nobody drives on, and ghost bullet trains that go nowhere useful. All because regional governors are expected, one way or the other, to match GDP targets for their regions. Goodhart's law applies here. "Any observe…
It’s hard to imagine in the west just how fast china is urbanizing- and the immense scale that the government is preemptively tackling a housing crisis.
GDP is it a useful measure? Maybe? Maybe not? What is your argument and how does the GDP numbers support it?
GDP counts government dollars at face value. But is a government dollar really as productive as a private sector dollar? $1b billion for the local school district. Compare that to $1 billion spent by a private operator? Standard GDP might overstate. Maybe you need a 50% haircut on government spending in the calculation.
GDP counts government dollars at face value. But is a government dollar really as productive as a private sector dollar? $1b billion for the local school district. Compare that to $1 billion spent by a private operator? Standard GDP might overstate. Maybe you need a 50% haircut on government spending in the calculation.
Yes.
What? A dollar is a dollar, duh. If you want to claim otherwise, you're the one who needs to show evidence. Why should the government selling a $1000 bond and spending it on a free gadget for a craven bureaucrat behave any differently than me putting a $1000 iPhone on a credit card? Money is money.