Why should anyone care about the level of economic activity as such? What everyone wants is an improvement in, or if wealthy the maintenance of, their living standard, which I define as their ability to get what they want, whatever that may be. That is a function of a person’s financial resources (income plus savings) and the cost of whatever is in their market basket. A dollar decline in their cost of living is actually better than a dollar increase in their income because the latter gets taxed, the former doesn’t.
When GDP's predecessor GNP was first being developed in the 1930s, the government was very small relative to the private sector. If it were still that way, economic activity, which is what GDP measures as you say, would be closely correlated with living standards. As governments have become much larger relative to the private sector in recent decades, GDP increasingly measures activity producing what politicians and government administrators want, which mostly is not what people want for themselves. The government buys stuff from the private sector, so an increasing amount of private sector activity serves government demand, not private demand.
Keep in mind that when people work or earn the profits from their business, whatever their jobs or businesses, they use that money to buy consumer-oriented output such as food, clothing, shelter, energy, travel, healthcare, etc. Before the government got so big nearly everyone was producing exactly that output. Now, tens of millions of people working in the government and private sector are getting paid but not producing what they and others want for themselves.
IOW, more government spending increases the demand for consumer-oriented output, but not the supply. That pressures their prices up and reduces living standards because people, especially those already on tight budgets, are forced to buy less.
This is why there is such a disparity between economists, who look at GDP and think the economy is doing fine, and big chunks of the public who are unhappy because they are very aware of all the things they used to buy regularly but can no longer afford to do so, despite working as hard as ever.
For more, please check out my recently published book and substack.
Mr. Kling could learn a lot from you sir. However that would require him to surrender his deeply imbedded fallacies. Learned scholars just can’t do that and remain in the “brotherhood”.
I strongly disagree with you on household production, and I think that this is a huge driver of misallocation of resources.
1) At least 90% of the population is more efficient to do their own housework. Not every job, but most jobs. Hiring another person and having them come to your house to do simple jobs you could do seamlessly throughout the day is not efficient.
2) A lot of confusion on this comes from the government providing massive subsidies to those that do low productivity work. The price isn't the price.
3) Childcare at a daycare center and childcare at home are at best equal and likely the former is worse than the latter. But the former counts to GDP and the other doesn't.
One could say the same of homeschooling vs public schooling.
The same is true of elder care.
4) Low TFR increases GDP today but at the expense of future growth. This is the misallocated resource of our time.
All that said, I don't think there is an easy way to measure household production. I don't suggest we try to change GDP, I suggest we view GDP with more humility.
Suppose that a surgeon can mow his lawn in an hour, and the person he would hire takes two hours. That does not make it more efficient for the surgeon to spend less time doing surgery in order to mow his own lawn.
I think that is true, and I use that example when teaching, but there is a point about that is important and missing: does the surgeon get to do another hour of surgery if he doesn't mow his lawn? Does he tell patients "Can't do you Friday, gotta trim the grass," or does he mow on his down time?
For most of us making salary we have no ability to turn off time into more money by working more hours, we would need a second job or other side hustle to do that. So in that regard mowing my own grass makes sense because I shouldn't compare it to my main job but whatever little bit of extra money I could make on the side. Such as mowing my neighbor's lawn.
The economics of mowing your own lawn or fixing your car, etc. needs to keep in mind taxes. There are no taxes on a saved dollar. A dollar saved fixing my car would require about $1.30+ of earnings for break even. When dealers charge about $100/ hr for "book time" (how long a repair should take), not actual time, and most backyard mechanics can meet or beat book time the second time through a repair, DIY (do it yourself) looks very good.
1) surgeons are in the top 1% of labor productivity, and thus would meet my criteria of the top 10%
Note that both spouses would have to be surgeons
2) I see women drop their kids off at daycare so that they can go work at a daycare (or some equivilaint job that pays no more then daycare). As far as I can tell people do this because the state will subsidize daycare for people with lower incomes.
I can’t buy that this is productivity enhancing.
Median female earnings is $20 an hour. Minus taxes and the costs of employment (transport, etc). It’s hard to think of many in home market services that are cost effective at that level.
My wife makes well above median and the second we had a third kid market labor didn’t make any financial sense, it barely did at two.
3) like everyone else in my neighborhood I mow my own lawn. I do it during the “workday” because I work at home and there is plenty of downtime (hence posting). Others do it in the morning on the weekend
It’s actually really good for me as I should go to the gym more and this gets me some exercise. Everyone in my development feels the same way.
