Talk:Gross domestic product

From Mises Wiki, the global repository of classical-liberal thought
Jump to: navigation, search

On 'GDP Numbers are Flawed'

I toned down some of the overly enthusiastic speech, but it could still use some more work; also some of the numbers quoted would look much better if they would come from verified sources.

Can we have some template that would say "This section needs to be calmed down", or equivalent? :) Pestergaines 06:22, 25 January 2011 (CST)

Government component of GDP

GDP includes not only goods and services produced/consumed by businesses, but some measure of the contribution to national production by governments at all levels (e.g., federal, state, county, city, etc.).

Because governments produce only a few actual goods and services that are sold in the marketplace (e.g., camping at a national park), it was agreed at the creation of GNP that in addition to actual (or "private") production, GNP (and hence GDP) would include the greater of: 1) taxes and fees collected by government (at all levels), or 2)the total amount spent by government. Note that in some years in the 1930s, the Federal Government actually took in more than it spent because of large increases in excise taxes, tarriffs, etc.

Prior to World War Two, government "production" represented less than 5% of national GNP. However, the government portion of national GDP has increased significantly since the Vietnam War, pushing up from 15% of the announced total to the current 25%. [See Higgs "Depression, War, and Cold War", etc.]

This has the effect, especially in recent years, of causing the announced GDP to rise only because of dangerous increases in spending by the Federal Government. Of particular concern is the fact that much of this increased spending is funded by borrowing, with the effect that the Government can increase the nation's "production" by borrowing money it cannot repay and then giving the money away.

GDP with government spending (at all levels) substracted is called "gross private product" or "GPP".