35 comments on Robert F. Kennedy on Defining GDP and Some Other Thoughts
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35 comments on Robert F. Kennedy on Defining GDP and Some Other Thoughts
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GDP: The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.
Only if exchanged for dollars. You can transport a child to school via your car in which case this service produeced for your child is NOT included in GDP, or via a taxicab or limo service, in which case it IS included in GDP. You can wash your family's clothes in the laundry room/closet of your home in which case it is NOT included, or you can leave them at the dry cleaners in which case it IS included. You can watch your kids after school which is NOT included, or you can hire a babysitter which IS included. You can cook them a meal in the kitchen [not included in GDP] or you can pay the nanny or the pizza delivery guy or the restaurant to do it instead[included in GDP]. Same service performed, different way of counting it.
If you own your home, the amount that you theoretically would pay in rent is included in GDP. I don't know if the feds inflated figures accordingly during the housing boom, but this would seem to exaggerate things a bit.
More critique from Mish.
Furthermore, if we were to sell everything except the shirts off our backs to other countries - lock, stock and barrel - it would be considered to be a boom year as far as the GDP is concerned.
This is what you get when you only operate with an income statement and are oblivious about the balance sheet. We are depleting and depreciating our national assets and loading up on liabilities like a bunch of manic lunatics.