> I see women drop their kids off at daycare so that they can go work at a daycare (or some equivilaint job that pays no more then daycare). As far as I can tell people do this because the state will subsidize daycare for people with lower incomes.
That's certainly part of it, but I suspect that another part is that this arrangement allows them to convert relations of parent-child duty and obligation into relations of mere employment. What do your observations say about this?
However there is a point to make here, which is that many occupations (surgeons are probably good examples) need the practitioner to take a break from that activity periodically in order to not make mistakes. Mowing the lawn might be a good way for out hypothetical surgeon to recover from the stress of the day job
Of course in GDP terms a surgeon who works 12 hours and botches an operation in the final one that requires 3 follow ups to fix has created more than one that went home after 10 and mowed his lawn but it is worse that makework in terms of actual benefit to society
The opposite is also not true. Unless the surgeon is passing up surgery to mow his own lawn the efficiency argument is wrongheaded. Surgeons lives don't alternate between sleep and cutting someone open, if the surgeon is paying someone to mow his lawn, and then spending that hour at the gym walking on the treadmill instead your GDP number will be higher, but the net efficiency lower.
My thought would be that the surgeon is intelligent and realizes that his lawn only needs mowing 5x a year. He or his son could easily do that. Nobody specializes in lawn mowing any more than peanut butter sandwiches. But the lawn company wants to do it every week or two weeks. That’s the service on offer. So the surgeon, mindful of his dignity, acquiesces to this relentless wastefulness, which leaves his yard a sterile place; and the bonus of contributing to the constant whine of lawn equipment which nobody really likes unless it’s the sound of $ to them. All day long in the nice neighborhood. Plus the lawn crews down here are generally illegal with lots of kids and their kids all need to go to school so the surgeon definitely pays for the school.
I like the focus on efficiency. That statement bothered me too. I suppose AK meant it in the sense of "what you do in your house is your business only, not that of economists." But again, is the economy, and the country, really better off when people are actively discouraged from providing their children's breakfast and lunch?
I sometimes wonder when I walk past someone's house, and there is a Chick-Filet bag sitting on the front step, and I walk back past ten minutes later, and there is still a Chick-Filet bag sitting on the front step. Some economic activity was created because someone drove this Chick-Filet bag to this house so somebody could eat cold food and thus further economic activity!
During the Covidiocy the UK Office of National Statistics tried to adjust the data it had to reflect the reduction in (for example) in classroom education because although money was still being spent on teacher salaries, building maintenance etc. education wasn't really happening.
It seems to me that this approach to what ONS calls "non-market output" would also help a lot in other places. Stripping it out partially in US GDP would probably give a very different picture of US economic health.
It also seems to me that this makes the removal in in household labor fairer
"Comparing the level of GDP in the United States to that of France means something."
I just returned from a trip to developing countries and that type of exposure always brings to prominence how the same activity there has a much smaller GDP $ amount. The same could be said of NYC and Alabama.
How does your model of GDP explain the effects of Wikipedia or Craigslist, both of which directly caused huge increases in PSST? But their direct impact, shutting down encyclopedia and newpaper print factories, caused a drop in GDP.
I get that measurement of GDP is imprecise and we need to be careful interpreting high frequency measurements but I don't see how anyone can argue a reversal in GDP trend isn't important. I'm not sure that's what you are saying but it sounds like it.
I think you are right about GDP being just one measure, but I think you don't quite go far enough. GDP is an example of looking for your keys where the light is better, in that it is an attempt to measure economic output (production) via the easy method of tracking what people spend. We aren't really measuring what people want, just what they spend money on, and we aren't really measuring total output or economic activity, just the output and activity we can see.
For example, you note that outsourcing activities to machines and people are good for economic activity. No problem there, so if I stop paying a lawn care service and buy a robot lawn mower I... probably lower GDP over all, since the robot is cheaper than the lawn service over time. Uh oh.
Or I can outsource gardening to someone else, and increase economic activity, which is good for GDP, but bad if I like gardening for its own sake, unless I then get a job gardening for someone else to make up for it. In fact, GDP would go up immensely if every morning we got up, walked over to the neighbor's on the left and then lived our lives as though it were our house, and then in the evening collected a few hundred bucks and walked back to our own house to sleep.
So, sure, GDP is a half decent measure of outsourcing (only that which gets paid... sorry grandma), which is also an ok measure of output. Not great, but pretty good across time at least if you assume the home production aspect doesn't change much. It also isn't all you want to look at if you want to know how the economy is doing, nor the metric you want to optimize.
