I'm not sure about the context of that Kennedy quote, but as presented it doesn't read as a case for redefining GD(or N)P, but rather as a reason not to take it as a measure of the success of society. I think that's correct, and the present blog post comes to a similar conclusion at the end.
Elon Musk is wrong about GDP
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Re: Elon Musk is wrong about GDP
#42Earlier quoted context omitted.
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.
> Spending isn't producing. 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…
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Re: Elon Musk is wrong about GDP
#43GDP 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.
There are plenty of examples where government is vastly more efficient than private sector. Medicare is vastly more efficient than private insurance. USPS is more efficient than private carriers. Another example is government pay. Usually much lower than the equivalent job at a private sector company. That's because private sector companies fail ALL THE TIME, and the COST of that inefficiency (waste of a failed company) is passed on to you via higher prices for those functions.
Also efficiency shouldn't be the goal of everything we do all the time. Sometimes resilience is more important, which comes at the cost of efficiency.
Re: Elon Musk is wrong about GDP
#44While I can't say that Musk is right, I also can't say he is completely wrong here. The private sector can also spend on dumb and inefficient things and we are fine in counting it in the GDP metric, the difference between private sector and the government is the source of revenue. The private sector has to produce something for the economy before spending (it may be done indirectly through debt, but it's not importan…
Nah, it's dumb. He's saying a dumb thing because he doesn't understand the use and importance of it (and also its limitations). We (economist) count everything because excluding an economic agent that has a massive effect on the economy, is such a intellectually foreign concept that we don't even consider it. There's no rational honest argument that would make sense.
BTW, government expenditure only appears in the GDP calculations by expenditure. It doesn't appear in the income nor in the production. The later one the one you are actually thinking of.
Re: Elon Musk is wrong about GDP
#45Earlier quoted context omitted.
What is his actual area of expertise ?
His expertise is in lying, pompousness, fraud, and exemplifying the Dunning-Kruger effect. He's world-class at appearing to be intelligent. He's also resoundingly good at being a nepo-baby who got everything handed to him. I can assure you he's not a good engineer or honest businessman.
> His expertise is in lying, pompousness, fraud, and exemplifying the Dunning-Kruger effect.
Yeah, but that is precisely why he is asked such questions. He gives a more engaging to the Average Joe response than an expert does. It doesn't matter if the response is out to lunch.
The question you responded to was trying to figure out where his expertise didn't overlap with the intent of the people questioning him.
Re: Elon Musk is wrong about GDP
#46I 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…
This is done to curb the inflation caused by military spendings and low unemployment rate. Yes, this is net negative for projected economic growth but considering historic record of oligarchs in Russia who would invest in foreign economies instead of Russia during peace time, I would argue for Russia it is net positive development assuming massive western sanctions stay in place.
Re: Elon Musk is wrong about GDP
#47GDP 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.
Comparing private schools and state schools is far from easy without going really deep into the subject. Superfically comparing grades without taking into account the self-selecting nature of private education vs state schooling. The school bodies are very different and thus the burden on resources.
Re: Elon Musk is wrong about GDP
#48> "elon is wrong about {X}" People are (very) slowly waking up. The number of X-es is large to say the least.
As one of Elon's ex-fan's (or at least had a generally positive opinion of him) like I suspect many of us here once were, it is astonishing how consistently wrong and ignorant he has been, and it has gotten worse year over year. I think there is a legitimate possibility he fried/is frying his brain on Ketamine.
There are numerous examples of people who appear to be intelligent, witty. Maybe they hid their darker sides (be it some authoritarian, populist, racist or otherwise objectively bad tendency). But they did hide them. But then something seems to change and they quite quickly descend into being very unlikeable. And it's not just always "ideas". It seems to permeate their entire being. The transformation includes going from being "likeable" in a broad sense, to very abrasive personalities even when you factor out their views. It's really scary and depressing. We only notice this in some really high profile cases (Musk, Notch, a few politicians...), but I'm sure there are thousands of less visible people who have done this transformation without anyone noticing but their close friends and family. While I might sound like RFK Jr: I'd really like for someone to go to the bottom of what causes it.
Re: Elon Musk is wrong about GDP
#49While I can't say that Musk is right, I also can't say he is completely wrong here. The private sector can also spend on dumb and inefficient things and we are fine in counting it in the GDP metric, the difference between private sector and the government is the source of revenue. The private sector has to produce something for the economy before spending (it may be done indirectly through debt, but it's not importan…
Nah, it's dumb. He's saying a dumb thing because he doesn't understand the use and importance of it (and also its limitations). We (economist) count everything because excluding an economic agent that has a massive effect on the economy, is such a intellectually foreign concept that we don't even consider it. There's no rational honest argument that would make sense. BTW, government expenditure only appears in the GD…
>BTW, government expenditure only appears in the GDP calculations by expenditure. It doesn't appear in the income nor in the production. The later one the one you are actually thinking of.
I am not sure against what you argue exactly. My point is that if we use GDP as a metric of economy strength, then it's easy for the government to cheat it by fueling it's spending by printed money (ah, sorry, the reputable economist use the "quantitative easing" euphemism instead) or by unfair debt issuing practices (like forcing banks, pension funds, or even people directly to buy government bonds), then it results in a short term "sugar rush" GDP growth, while consequences are kicked down the road. In the US case we also have an additional masking factor in the form of having control over the world's reserve currency, which significantly dampens the usual inflation reaction.
So if we want a better metric, we should somehow discount this factor. Obviously, simply removing the government spending is too simplistic (or you can call it less charitably as "dumb").
Re: Elon Musk is wrong about GDP
#50Bolsonaro government in Brazil pulled the same private vs public GDP rethoric to justify smallish growth.
Mind you the economy was effectively being lead by Paulo Guedes, U of Chicago PhD