GDP = private consumption + gross investment + government spending + (exports - imports), or
Government spending is a component of GDP. For more than one reason, it can be argued that it's kind of a bogus number. My own opinion is focusing on GDP is the wrong thing to focus on right now. There's an economic conference coming up, the purpose of which is to focus on ways to achieve 4% growth in GDP. My first thought was that with government spending about to be curtailed, that will make 4% growth even more unattainable than it already is. My second thought was a form of "so what". Unless higher GDP growth translates into higher tax revenues to the federal government, the country is still in real trouble. So all the hand wringing over this or that GDP number misses what's going on behind the numbers.
Consider this. Exports are growing and net exports is a number that would add to GDP. But if those companies that are exporters aren't also raising wages, tax revenue to the federal govt. will still be anemic and leave our growing deficits in place. The higher corporate revenue from exporters will lead to higher tax revenues but it won't be much plus much of those revenues will stay outside the country.
There are so many moving parts.
I may be mistaken, but there is an evolving concern about the fact that much of our prosperity (and GDP) is paid for with borrowed (read: freshly printed) money. People may not be enthusiastic about austerity, but deep down many are starting to feel that what is going on is not sustainable. Who knows, maybe enough citizens will decide not to trust the demagogues and their bs numbers.
I agree. Where you and I may differ, though, is that I think both sides have bs numbers and bs arguments. Not necessarily because of dishonesty, but because both sides are basing their argument on growth assumptions that are unlikely to materialize. In other words, anytime any kind of economic roadmap is floated, there are growth numbers in the formulation. The CBO is given a bunch of assumed growth rates for various things and out comes a bunch of numbers. In my opinion, it's all FIFO--fantasy in, fantasy out.
Neither side is fully appreciating the many factors in our society that are and will continue to inhibit the kind of broad economic growth that lifts all boats. This is a rather dangerous oversight, imo, as a lot of time may get wasted before our pols come together and come up with real solutions. Right now, imo, each side is just rearranging a different set of chairs on the Titanic. |
