So, I have been hearing all this talk about Obama raising the GDP a lot since he took office. All the liberals at my school are raving about it and I don't know what to say back. How is the GDP rising under Obama, any explanations? I figured maybe since it is measured in US Dollars, it might be because of inflation, but I think the figure is too much of an increase to be based solely on inflation. If anyone could tell me why the GDP is rising I would really appreciate it.
Really? The monetary base like, doubled dude. You can easily make this argument. Also there are many austrian critiques of the GDP... search mises.org. It turns out that you really want the real GDP to go down because you want stuff to get cheaper.
Hey, I was unaware the money had inflated that drastically in the last couple years. And also, I just read http://mises.org/daily/2878, but I am only 16 years old and don't understand a lot of the concepts mentioned. Could anyone explain to me this whole GDP situation please?
Plain silly. First off, Obama took office about right when things were the worst. You could have put a golden retriever in office and seen significant GDP increases (actually some would argue you'd have seen ever better GDP increases. I'd be one of them).
Second, no economist of any credibility is arguing that we are in some kind of robust expansion phase, all thanks to Obama. Many are arguing that it would have been worse without his stimulus but that is a whole different beast than the claims your ignorant classmates are making. Even the New York Times doesn't agree with the drivel they seem to believe.
Just try asking them HOW Obama has made these GDP increases happen. The stimulus? Well, according to most liberal economist it has had little impact (of course to them it was because it wasn't big enough, didn't target low income households enough, etc.).
They are delusional. Drinking the cool-aid for sure.
Good answer, thank you! Does anyone else have an expaination about this whole "a lower GDP is better" and what that article i linked means.... I am not very fimiliar with Keynes' equations, although i know the gist of macro....
If I trade you a computer for $1000 this year, it contributes $1000 to the gdp. If I trade you 3 computers for $200 next year, it contributes $600 to the gdp. :I There are other examples where higher/lower GDPs will be better/worse , but the overall point is that the GDP is a completely bunk statistic. It basically always goes up when the government does crap. Ex: Spending 18 million on a plane.
"If I trade you a computer for $1000 this year, it contributes $1000 to the gdp.
If I trade you 3 computers for $200 next year, it contributes $600 to the gdp. :I"
I'm pretty sure that would be for nominal GDP, but real GDP would use the base year price to remove price changes and just analyze the changes in quantity (theoretically... I think there are a lot of problems with this in practice in addition to many other problems associated with GDP). So in the second year, the 3 computers would contribute $600 (3 x $200) to nominal GDP and $3,000 (3 x $1,000) to real GDP, I think.
GDP is a fradulent figure. The government doesnt produce anything, yet it is counted as output? Please.
GDP is a fairly meaningless statistic. Is it really possible to add up computers, cars, hammers, massages, cole slaw, fried chicken, janitorial work etc. into some aggregate number that really means anything? But assuming it has legitimacy, sure the government can influence the number. That doesn't mean we're better off. If the government has us dig ditches and fill them up again, GDP may rise, but we're no more wealthy and in fact I'd argue we are poorer (shovels worn out and labor expended on a useless task for example). Also, whatever the government spends, it takes in taxes, through borrowing, or through inflation. All of these in some way take purchasing power from the private sector meaning that money is simply shuffled around. What the government spends on a political project is money that cannot be spent in the private sector.
Government also lacks the incentives the private sector has to create things that people value. The government does not operate with the profit motive. A government dug ditch that adds $100 to GDP is worth less than say an iPod that adds $100 to GDP because the iPod is voluntarily bought at that price thus it is subjectively believed to be worth more than $100 by the buyer while the fact that the government had to tax, borrow, or inflate $100 to dig their ditch means it is subjectively valued lower than $100 because no one voluntarily spent money on it.
This is true of most public sector spending. There are certain things like law and national defense that the private sector is legally prevented from providing so you can't make the same kind of comparison, but because the government does not operate with the profit motive, it is likely that the government is not providing the right amount of law or national defense and doing so at relatively high cost.
I think the government did prevent GDP from going lower than it otherwise would have through TARP, the stimulus, and other interventions in the market, but only superficially and temporarily. The underlying causes of the downturn have not been solved and in fact have only been made worse. We have in essence put off a current recession for a future much greater recession. And like I said, GDP is pretty meaningless so the fact that the government prevented it from going lower (if that is indeed the case) doesn't mean a lot to me. Just my 2 cents.
GDP is simply the total amount off dollars spent in the economy. The only reason why GDP is where it is at now is due to government spending and inflation. But productivity does not increase due to government printing money and spending it. Take for example the BP Oil spill. How many billions of dollars have been spent cleaning that up? Who knows, but those expenditures count as GDP even though that whole region has had some industries hurt and productivity lost (although not as bad as the media claims IMO)
The government does provide some goods and services that are useful. But by no means am I saying the private sector can't provide them or that the government does an efficient job at providing them. Garbage collection and roads for instance are all useful but I think the government does a horrible job providing for them and they make up a relatively small part of government expenditures. In many cases (much of defense and some of education spending for example) I think government spending does outright harm.
But don't get me wrong, I think the government does far more harm than good (and where it does good, it does so much less efficiently than the private sector).
I can help the GDP, give me the printing press. I'll make it grow like you've never seen!
filc has the right idea. We must all begin counterfeiting USDs for the good of the economy. Would GDP ever rise without monetary expansion?
Government spending and printing can cause GDP to go up, but it's only a somewhat valuable measure of an economy in a free market, not a government controlled one. When the economy needs to retrench and clear malinvestment, compelling spending through government spending and inflation is counterproductive.
One example that will win every argument is the year 1946. Government cut spending big time after the war. The GDP Keynesians saw a depression because GDP went down. But private investment had the best year ever, and it was a boom time. Not a depression. But the people who analyzed GDP thought it was one.
http://dailyreckoning.com/the-gdp-fraud/ Here's why GDP is largely fraudulent, especially when governments are targeting it.
pretty much.
http://mises.org/daily/770
I've always found that article to be a decent way of introducing people to looking at the gdp.