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Your statement applies to a chain of people who have something material to do with getting the item from raw materials to a consumer's hand. But in many cases that chain is loaded with... deadwood from a production standpoint. It's simplified to say all those people contribute to "producing" something, although you are completely correct in that they add to the "cost."
It's only simplified in your mind, not mine. A good starting point when I say "everything" would be to imagine what everything is.
If you believe there are a lot of people in the supply chain unnecessarily, then that would be a good place to save time, yes? But I think you will find that they (most of them anyway) are more "necessary" than you believe.
It's only simplified in your mind, not mine. A good starting point when I say "everything" would be to imagine what everything is.
If you believe there are a lot of people in the supply chain unnecessarily, then that would be a good place to save time, yes? But I think you will find that they (most of them anyway) are more "necessary" than you believe.
I understand your contention. I just disagree that the original statement has much if any meaning in the discussion. It's just rearrangement of the pieces to no useful end.
Like, everyone who ate tomatoes 100 years ago is dead, man!
It's only simplified in your mind, not mine. A good starting point when I say "everything" would be to imagine what everything is.
If you believe there are a lot of people in the supply chain unnecessarily, then that would be a good place to save time, yes? But I think you will find that they (most of them anyway) are more "necessary" than you believe.
What if everybody took their whole paycheck and bought private commission lottery tickets, and then lived off the winnings. The GDP would immediately double, nearly everyone's good and bad luck would be in equilibrium, and their standard of living would remain about the same. But the GDP would double. What would that mean?
A variation on that does occur. A century or so ago, most households did everything for themselves, and rarely paid anyone to do any work for them. They did their own laundry, took care of their own kids, made their own clothes, and raised their own oats to feed their own horse to pull their own buckboard. The 20-fold increase in the GDP simply represents all the cross payments for people to take in each other's wash, so to speak. Without any commensurate rise in the quality of life, nor real value of goods and services produced.
So GDP is inversely proportional to people's willingness to take care of poroducing their own consumption of goods and services, circulating cash to have others do it for them.
What if everybody took their whole paycheck and bought private commission lottery tickets, and then lived off the winnings. The GDP would immediately double, nearly everyone's good and bad luck would be in equilibrium, and their standard of living would remain about the same. But the GDP would double. What would that mean?
Healthcare cost is part of GDP service sector. If too many can not even access affordable healthcare due to high cost, then GDP will be very high but quality of life will not be high. In that situation, higher GDP and higher GDP growth is a bad thing.
You're right, it would not, but only because lottery transfers are excluded by fiat. But the illustration is the economic equivalent of money changing hands when there is no value being created. Joe, the mechanic, rebuilds the transmission on the truck of Bill, the electrician. Bill then rewires Joe's house. Joe charges Bill $1,000 and Bill charges Joe $1,000. Now $2K has been added to the GDP, but no value was added, that wouldn't have been if they both did their own work, which a century ago, their grandfathers would have done. So modern specialization of trades has raised the wealth, but at the same time has eroded the value of a man's work. An interesting paradox.
Now $2K has been added to the GDP, but no value was added, that wouldn't have been if they both did their own work, which a century ago, their grandfathers would have done.
A century ago they wouldn't have had electricity or trucks (probably). And if they did, they likely would have had jobs and it would have been more prudent to hire someone then as well. I get what you are saying, but you really need to go back further to agrarian times, when people were largely self sufficient.
Based on the posts in this thread it seems that a lot of the issue with GDP is people expecting it to mean something it really doesn't. Rising GDP is usually a good thing, but it isn't the best proxy for living standard.
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