Sunday, February 20, 2022

You Can Tell They Work for the State

Let's talk about gross domestic "product."

First, let's very briefly talk about how it should be profit, not product. Okay, next.

The formulae all say GDP goes up if taxes go up.

"GDP at factor cost plus indirect taxes"

"GDP = COE + GOS + GMI + TP & M" That last factor is taxes. With a plus sign. The other factors are already gross, not net of taxes.

 "Y = C + I + G" That "G" is government spending. So, under a central bank regime, it's inflation. 

Oh my fucking god. If you facepalm as hard as this deserves, you will die. You will kill the person behind you with the shrapnel that used to be your skull. Quite possibly you will level your entire town with the explosion, like you were domed by a meteorite.

"Does Government Spending Stimulate Economies?🤔"

You literally assumed it stimulates the economy right in the GDP equation. Plain, in your face, question begging. Could not be more blatant. 

Then you plug your numbers into the models and wow, GDP goes up when you tax more or print more money. Amazing! How could this have possibly happened unless it was true! 🙃

The joke is, if you read the link, you find even Official economists find reasons to tell the government not to do it.

Here in reality, taxes are like bombs. When used they cost even more than you spend on them, and indeed that seems to be the point. The government arrogates products and services to itself, lights them on fire, leaves them in a bag on your porch, and runs away snickering. "How did a recession happen I can't even." 

Truly the world is a mysterious place. I dunno how anyone can figure out what's going on! 🙃

P.S. On top of this all the numbers are fudged. It's not even calculated as stated, they "accidentally" adjust practically everything. I wonder if there's an arms race between vaguely sane economists adding factors to unbugger GDP and government accountants adding new best fudge practices. 

Basically, just use the Big Mac index. It's not exactly precise but it's vastly more accurate than this steaming pile of rotting monkey diarrhea. 

Especially, inflation is constantly underestimated for obvious political reasons, producing a lot of spurious GDP growth. There have been many stealth recessions. Typical real inflation/debasement is near 10%, though much of this is absorbed outside America for reserve currency reasons, which puts regular Americans fairly high up the Cantillon scale. (The Yuan sometimes hovers around 20% inflation.) This, in turn, allows Americans to live much richer than they could if they had to get by on the productivity of their labour. Absent reserve currency status, America would fit in with the rest of South America. Likely not competitive with Europe - unless USD are strongly funneled through Europe for reasons I'm unaware of. Despite Europe's near-open Communism. Reminder that Kigali, in Rwanda, is cleaner and safer than big American cities. Never mind places like Singapore.

On the plus side, since baseline inflation is so high, Americans are constantly desperate for productivity improvements so they don't have to raise prices, which means a lot of deflation offsetting the raw inflation. Turns out prices going down is a good thing. And also makes the Fed not look quite so Japanese-cartoon villainous. (They have the incoherent rants down pat tho.)

P.P.S. Fun fact that third one counts imports as a negative, instead of a positive. You can make your country "rich" by selling everything to the next country over. That's completely how wealth works, right? Dismantle all your houses and export the boards and screws? Totally nailed it. 

"Oh noes the trade """deficit"""!!!!11" Play stupid games, win stupid prizes.

Allegedly all these equations are equivalent. Either that's wrong or it makes brain cancer look like Isaac Newton. 

P.P.P.S. "spending on taxes actually increased 140%, not 25%." They pull this sort of shit all the time.

1 comment:

CovfefeAnon said...

It's also easily dismissable with Goodhart's law.

The rules for calculating GDP are published, they're considered a metric of economic health, they will be manipulated both on the straight up cheating level as well as the level of "honest" cheating by managing to the metric.

GDP being a pretty old idea in the field there's been plenty of time to come up with ways to decouple the metric from the intended underlying.