Diggin' and then fillin' in the ditch, boss.

Posted On: Saturday - August 27th 2022 2:56PM MST
In Topics: 
  Movies  China  Economics

This is a continuation, or spin-off, from the recent Peak Stupidity post Gross Defective Product, written considering input from all the commenters under it.

Get yer dirt out of the boss man's ditch!

First off, per Alarmist, indeed, America has a lot of natural resources. (It helped immensely that our population had been small and under control until the last half century's stupidity on that score. This is as opposed to China, where much of the woods had been denuded over the many years with too many people.)

Farming, forestry, mining, and other extraction industries, most assuredly generate real products that can be easily valued, maybe the most easily, for those (most of them) considered commodities. However, as compared to heavy manufacturing, it seems that a country in which these industries and products are predominant ends up trading them for manufactured goods elsewhere. If a nation can handle this economy with tariffs, and keep a trade balance, I suppose it can work, but this exporting commodities is the makings of a "colony" Political control is the read defining factor, but economically, let's say, Australia is pretty much a colony of China. A serious large country needs manufacturing, IMO.

Commenter "Fundamental Transformation" noted that manufacturing capability is important for a country's self-sufficiency.

Next, to the actual subject of this post, Bill H. brought up the example of neighbors mowing each others' lawns for a price. They could each mow their own lawns, but those efforts, with the same amount of work expended obviously, wouldn't be part of the official* GDP, while the first situation would add to it. Value is added to the lawns either way, at least temporarily.

How do you account for actual work expended in the economy? Is that a measure that even means that much, considering that work can be done smarter rather than harder? All this reminds me of the old Paul Newman (no relation) movie, Cool Hand Luke from which the scene above was taken from. To break Luke's spirit**, in the prison yard, rather than give he and others productive work***, they had him digging a big hole, and then filling it back up again. Isn't that the same thing, were he working in the private sector for pay? There is a lot of that though, and it would show up in the GDP. The bogus "broken windows" theory "**** says that's the way it should go. The hurricane came through and broke 50,000 windows and tore up 5,000 roofs. Great! That's more service work required - a real boost for the economy. In the big picture, it's no boost. A country does not get rich this way.

I want to insert here that I didn't mean to denigrate service work in general. Mr. Smith brought up an example of the grading of a piece of property, along with his own auto work. The former, grading, would be called a service, but it results in something like a product. The piece of property may be accurately valued to be worth $15,000 more (whatever the work "should" have cost) due to that service. A working sunroof on one's car adds value, of course. Some service "industries" - I use the quotes for those in particular - add very difficult to measure value, nothing at all often, and sometimes subtract value.

As a whole, I'd say the value of products can be more easily assessed. Then, again, what about 30 story apartment buildings in China that nobody ever lived in, and that end up getting demolished? The buildings are, if not expensive, high-value, products that are considered wealth. There is the labor - a whole lot less, I'd say, in destroying them. Wealth is destroyed, but the labor was expended on both ends. I don't know - this is the part of economics that really screws with my head. I'm guessing the Economists won't admit that it does the same to theirs!

Then, you've got really misplaced labor such as the Big Gov central planning that resulted in only the most special of Soviet Russians getting those POS automobiles for those 7 decades, and poor Chinese farmers out trying to make steel on the farm, as 30-40 million Chinamen starved to death over that 2-3 year Great Leap Forward.

While writing that previous post, I'd been thinking of how the GDP could be changed to a better measurement or what other measurements should be used. That's something I've got to think about hard, which is not going to happen right now. However, if we don't need comparisons over time, but just a comparison between countries, Commenter Jack Russell made a good point. I've written here about the HUGE trade deficit the US has been running with China - it's on the order of $500,000,000,000, that's 5 hundred Billion or 1/2 a Trillion dollars in a year. That's a real serious problem for us.

There's your comparison of who's doing better economically. After years of Country A buying a whole lot more from Country B than it's been selling to it, the next thing that happens is, in return, Country B is in shape to BUY Country A, one piece at a time. In the case of American and China (Country C, I guess), Peak Stupidity wrote a whole series about our worries on this, called Will America be looted by China? - see Part 1: Intro. - - Part 2: Housing - - Part 3: Big Biz - -Part 4: The Fruited Plain - - Part 5: The Wilderness - - and Part 6: Conclusion - The Golden Rule .

Here's another conclusion I get from thinking all these economic thoughts. Who has the best way to value our labor and the services provided and products built? That's a trick question, as it's not a "who", but only a figurative body part. It's something called the "Invisible Hand", and it speaks in one language - PRICES.

Thank you, PS commenters, for your input on this headache-inducing subject!

* I noted to Bill that were a neighbor to fill out a 1099 on my ass for something like that, we simply could not be friends anymore!

** That was kind of the theme of the movie.

*** As when the paved the piece of road quickly, unexpected with prison labor, to get done early, as the guards were out of work for them. BTW, that's like the roofing scene in The Shawshank Redemption.

**** There are 2 Broken Windows theories - the other has to do with policing small crime.

Sunday - August 28th 2022 6:03AM MST
PS: Yes, M, I mean to show that as just another example of the wasted effort such as in Cool Hand Luke. Some of these situations in China, though, are NOT over many years. Government incentives or their flat-out paying for ghost cities or ghost cities doesn't square with the market, and fairly new structures are knocked down.

It's only recently that there were so many of these residences in China to begin with. I've seen a town with many dozens of them that 10 years before had none.

Whether it is make-work or not, the infrastructure work there is AMAZING.
Sunday - August 28th 2022 5:01AM MST
"what about 30 story apartment buildings in China that nobody ever lived in, and that end up getting demolished?"

I'm not sure why this should be counted as being anything other than a larger version of "dig hole then fill again".

It would be hard to do that since the accounting would have to be over many years. Perhaps make a "tentative" or "projected" GDP add until units get occupied? If a unit is never occupied then it never moves into the "actual" column?

So then GDP becomes multiple measures (rather like the multiple ways we measure how much money is out there)?

If this isn't already happening I suspect there's money to be made in not doing it.
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