Posted On: Friday - August 19th 2022 9:15PM MST
In Topics:   China  Economics  Americans
I've been in online and also offline discussions about the big picture of the economic might of America versus that of China or just the state of the American economy itself. I'm told often that we here still have this huge and growing GDP (That's Gross Domestic Product - the title here refers to China more specifically - see our topic key Cheap China-made Crap.) I'm told that China's GDP, hence, allegedly, its economy is smaller that ours - the www says yes, see, the US GDP in '21 was $21 Trillion, China's GDP was $17 Trillion.
Oh, so we're not as overwhelmingly kicking China's ass economically, but we still are by nearly 25%! Now, how stupid does that sound? Don't answer that if you are an economist - it be best for all of us if you would recuse yourself from this entire post.
Gross Domestic Product is the big number that's trotted out to compare economies to their former selves and to economies of other lands. If you've been around a while, you might recall that it used to be called the Gross NATIONAL Product. What's the diff? Investopedia tells me here:
Gross domestic product (GDP) is the value of the finished domestic goods and services produced within a nation's borders. On the other hand, gross national product (GNP) is the value of all finished goods and services owned by a country's citizens, whether or not those goods are produced in that country.I can't seem to get off the web the time that American economists and politicians changed over - I'd guess in the 1980s sometime - but it makes sense as Globalism increases.
Let's talk GDP then, because that's what you read/hear about. What are these products of which they speak? First of all, just to keep the abbreviation short, there is no "S" at the end for Services. Yet, they are, of course, part of this economic metric.
Because services are so hard to define and quantify, I really think a better number for comparing economies might be one that only measures the value of products only. That would rule out much of the economy of Switzerland, and, the way it's going, the U.S. of A, though. (Peak Stupidity had a blog post way back explaining how the rendering of services doesn't have quite the respect that creating products does - so oftentimes Services are now Products.) It seems easier to value a product than a service - there are lots of services that may have a negative value to us - IRS auditing services comes to mind.
America does not manufacture so much anymore, and Peak Stupidity has written before about the foolishness of expecting an economy to run off of "people selling each other gourmet hamburgers and craft beer". Let's think about the value added. Surely, there IS value added. The raw ingredients in each become a short-term product that we are willing to pay better than McDonald's burger prices for. Just the same, if looked at as products, the beer and burgers don't have the long-term value as automobiles and clothes washers do.
Looking for the value added by services becomes more vague when we look at legal services and the F.I.R.E. "industries". (That'd be Finance, Insurance, Real Estate, and Education.*) There are a big part of the modern American economy, but it is very questionable where and what the real value is out of each of them.
However, the GDP counts it all. In a manufacturing economy like modern China's, the GDP will reflect primarily the value of the cars and trucks produced, the machinery produced, the buildings built, and lots of other real products, In America, the money made by middlemen in large financial dealings, the "education" provided by universities to their gender studies majors, the money made by lawyers for their legal services in their suing to stop a road being built ... ker-ching! They are all part of the huge GDP we rack up.
Part of the reason China has been increasingly doing manufacturing for the world is its cheap labor. That factor is changing, but the other big factor has been that business is not over-regulated. In the meantime, American business is greatly hampered by the Feral Gov't. Yet, if OSHA has 200 people spending 2 years working on proposed rule-making that will just make more work for businesses, well those man-hours of OSHA's are services, to be counted. Ker-ching!
There's a lot more I want to discuss regarding different types of industry in our different economies. The conclusion of this post, however, is simply that people need to understand what's included in that GDP measure that is used so much. I think that right now the Chinese economy is stronger than that of America. The use of GDPs to compare them is not what it's cracked up to be.
To illustrate the point further, I bring up a joke I read a month ago from an Unz Review commenter named Mario Partisan:
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An Econ professor and a grad student are walking in a park when the prof sees a dog turd on the ground. The professor says to the grad student, "I’ll give you $50 if you eat that turd." The grad student agrees.
Half an hour later the grad student sees a turd and offers the prof $50 to eat it. The professor agrees.
The student then says, "What the heck was the point of that? Neither of us has any more money but we’ve both eaten shit. The professor says, "Son, you are overlooking the fact that we just benefited from $100 worth of trade."
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* The "R.E." may have both originally stood for Real Estate, but I think education belongs there too.