Well, I am not so sure. If he wants to use GDP to measure outsourcing, whether to machine or human, the robot lawn mower suggests that isn't what is happening. Outsourcing goes up, GDP goes down.
Likewise the example of doing all your neighbor's chores for money while getting someone else to do yours for money does increase measured GDP, but the exact same amount of stuff is getting done, and probably worse at that. That seems like an undesirable outcome, because outsourcing doesn't always make sense.
In a sense what we really do care about is production, and GDP fails there a fair bit there too, but I am not sure that it is a better measure of outsourcing, or that we even care about outsourcing as such. I would much rather buy a dish washer that does my dishes all by itself than hire someone to come over and wash dishes for me, and for the cost of hiring someone I would almost certainly prefer to do it myself even disregarding the transaction costs. There is a low enough cost that paying a stranger would be ok, I guess, but it would have to be really low to make that outsourcing desirable. Likewise with child care and any number of other mundane tasks. So GDP measuring outsourcing is really odd... do we even care if it goes up and down necessarily?
You are looking at this wrong. More specifically, you are looking for examples that fail while ignoring the ones that work. Yes, you can outsource and come out worse. If that's the case, don't do it. The goal is to find the situations where it makes things better.
Are you familiar with the pencil example? The premise is that nobody knows everything necessary to make a pencil. Think about making a pencil versus how little earned income it takes to buy one. Maybe this is an extreme example but it is far closer to which Kling speaks than your examples.
Machines complicate what Kling is saying. I don't know how he would clarify but I'd say it's still a version of outsourcing to buy the machine. Think of an "independent" farmer versus all the machinery, chemicals, and seed commercial activity that is part of farming.
If you want something to be a good measure, such as GDP measuring the state of the economy, you really want it to work very consistently. Looking for where it fails is exactly what you need to do so that you don't get overly confident.
When it comes to outsourcing, I am totally on board where it makes sense. The point is that it doesn't make sense in every way. Trying to split hairs over the machines as outsourcing doesn't help much, as it isn't a question of me going out and using my hands to tear out clumps of grass vs hiring a machine or buying a robot mower, but going from me mowing the lawn with a lawn mower vs paying someone else to mow with a lawn mower or buying a robot that mow without much intervention. Outsourcing does tend to make more sense when processes are more capital intensive, or when the person you outsource to can use more capital. That isn't the only case when it makes sense though.
What your described previously isn't a failure. Is capitalism a failure because some businesses don't succeed? Just because we can think of outsourcing examples that don't work doesn't mean GDP doesn't work as a measure of outsourcing or that outsourcing isn't generally good.
You are losing the thread here a bit. I am not arguing that GDP doesn't work as a measure of outsourcing or that outsourcing isn't generally good. I am saying that GDP is a mediocre measure of a few different things, but only mediocre and shouldn't be used alone and should not be the number one tries to optimize around. I am also saying that outsourcing is only good sometimes, and maximizing it as a goal is a bad goal; there are a lot of trade offs around outsourcing, and more isn't always better.
I disagree almost entirely with your position here. GDP itself means little, but changes in the direction of GDP mean a very large amount. Changes in GDP show changes in the patterns of specialization and trade. To take your lawn mowing example, if I pay a person to mow my lawn for years and then shift to mowing it myself (or vice versa) the change in GDP reflects the change in behavior, but doesn't say much about the value gained or lost in the situation.
More importantly we have a system that aims at GDP growth, changes matter not because of some inherent relationship between GDP and value or economic activity, but because it shows that the system is failing to meet its own aims. Two consecutive quarters of declining GDP would mean a lot less in a system ambivalent to growth, but in one that explicitly aims for growth it is significant.
Another facet of our descent into gerontocracy…last I checked, 40% of federal government spending was dedicated towards the elderly (considered 65+ for government program purposes, which is another problem: not adjusting eligibility ages for longevity). How much of US GDP is consumption by the elderly?
If you’re looking for a measure of economic activity, wouldn’t Gross Domestic Expenditure (GDE) be more useful and less misleading than GDP? For example, because GDP ignores intermediate production and sales, it suggests that consumption has a much bigger share of the economy than it really does.
Why should anyone care about the level of economic activity as such? What everyone wants is an improvement in, or if wealthy the maintenance of, their living standard, which I define as their ability to get what they want, whatever that may be. That is a function of a person’s financial resources (income plus savings) and the cost of whatever is in their market basket. A dollar decline in their cost of living is actually better than a dollar increase in their income because the latter gets taxed, the former doesn’t.
