Visual Capitalist has published their 2021 world GDP update, “Visualizing the $94 Trillion World Economy in One Chart”, along with an expanded version of the chart that lists all of the countries that fell into the “Rest of” boxes on the summary chart.
“Once Pareto gets into your head, you’ll never get him out.”
One of the confusing things today is that so much “data” really fits into the category of “Accurate But Misleading”. The arithmetic is correct, but the implicit assumptions are highly questionable.
There is an interesting short book about GDP by Diane Coyle, “GDP: A brief but affectionate history”. There have been many arguments over the years about how to measure GDP. A lot of the measurement is consumption rather than production. Then there is the issue of arguably double counting actual production, such as when a government taxes the producers and then spends that tax revenue.
The take-away from her book is that reported GDP is a much more nebulous concept than the Authorities would like us to think. For example, of the $22.6 Trillion reported US GDP, around $10 Trillion is fairly unproductive money-shuffling FIRE (Finance, Insurance, Real Estate), Professional & Business Services (ie, a large element of non-productive compliance costs), and Government Expenditures (mostly the Paying Paul side of Robbing Peter). How much of that is genuinely productive?
We are driving the economy along making decisions by looking at the speedometer and the fuel gauge. What if those gauges are not telling us what we assume they are?
And what if all of the levers and dials the “people in charge” use are not connected to the things they think they are, sometimes work in opposite directions, interact with one another in nonlinear ways, and have long and unknown delays before changes have their effects upon the system? Anybody who’s worked on an operating system knows this from experience. I suspect the “macroeconomics” clerisy hasn’t a clue and thinks their equations actually predict human action.
One thing that’s clear from the chart is that GDP, however defined, is a poor predictor of mind share among the political class (none of whom have ever worked on an operating system). For example, most of them seem to view Russia and China as peer adversaries. Look at the size of their economies. Heck, Taiwan is creeping up on Russia in GDP from a tiny little island with no natural resources.
It used to be simpler: look at production of steel, coal, etc. Today, intellectual capital and human capital appear to be more important. I’d bet on countries that are preserving their human capital rather than diluting it by open borders and mass immigration from less cognitively endowed populations.
These government reports about how well the US economy is performing (under their guidance) remind me of that comment by President Nixon at the depths of his troubles. A reporter questioned Nixon about his status after a visit to a doctor. The President responded: “The doctor says I feel fine”.
This is a government report, so suspicious from the gitgo. Government lies. We have reams of proof of that from these last 4 years. ?Why are we to suddenly believe a rosy report about the economy when all around us we see - misery and hard times. This strikes me as the old joke of degrees: BS is what you think it is, MS is more of the same, PHD is piled high and deep.
I wish government spending wouldn’t be included in GDP
GDP = Consumer spending + private Investment + government spending (including payroll) + (Exports - Imports)
Consumer spending is about 66 to 70 percent.
Net exports is the smallest component, usually negative
Ha! That would not be advantageous to the government. Hell will freeze over before that happens.
Note that GDP is supposedly about Production! Instead, the authorities measure consumption.
This used to be OK, when most of what was consumed was produced in the country. But when so much of what is consumed is now imported from other countries, treating domestic consumption as a proxy for domestic production is highly misleading.
Yet the old saying remains true – Production Precedes Consumption.