Comments:
Jack Russell
Monday - August 22nd 2022 6:13PM MST
PS
The balance of payments is the only thing that matters. If the denizens of country A sell each other bricks at fabulous prices, then uses its profits to buy the necessities of life from country B, country B is getting richer and country A is getting poorer, no matter how you slice it. Provided country B is getting paid in real money, not fake money. That last proviso is a good part of why the current scam has worked so well for so long: country B has been accepting bricks in lieu of real money, and country A blows up anybody who says that bricks aren't real money.
The balance of payments is the only thing that matters. If the denizens of country A sell each other bricks at fabulous prices, then uses its profits to buy the necessities of life from country B, country B is getting richer and country A is getting poorer, no matter how you slice it. Provided country B is getting paid in real money, not fake money. That last proviso is a good part of why the current scam has worked so well for so long: country B has been accepting bricks in lieu of real money, and country A blows up anybody who says that bricks aren't real money.
Moderator
Saturday - August 20th 2022 3:21PM MST
PS: I didn't mean to imply that all service jobs are BS or are not productive, Adam. For example, that grading job really results in a product, that graded lot that you specified with a tangible added value over the lot as it was before. It's just that lots of them are harder to value. Your car jobs, well one can look at the shop manual to get a pretty good estimate - assuming there aren't rusty bolts all over...
Lots of services can be quantified well, and lots can't. Those F.I.R.E. "industry" ones are a big part of what's left of the economy, and they may be a big part of the GDP, which is what I think makes the GDP pretty bogus.
Lots of services can be quantified well, and lots can't. Those F.I.R.E. "industry" ones are a big part of what's left of the economy, and they may be a big part of the GDP, which is what I think makes the GDP pretty bogus.
Fundamental Transformation
Saturday - August 20th 2022 2:53PM MST
PS The vaunted service economy or do you want some fries with that shake.
It took three months for an engine rebuild on a vehicle just out of warranty range due to supply chain and it was really just a couple of the most important components.
Not a problem if the parts were made here.
No jobs and everyone working for or getting a handout from the government is a feature and not a bug in the pod for the one worlder globalist quisling traitors in the swamp.
It took three months for an engine rebuild on a vehicle just out of warranty range due to supply chain and it was really just a couple of the most important components.
Not a problem if the parts were made here.
No jobs and everyone working for or getting a handout from the government is a feature and not a bug in the pod for the one worlder globalist quisling traitors in the swamp.
Adam Smith
Saturday - August 20th 2022 9:48AM MST
PS: More about those bullshit jobs...
https://www.newyorker.com/books/under-review/the-bullshit-job-boom
https://tinyurl.com/bdf873au
☮
https://www.newyorker.com/books/under-review/the-bullshit-job-boom
https://tinyurl.com/bdf873au
☮
Adam Smith
Saturday - August 20th 2022 9:20AM MST
PS: Good afternoon, Everyone,
1991. (The United States has used GDP as its key economic metric since 1991.)
https://www.investopedia.com/ask/answers/030415/what-functional-difference-between-gdp-and-gnp.asp
While I wholeheartedly agree that there are many non-productive (even destructive) services included in the GDPee numbers (IRS, most lawyers, DMV Ladies, diversity sinecures, most "education", most "government", most "administrators", etc. ad infinitum), and that we cannot achieve prosperity by simply shining each other's shoes, I would also argue that some services are useful, helpful and, dare I say essential.
When building a house it is a very good idea to have the property graded properly before you lay the foundation. The grading company is providing a service. When the electrician comes by to wire up the house, he is providing a service. When I fix a sunroof* or put new springs/shocks/struts on a truck or install a new fuse block and fix the wiring on a classic car or change the alternator in an excavator or replace a compressor and recharge an air conditioner, I too am providing a service. Doctors, nurses, dentists, plumbers, roofers, etc. There is a need for useful services and they should probably be included in the so called GDP.
Unfortunately there are many people who have bullshit jobs that are essentially pointless and shouldn't exist...
https://www.strike.coop/bullshit-jobs/
*If anyone needs to fix a broken sunroof...
https://www.youtube.com/watch?v=u4wW7fAFOlE
Happy Saturday!
☮
1991. (The United States has used GDP as its key economic metric since 1991.)
https://www.investopedia.com/ask/answers/030415/what-functional-difference-between-gdp-and-gnp.asp
While I wholeheartedly agree that there are many non-productive (even destructive) services included in the GDPee numbers (IRS, most lawyers, DMV Ladies, diversity sinecures, most "education", most "government", most "administrators", etc. ad infinitum), and that we cannot achieve prosperity by simply shining each other's shoes, I would also argue that some services are useful, helpful and, dare I say essential.