When GDP's predecessor GNP was first being developed in the 1930s, the government was very small relative to the private sector. If it were still that way, economic activity, which is what GDP measures as you say, would be closely correlated with living standards. As governments have become much larger relative to the private sector in recent decades, GDP increasingly measures activity producing what politicians and government administrators want, which mostly is not what people want for themselves. The government buys stuff from the private sector, so an increasing amount of private sector activity serves government demand, not private demand.
Keep in mind that when people work or earn the profits from their business, whatever their jobs or businesses, they use that money to buy consumer-oriented output such as food, clothing, shelter, energy, travel, healthcare, etc. Before the government got so big nearly everyone was producing exactly that output. Now, tens of millions of people working in the government and private sector are getting paid but not producing what they and others want for themselves.
IOW, more government spending increases the demand for consumer-oriented output, but not the supply. That pressures their prices up and reduces living standards because people, especially those already on tight budgets, are forced to buy less.
This is why there is such a disparity between economists, who look at GDP and think the economy is doing fine, and big chunks of the public who are unhappy because they are very aware of all the things they used to buy regularly but can no longer afford to do so, despite working as hard as ever.
For more, please check out my recently published book and substack.
Mr. Kling could learn a lot from you sir. However that would require him to surrender his deeply imbedded fallacies. Learned scholars just can’t do that and remain in the “brotherhood”.
“The more we outsource, the better off we are.”
So, we should pay others to have kids and enjoy years of leisure provided by the services of those paid for children?
I strongly disagree with you on household production, and I think that this is a huge driver of misallocation of resources.
1) At least 90% of the population is more efficient to do their own housework. Not every job, but most jobs. Hiring another person and having them come to your house to do simple jobs you could do seamlessly throughout the day is not efficient.
2) A lot of confusion on this comes from the government providing massive subsidies to those that do low productivity work. The price isn't the price.
3) Childcare at a daycare center and childcare at home are at best equal and likely the former is worse than the latter. But the former counts to GDP and the other doesn't.
One could say the same of homeschooling vs public schooling.
The same is true of elder care.
4) Low TFR increases GDP today but at the expense of future growth. This is the misallocated resource of our time.
All that said, I don't think there is an easy way to measure household production. I don't suggest we try to change GDP, I suggest we view GDP with more humility.
Suppose that a surgeon can mow his lawn in an hour, and the person he would hire takes two hours. That does not make it more efficient for the surgeon to spend less time doing surgery in order to mow his own lawn.
I think that is true, and I use that example when teaching, but there is a point about that is important and missing: does the surgeon get to do another hour of surgery if he doesn't mow his lawn? Does he tell patients "Can't do you Friday, gotta trim the grass," or does he mow on his down time?
For most of us making salary we have no ability to turn off time into more money by working more hours, we would need a second job or other side hustle to do that. So in that regard mowing my own grass makes sense because I shouldn't compare it to my main job but whatever little bit of extra money I could make on the side. Such as mowing my neighbor's lawn.
The economics of mowing your own lawn or fixing your car, etc. needs to keep in mind taxes. There are no taxes on a saved dollar. A dollar saved fixing my car would require about $1.30+ of earnings for break even. When dealers charge about $100/ hr for "book time" (how long a repair should take), not actual time, and most backyard mechanics can meet or beat book time the second time through a repair, DIY (do it yourself) looks very good.
Economic theory vs real world.
1) surgeons are in the top 1% of labor productivity, and thus would meet my criteria of the top 10%
Note that both spouses would have to be surgeons
2) I see women drop their kids off at daycare so that they can go work at a daycare (or some equivilaint job that pays no more then daycare). As far as I can tell people do this because the state will subsidize daycare for people with lower incomes.
I can’t buy that this is productivity enhancing.
Median female earnings is $20 an hour. Minus taxes and the costs of employment (transport, etc). It’s hard to think of many in home market services that are cost effective at that level.
My wife makes well above median and the second we had a third kid market labor didn’t make any financial sense, it barely did at two.
3) like everyone else in my neighborhood I mow my own lawn. I do it during the “workday” because I work at home and there is plenty of downtime (hence posting). Others do it in the morning on the weekend
It’s actually really good for me as I should go to the gym more and this gets me some exercise. Everyone in my development feels the same way.
> I see women drop their kids off at daycare so that they can go work at a daycare (or some equivilaint job that pays no more then daycare). As far as I can tell people do this because the state will subsidize daycare for people with lower incomes.
