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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Cogito who wrote (48261)	2/7/2008 11:02:08 AM
From: TimF	Read Replies (2) \| Respond to of 541326

Lets break this down a bit. Company A is an American company. Company B is a Chinese company. Both companies produce and sell in both the US and China. Lets ignore services to simplify things. Obviously they count toward the GDP and GNP and other national production or income measures, but I'll just focus on manufacturing for now. 1 - Company A produces product 1 in the US, and sells it in the US, making a profit in the US, and investing that profit in the US. No reason to consider this anything other than part of American production and income. 2 - Company C produces product 2 in the US, but takes the profit back to China. 3 - Company A produces product 3 in China, but takes the profit back to the US. 4 - Company C produces product 4 in China, and keeps the profit in China. Obviously this is just part of the Chinese total production and income. So the two areas that could be disputed are 2 and 3. You can refuse to count repatriated overseas profits. That give you GNP, which used to be the government's headline figure. In this case 2 counts towards US production, but not Chinese, and 3 counts toward Chinese production but not American. Or you can count repatriated profits as part of national production and income. In this case 2 counts for China, and 3 counts for the US. That gives you GDP. America's GDP is very close to GNP. For purposes of our calculations they can probably be treated as identical. Swap one for the other and you change the percentage going toward the military by less than a tenth of a percent, probably less than a twentieth. What you seem to want is to count both 2 and 3 for China. If you do that, than you may indeed decrease the measured gross production and income noticeably, but I can't see any justification for calculating national production that way. One of those two has to be counted for America, and if you do that your point basically goes away.