Western world is messing with GDP


Translated from Ruslan Karmanov by 
| Global Global

«RBC»:«Europe included drug trade and prostitution in GDP for the first time.»

Let me tell you how people live in 'normal' countries.

It's known that in Normal Countries there's a continuous self-development, self-improvement and flowers are blooming everywhere. Roads are washed with shampoo for almost 30 years now, robots with lasers everywhere and people work 15 minutes per day and spend all the time on block-stone pavements drinking coffee or good beer and listening «Amelie» soundtrack. It's so serene out there: everyone is talking about fashion, marriages of movie stars, showing each other brand watch or 'Tiffany' trinkets.

Then they get into sports-cars and drive to eco-mountains to take beautiful selfies. In those mountains inhabitants, neat and living in cute German houses, bring homemade wine and various kinds of cheeses as a present.

No, I'm not using meth, if you would like to know.

So, about GDP.

To have desirable records (i.e. better and better every year) it's necessary to change counting system. Otherwise something bad, not cool, negative will surface. And lots of mid-level executives will be outraged. They didn't supply kindergartens with tainted tomatoes and taking bribes to have THIS Europe for check-in!

Where the heck is Amelie? Why there are no beautiful and friendly French women but sturdy and grim Pakistani men?

Revision of counting methods approximately began in 1980s. It was time when technological advance has slowed down, physicists from 1960s perished or drank themselves to death, science-fiction writers stopped publishing books about outer space and great deeds. Instead, we got '117' volumes telling us about elf maidens. Rock stars fighting for sensible lyrics were substituted by 'famous black woman's 4-th divorce, she's leaving infamous black guy who has 3 prior convictions'.

Take unemployment rate, for example. If it's calculated as usual (considering people do work), figures will become worse from year to year. Therefore let's elevate age of participants! We're building Economy of the Future where everyone is 'finding their own way' till they are 40 years old, living off their parents and spending the whole time playing online games.

That's why in Europe overall percentage at first was counted from the age of 16, then 18, after that from 20, then from 21. And Europeans really consider to raise the bar to 25. Youngsters study around the clock till that age, there's no opportunity to work, don't you understand?!

Advantages of that counting are obvious: employment rate among youngsters is low, percentage of legally employed is next to zero. Numbers we get are not encouraging. And it doesn't matter if a person aged 24 can't do anything and doesn't even want to, he is not included in official statistics.

The same thing happens with employed pensioners. Unemployment rate in this category can either be increased or decreased if you include some groups correctly (for example, people taking early pension or their seniority is counted 'one work year for two on paper').

Examples like that are infinite.

Counting GDP (Gross Domestic Product) is the best, because it could be interpreted in lots of different ways. Let's assume you deposit 100 thousand dollars in American bank and take it back right away. USA GDP is 300 thousand dollars more, because lots of things are taken into account: the turnover (exactly 200 thousand), bank's potential profit, insurance and so on under a flag «if something happens».

That's why ratings and enormous success were spoiled by 'Dot-com bubble' in late 1990s: web-projects promised huge profits and then failed completely. The world tries to forget this ever happened, but imagine something like that occurs now!

What will be with GDP of the United States if the truth about Internet startups comes up? A thousand of these projects were assessed as 100 million dollars each. By whom? By anonymous successful experts never responsible for anything and saying startup is 'promising' and 'can get lots of likes and followers'. But it doesn't mean all these projects add up to 100 billion dollars, it's just stupid slack students having no imagination and a bunch of not-so-young con artists hoping to find good ideas in this mess and profit from it.

You can find out lots of things while listening to people chanting: 'We've made a drawing of our new economy! If you don't understand it, you are too old for this, look, it's drawn great, just like a real one.' For example, if you sell one diamond sword in online game for 1500 bucks, it's not reasonable to think: 'Assuming there's 1 million swords in this game, meaning — it's like 1,5 billion dollars... in this case 10% of this game cost 150 million... we can take a loan against this sum and insure it. If we sum everything up, final turnover will be huge. That's the economy!» Vanadium extraction? Pfff, this is too challenging and not-so-profitable, why even bother?

Because now you can't pay for vanadium and products made of it by drawn money; you must give real currency for food and electricity.

And you find out unpleasant facts — there's no special Different Economy, just a derivative of real assets. It's the same thing as scheme: 'I mortgaged my apartment, then deposited it, got a certificate that I have bank deposit, took a loan using it, deposited this money in other bank... and so on.»