That's certainly part of it, but I suspect that another part is that this arrangement allows them to convert relations of parent-child duty and obligation into relations of mere employment. What do your observations say about this?
Ricardo to the white courtesy phone...
However there is a point to make here, which is that many occupations (surgeons are probably good examples) need the practitioner to take a break from that activity periodically in order to not make mistakes. Mowing the lawn might be a good way for out hypothetical surgeon to recover from the stress of the day job
Of course in GDP terms a surgeon who works 12 hours and botches an operation in the final one that requires 3 follow ups to fix has created more than one that went home after 10 and mowed his lawn but it is worse that makework in terms of actual benefit to society
The opposite is also not true. Unless the surgeon is passing up surgery to mow his own lawn the efficiency argument is wrongheaded. Surgeons lives don't alternate between sleep and cutting someone open, if the surgeon is paying someone to mow his lawn, and then spending that hour at the gym walking on the treadmill instead your GDP number will be higher, but the net efficiency lower.
My thought would be that the surgeon is intelligent and realizes that his lawn only needs mowing 5x a year. He or his son could easily do that. Nobody specializes in lawn mowing any more than peanut butter sandwiches. But the lawn company wants to do it every week or two weeks. That’s the service on offer. So the surgeon, mindful of his dignity, acquiesces to this relentless wastefulness, which leaves his yard a sterile place; and the bonus of contributing to the constant whine of lawn equipment which nobody really likes unless it’s the sound of $ to them. All day long in the nice neighborhood. Plus the lawn crews down here are generally illegal with lots of kids and their kids all need to go to school so the surgeon definitely pays for the school.
I like the focus on efficiency. That statement bothered me too. I suppose AK meant it in the sense of "what you do in your house is your business only, not that of economists." But again, is the economy, and the country, really better off when people are actively discouraged from providing their children's breakfast and lunch?
I sometimes wonder when I walk past someone's house, and there is a Chick-Filet bag sitting on the front step, and I walk back past ten minutes later, and there is still a Chick-Filet bag sitting on the front step. Some economic activity was created because someone drove this Chick-Filet bag to this house so somebody could eat cold food and thus further economic activity!
Mainstream "economics" is simply banking propaganda and completely wrong.
More here; https://truthaddict.substack.com/p/mainstream-economics-is-now-100-propaganda
During the Covidiocy the UK Office of National Statistics tried to adjust the data it had to reflect the reduction in (for example) in classroom education because although money was still being spent on teacher salaries, building maintenance etc. education wasn't really happening.
See https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/coronavirusandtheeffectsonukgdp/2020-05-06#the-treatment-of-non-market-output-in-gdp and links to previous announcements in that link
It seems to me that this approach to what ONS calls "non-market output" would also help a lot in other places. Stripping it out partially in US GDP would probably give a very different picture of US economic health.
It also seems to me that this makes the removal in in household labor fairer
"Comparing the level of GDP in the United States to that of France means something."
I just returned from a trip to developing countries and that type of exposure always brings to prominence how the same activity there has a much smaller GDP $ amount. The same could be said of NYC and Alabama.
How does your model of GDP explain the effects of Wikipedia or Craigslist, both of which directly caused huge increases in PSST? But their direct impact, shutting down encyclopedia and newpaper print factories, caused a drop in GDP.
I get that measurement of GDP is imprecise and we need to be careful interpreting high frequency measurements but I don't see how anyone can argue a reversal in GDP trend isn't important. I'm not sure that's what you are saying but it sounds like it.
I think you are right about GDP being just one measure, but I think you don't quite go far enough. GDP is an example of looking for your keys where the light is better, in that it is an attempt to measure economic output (production) via the easy method of tracking what people spend. We aren't really measuring what people want, just what they spend money on, and we aren't really measuring total output or economic activity, just the output and activity we can see.
For example, you note that outsourcing activities to machines and people are good for economic activity. No problem there, so if I stop paying a lawn care service and buy a robot lawn mower I... probably lower GDP over all, since the robot is cheaper than the lawn service over time. Uh oh.
Or I can outsource gardening to someone else, and increase economic activity, which is good for GDP, but bad if I like gardening for its own sake, unless I then get a job gardening for someone else to make up for it. In fact, GDP would go up immensely if every morning we got up, walked over to the neighbor's on the left and then lived our lives as though it were our house, and then in the evening collected a few hundred bucks and walked back to our own house to sleep.