When building a house it is a very good idea to have the property graded properly before you lay the foundation. The grading company is providing a service. When the electrician comes by to wire up the house, he is providing a service. When I fix a sunroof* or put new springs/shocks/struts on a truck or install a new fuse block and fix the wiring on a classic car or change the alternator in an excavator or replace a compressor and recharge an air conditioner, I too am providing a service. Doctors, nurses, dentists, plumbers, roofers, etc. There is a need for useful services and they should probably be included in the so called GDP.
Unfortunately there are many people who have bullshit jobs that are essentially pointless and shouldn't exist...
https://www.strike.coop/bullshit-jobs/
*If anyone needs to fix a broken sunroof...
https://www.youtube.com/watch?v=u4wW7fAFOlE
Happy Saturday!
☮
Moderator
Saturday - August 20th 2022 8:31AM MST
PS: Those are great examples, Bill. Of course, the first set of transactions out of me and my neighbor wouldn't be counted, due to the fact that if he ever filled out a 1099 on me, I would never speak to him again. ;-}
Bill H
Saturday - August 20th 2022 7:42AM MST
PS To show just how stupid the GDP is. If I pay you $20 to mow my lawn, and you pay me $20 to mow your lawn, we have added $40 to GDP. Neither of us has become richer, no additional work has been, as we could both have mowed our own stupid lawns, but we added $40 to GDP.
Making it worse, if I give you a $20 raise, and you give me a $20 raise, we have added $40 MORE to GDP, even though neither one of us has gained a dime in the process.
Making it worse, if I give you a $20 raise, and you give me a $20 raise, we have added $40 MORE to GDP, even though neither one of us has gained a dime in the process.
Moderator
Saturday - August 20th 2022 5:23AM MST
PS: Alarmist, the natural resource industries are what I wanted to write about in another post.
The rest of your comment is a pretty grim assessment, but I have no argument against it.
The rest of your comment is a pretty grim assessment, but I have no argument against it.
The Alarmist
Saturday - August 20th 2022 4:09AM MST
PS
China (and Russia, for that matter), also have far better supplies of the natural resources needed for the new world into which Western leaders are desperate to command us. We in the West are very dependent on the Global South for much of what we need for the little we actually produce. Fortunately for the US, it still has enough reserves of various resources to get by. Western Europe is a dead man ... err, person ... walking, and has arrived at its own funeral with no idea it is the guest of honour this winter.
But even the US is going to have to back away from its Green pretensions sooner rather than later, lest it follow the lead Sri Lanka has taken. We won’t need a Trump-like creature to call for insurrection if they keep going the way they’ve been going ... it will bubble up organically. TPTB think locking down and controlling comms will limit the organisation and coördination of it, as if that will stop it.
TPTB have let crime and anarchy in the streets of the West grow to proportions where the common folks know that the police and justice systems do not have their backs, so the West will probably devolve into something that looks like Beirut 1980. Not so much a problem in heavily-armed “Can Do” America, where neighbourhoods can police themselves, but a huge problem in pussified Western Europe (including the UK), where the essential elements of the Camp of the Saints are already in play.
GDP won’t matter in 10 years time.
China (and Russia, for that matter), also have far better supplies of the natural resources needed for the new world into which Western leaders are desperate to command us. We in the West are very dependent on the Global South for much of what we need for the little we actually produce. Fortunately for the US, it still has enough reserves of various resources to get by. Western Europe is a dead man ... err, person ... walking, and has arrived at its own funeral with no idea it is the guest of honour this winter.
But even the US is going to have to back away from its Green pretensions sooner rather than later, lest it follow the lead Sri Lanka has taken. We won’t need a Trump-like creature to call for insurrection if they keep going the way they’ve been going ... it will bubble up organically. TPTB think locking down and controlling comms will limit the organisation and coördination of it, as if that will stop it.
TPTB have let crime and anarchy in the streets of the West grow to proportions where the common folks know that the police and justice systems do not have their backs, so the West will probably devolve into something that looks like Beirut 1980. Not so much a problem in heavily-armed “Can Do” America, where neighbourhoods can police themselves, but a huge problem in pussified Western Europe (including the UK), where the essential elements of the Camp of the Saints are already in play.
GDP won’t matter in 10 years time.
Thanks for the comment, Jack!