Some narrow-minded ('creative') people have illusions how it will be great in the world they created in their imagination. And using other people's income, some guys turn these illusions to money.

To set this scheme in motion, Continuous Expansion Imitation is needed. The Idea of America's Great Expansion started from caravans heading west. Take over territories, kill everyone, enslave remaining Indian men. Wealthy and respectable white 'gentlemen' take Indian's belongings, use Indian women as servants and sex slaves.

'It just happened on it's own' - said Thomas Jefferson, one of the Founding Fathers and authors of the Declaration of Independence, philosopher and upright man, to his wife, telling her about his eight light-skinned mulatto children from black maid who worked in his house.

But everything on our planet comes to an end. Natural recourses will soon be depleted. You can't increase Internet user rate tenfold in the near future. But if you want it so bad... Let's consider all connected devices (or all network interfaces of all devices) as subscribers. You see, how many opportunities! In fact, nothing changes.

All I'm saying is messing with GDP counting is not something unique, it's natural course of events. Locomotive should quicken its speed, even if it results from falling off the cliff.

This time (ESA 2010 method) it's decided to add in GDP:

1. Investments which will be paid off in the near future.

These are R&D (Research and Development)and military expenses. To put it simple, if 'Lockheed Martin' spent 400 billion dollars and couldn't develop a 5-th generation jet in twenty years and shows only videos and plastic models, these 400 billion are not spent in vain, but investments. This is not a fraud now, it's a startup and GDP growth.

The great example is a situation with military vessels. That's what Eurostat says: 'Military vessels serve the state for many years, you can't stop using them at the end of the year, only if they are sank during naval engagements'. That's great, let's add procurement costs of everything that army has, except broken, stolen and destroyed objects to GDP every year.

This counting system will be great for Ukraine – take 1990 USSR assets, recalculate costs of everything as new, plus inflation adjustment –voila, GDP is gigantic. And do this once a year. What, economy is in full bloom, look at the charts. Assuming, we didn't sell aircraft carrier, planes and tanks to China... hmm, let's count... Wow, our economy is awesome! You lie to the whole world that we are in trouble, you are just jealous!

2. Elements of shadow economy – 'first of all, drug trade, prostitution and smuggling'. Crucial point – it's now called 'transaction', because this happens by mutual consent.

Great, just great. Now GDP's calculation will be based on such indicators as:

- Prostitution potential turnover: Quantity and earnings are estimated and added to GDP, but it's unclear what the state gets from it (except increase of police costs);

- Drug trade potential turnover: estimates are vague too, lots of health-care and police costs for the state;

- Smuggling potential turnover: that's the most awesome part – for example, nuclear waste or lethal virus strain was smuggled across the border. GDP is raised sky-high, everybody is happy.

I'm trying to say this is so invalid, in fact, you can write whatever numbers you want and no one will prove they're wrong. And all derivatives (for example, some ratings) will advise investors particular plans of action. Meaning, fictional information influences real investments. This is, apparently, informational Economy of Knowledge many people are talking about.

Represented growth examples show the situation perfectly.

'Thus, if we include unlawful actions of underground business, size of unseen economy will be 12,4% of GDP.'

Chinese simpletons who (for some reason) build roads, lay out communications in the whole country, reduce costs, develop industry, switch fuel from coal to gas and lots of other things like this, will never reach us (they only have 7-8% of GDP growth).

It's much more simple among Civilized People. One of them can sit and start thinking: 'My classmate sucked my dick once at high school. It means, everyone could have. What if they did it for money? What if it happened every day and they worked full-time? What if it happened throughout the country? Let's count... Wow, I see GDP growth!

Let's also add assumed earnings of black drug-dealer at every school, GDP growth is now off scale. What if he will also sell coke? And bullets? And will work as a pimp at the same time? And we should include male population to the potential earnings from prostitution (we are tolerant, remember?). Men are counted from the age of 8 for not adopting the law for several times. GDP will be enormous then.'

But all this is announced in the right way:

'Previous counting system couldn't fairly assess economy level in the context of rapid computerization and technological advance.'

Smuggling, prostitution and drug trade – is it rapid computerization or technological advance?

Reading R. Sheckley when I was a kid, I imagined something completely different.

Maybe during Totalitarianism we have read wrong books.

What should we assimilate to treat current situation as normal? TV series about dragons and chicks with big b***s? Season 117, episode 40, jade rod against scarlet sword and high tower in the background and the grave of laughing Freud on the side of all this?

Well, thanks, I will survive without that GDP growth and progress.

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