So, sure, GDP is a half decent measure of outsourcing (only that which gets paid... sorry grandma), which is also an ok measure of output. Not great, but pretty good across time at least if you assume the home production aspect doesn't change much. It also isn't all you want to look at if you want to know how the economy is doing, nor the metric you want to optimize.
I don't think Kling said anything contrary to your comments.
Saying increased economic activity is good doesn't mean every single economic action is good.
Well, I am not so sure. If he wants to use GDP to measure outsourcing, whether to machine or human, the robot lawn mower suggests that isn't what is happening. Outsourcing goes up, GDP goes down.
Likewise the example of doing all your neighbor's chores for money while getting someone else to do yours for money does increase measured GDP, but the exact same amount of stuff is getting done, and probably worse at that. That seems like an undesirable outcome, because outsourcing doesn't always make sense.
In a sense what we really do care about is production, and GDP fails there a fair bit there too, but I am not sure that it is a better measure of outsourcing, or that we even care about outsourcing as such. I would much rather buy a dish washer that does my dishes all by itself than hire someone to come over and wash dishes for me, and for the cost of hiring someone I would almost certainly prefer to do it myself even disregarding the transaction costs. There is a low enough cost that paying a stranger would be ok, I guess, but it would have to be really low to make that outsourcing desirable. Likewise with child care and any number of other mundane tasks. So GDP measuring outsourcing is really odd... do we even care if it goes up and down necessarily?
You are looking at this wrong. More specifically, you are looking for examples that fail while ignoring the ones that work. Yes, you can outsource and come out worse. If that's the case, don't do it. The goal is to find the situations where it makes things better.
Are you familiar with the pencil example? The premise is that nobody knows everything necessary to make a pencil. Think about making a pencil versus how little earned income it takes to buy one. Maybe this is an extreme example but it is far closer to which Kling speaks than your examples.
Machines complicate what Kling is saying. I don't know how he would clarify but I'd say it's still a version of outsourcing to buy the machine. Think of an "independent" farmer versus all the machinery, chemicals, and seed commercial activity that is part of farming.
If you want something to be a good measure, such as GDP measuring the state of the economy, you really want it to work very consistently. Looking for where it fails is exactly what you need to do so that you don't get overly confident.
When it comes to outsourcing, I am totally on board where it makes sense. The point is that it doesn't make sense in every way. Trying to split hairs over the machines as outsourcing doesn't help much, as it isn't a question of me going out and using my hands to tear out clumps of grass vs hiring a machine or buying a robot mower, but going from me mowing the lawn with a lawn mower vs paying someone else to mow with a lawn mower or buying a robot that mow without much intervention. Outsourcing does tend to make more sense when processes are more capital intensive, or when the person you outsource to can use more capital. That isn't the only case when it makes sense though.
What your described previously isn't a failure. Is capitalism a failure because some businesses don't succeed? Just because we can think of outsourcing examples that don't work doesn't mean GDP doesn't work as a measure of outsourcing or that outsourcing isn't generally good.
You are losing the thread here a bit. I am not arguing that GDP doesn't work as a measure of outsourcing or that outsourcing isn't generally good. I am saying that GDP is a mediocre measure of a few different things, but only mediocre and shouldn't be used alone and should not be the number one tries to optimize around. I am also saying that outsourcing is only good sometimes, and maximizing it as a goal is a bad goal; there are a lot of trade offs around outsourcing, and more isn't always better.
I disagree almost entirely with your position here. GDP itself means little, but changes in the direction of GDP mean a very large amount. Changes in GDP show changes in the patterns of specialization and trade. To take your lawn mowing example, if I pay a person to mow my lawn for years and then shift to mowing it myself (or vice versa) the change in GDP reflects the change in behavior, but doesn't say much about the value gained or lost in the situation.
More importantly we have a system that aims at GDP growth, changes matter not because of some inherent relationship between GDP and value or economic activity, but because it shows that the system is failing to meet its own aims. Two consecutive quarters of declining GDP would mean a lot less in a system ambivalent to growth, but in one that explicitly aims for growth it is significant.
Do you have any other work that expands on this?
A whole book called *Specialization and Trade*
Thanks 👍
Another facet of our descent into gerontocracy…last I checked, 40% of federal government spending was dedicated towards the elderly (considered 65+ for government program purposes, which is another problem: not adjusting eligibility ages for longevity). How much of US GDP is consumption by the elderly?
If you’re looking for a measure of economic activity, wouldn’t Gross Domestic Expenditure (GDE) be more useful and less misleading than GDP? For example, because GDP ignores intermediate production and sales, it suggests that consumption has a much bigger share of the economy than it really does.