Thursday, March 15, 2007

About the Gross Domestic Product

Next time some yapper tells you about the glorious growth of the GDP, remind them of this:

GDP purportedly is now growing at 3.5%, and everyone seems pleased. What we fail to understand is how much government entitlement spending contributes to the increase in the GDP. Rebuilding infrastructure destroyed by hurricanes, which simply gets us back to even, is considered part of GDP growth. Wall Street profits and salaries, pumped up by the Fed’s increase in money, also contribute to GDP statistical growth. Just buying military weapons that contribute nothing to the well being of our citizens, sending money down a rat hole, contributes to GDP growth! Simple price increases caused by Fed monetary inflation contribute to nominal GDP growth. None of these factors represent any kind of real increases in economic output. So we should not carelessly cite misleading GDP figures which don’t truly reflect what is happening in the economy.

Ron Paul, MC

In other words, a good deal of Federal spending is counted as GDP--meaning that the larger the Feds' budget, the larger the GDP. Hell--FDR increased the GDP significantly, but gasoline was rationed, as was copper, and some food. Great GDP--just no benefit to the citizens (aside from winning the war.)

So who wants to look at the GWB spend-a-thon and re-calc GDP for actual growth?

No comments: