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GDP is a big fat lie

  1. Oct 22, 2005 #1
    GDP is a big fat lie.

    Why do economists still use such a FALSE measure of wealth such as GDP ?
    A real measure would be simply the ratio between minimum pay and minimum amount of money needed to rent a one bedroom home. If you plot this ratio wage/rent from 1970 to now you will see that it was once (in the USA) maybe 400/100 dollars and now is 800/400. So it went from 4 to 2 in 30 years, about 2% less each year. The real growth of our wealth is MINUS 2% each year. In Europe and Japan it is way worse maybe MINUS 3%. So the real wealth is constantly DECREASING with no end in sight!

    Reasons are :

    1) constant population increase looking for homes (people from poor nations getting in USA and Europe)

    2) Capitalism getting harsher, companies squeeze all the profits they can from real estate , by renting ever higher and opening and closing offices to squeeze profit from poor people that have to rent or buy homes to work in central cities like chicago tokyo.

    3) Gas and other resources costs always more.


    We are all getting poorer and there is no end in sight, it is a race to the bottom.
     
  2. jcsd
  3. Oct 22, 2005 #2

    Pengwuino

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    Wow that is one arbitrary standard...
     
  4. Oct 22, 2005 #3
    Still, gdp is still good for determining buying power right?
     
  5. Oct 22, 2005 #4

    russ_watters

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    GDP has never been meant to be a way to measure poverty, so you are arguing a strawman. And your criteria is not only arbitrary, but near useless since it is only one point - it doesn't tell you how many people are poor.

    Besides, you made up the numbers you used!
     
  6. Oct 22, 2005 #5
    Using paper money is like playing monopoly, even though you seem like you're a tycoon now, it doesn't mean anything until you have the real estate. Viva la gold bug revolucion!
     
  7. Oct 22, 2005 #6
    Numbers are real if not even extremely moderate and conservative. In the US you're closer to 600 dollars a month for a 1 bed home and min. pay is 800 dollars. If you factor in other inflation like health care and other items (gas etc). you get that we are getting poorer at a more extreme rate. I think the point is that GDP seems to give us an impression that the economy "grows" so we are getting richer. In this sense that is totally WRONG AND FALSE! We are getting poorer even if you don't like the idea. Japan and Europe are getting even worse. Try to rent in Tokyo and work minimum wage.... Granted there are many rich and well off people, but as time goes by, they will be sacked.
     
  8. Oct 22, 2005 #7

    Hurkyl

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    For fun, I'll play along.

    Yep, the ratio went down 50%. But, did you notice your income, after rent, has gone up 33%?
     
  9. Oct 22, 2005 #8
    That's assuming that rent was the only price that went up.
     
  10. Oct 22, 2005 #9

    Hurkyl

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    No it's not, since I was speaking about "your income, after rent". :smile:
     
  11. Oct 22, 2005 #10
    :rolleyes: Fine! However, it still doesn't show that your networth has actually increased.
     
  12. Oct 22, 2005 #11

    russ_watters

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    Since income alone doesn't say anything at all about net worth.....ehh, nevermind, this thread is useless.
     
  13. Oct 22, 2005 #12

    Hurkyl

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    Right -- overly simplistic figures like I (and the OP) gave are often of little help in actually figuring anything out.
     
  14. Oct 23, 2005 #13
    If you were a manager who got laid off and had to flip burgers, you would have to compute exactly those 2 things, wage and min. rent. To all of you who think this is not so, report to me how much the local burger wage is and how much is it to rent a 1 bed apartment. Now if this happened to you in 1970 you would have much more left to live with than today. This means that society as a whole is getting poorer, bear in mind, min. rent is a basic necessity and not a luxury or whim. It is like bread unless you want to end up like in Japan where they work to midnight and have to sleep in the streets, they went full circle, to avoid being homeless they become homeless, but you can sleep in the streets in japan because there is no violence.
     
    Last edited: Oct 23, 2005
  15. Oct 23, 2005 #14

    Hurkyl

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    Using the exact numbers you gave, in 1970 you would have 300 left to live with, but now you would have 400 left to live with.
     
  16. Oct 25, 2005 #15
    Would rent include utility bills? What are the stats for energy cost per kilowatt compared with both dates?
     
  17. Oct 25, 2005 #16

    loseyourname

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    Ultimately, the only thing that's going to matter to an individual is his own buying power. Other than disputing whether or not we should include credit rating and available credit balances in this, it seems a pretty straightforward way of determining wealth.
     
  18. Oct 25, 2005 #17
    You have a very poor understanding of what GDP is. GDP is income! GDP is a measure of total national income for the economy. The media only talks about it in terms of how much is produced on American soil in a fiscal year, but that is only one way to measure gdp.
     
  19. Oct 28, 2005 #18
    I would say that most of humanity for most of its history has lived in extreme poverty and the fact that from 1950-2000 there was so much increase in wealth was JUST A QUIRK COMBINATION OF ECONOMIC VARIABLES. That increase is now descreasing and will so in the future at an ever faster rate. We will retrun to 18 century poverty levels. The reason is :

    1) last century population was lower in the only 3 areas of the world that have really ever know some wealth US, Europe, Japan. Now that pop. continues to increase and people from poor contries come in the rich ones and there is not enough for everyone.

    2) technology was at a level where wealth increased , now it is working against any increase in wealth. For example, open source kills software jobs, globalization is a race towards the bottom in wages etc.

    3) Natural resources are dwindling, science can't keep up, alot of quirk waste etc.


    So it is true we are all getting poorer, in 1970 you could raise a family of 4 with just a normal job of the husband, now it's hard with both working.
     
  20. Nov 6, 2005 #19
    uhhhhhh, what? There is an income and expenditure approach to measuring GDP. The two numbers (when computed perfectly) are exactly the same.

    Also im surprised no one has brought up the CPI yet...

    Also what your forgetting to measure is the quality of our lives are getting better. Everything is getting more durable, more useful, and more pleasing. I would much rather live now than 35 years ago.

    The poor may be getting poorer and the rich may be getting richer but also notice what the poor have now than they did not have 35 years ago when they were *richer*.
     
    Last edited: Nov 6, 2005
  21. Nov 6, 2005 #20

    selfAdjoint

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    So what is it that the poor have now that's so much better than what they had in 1970? Cheap clothes from China? Better housing? What is it that the poor can afford that's better than in 1970?
     
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