And that is why GDP is such a badly flawed metric and why we should not use it as the one and only way to measure progress.
GDP just says how well a country is doing and is a good summarization for how imports and exports are doing. However, it also takes into account military spending and real estate, so you could argue the GDP can be inflated via those two measures (to a degree) to look better.
Consumer Price Index does a better job of showing how well the economy is doing for its citizenry.
CPI is not good either. Inflation can be fine for most citizens, when they have enough negotiating power to raise their wages with it. In that case it wipes out lenders. That happened in Weimar Germany after WW1, as the unions were strong enough to raise wages fast enough.
A measure stops being a good measure when it becomes a target.
It doesn’t show how well a country is doing, because GDP is not a direct measure of aggregate utility. For example: GDP can go up, but if it causes the Gini coefficient to rise, a country could be doing much worse than before.
Economists of course know of these flaws and use GDP accordingly. Its for example a great measure how complex the economic flows are.
Of course its known, that countries can easily manipulate the data, for example China, who retrospectively changed their measuring of the economic data of 2022 and increased their GDP growth 2023 that way to 5.2 %. Or Russia, who spent an enormous sum for arms production, financed by debt, which of course led to a higher GDP at the cost of debt.
Nevertheless, if you consider these kind of 'tricks', its a good measure for growth year on year. But this growth can mean two things: higher living standards for its population or a more complex economy.
Its the same with the BMI. Its a good measure in general, but looking at a specific individual, its a highly deceptive measurement.
But this growth can mean two things: higher living standards for its population or a more complex economy.
"A more complex economy" is a great euphemism for the rich getting richer while the masses languish.
That's not what they mean. "More complex" means that you start paying for something that you used to do yourself, like paying a cleaner instead of cleaning your place. Or paying for takeout instead of making food. Now there are more transactions happening in the visible economy but you may not be better off.
More complex means that you focus on what you can do best and pay others to do what they can do best. Instead of growing your own wheat and pottery, you and others pay a third person to get a tractor and you can instead focus on doing pottery and sell them and buy wheat. This way more gets produced.
And while the wheat you grow yourself isnt part of the GDP, the wheat the third person grows for you, is. Therefore a more complex economy significantly boosts the GDP more than increased productivity. So if you produce your own wheat and your own pottery and your neighbor does the same, the GDP is 0. If you sell your pottery and your neighbor his wheat, both get added to the GDP.
Isn’t this really just suggesting that the “services” part of goods and services doesn’t have real value?
In this case, each person paid for the entertainment of watching their friends eat shit. They only did the exact same thing for the exact same amount of money to make it seem like one negated the other.
In this case, each person paid for the entertainment of watching their friends eat shit.
Not to overanalyze the joke even more, but:
Eating feces is not $100 worth of entertainment by any rational standard.
No rational person would spend $100 to watch his friend eat feces.
No rational person would accept $100 to eat feces.
No rational society allows someone to either eat feces or pay others to do so, for public health reasons if nothing else.
I mean, if you went to an unhoused person and offered him $100 to eat feces, you'd get arrested. And you'd deserve it. Because even the United States isn't quite that bad yet.
(And this is not a hypothetical. People do those kinds of things. There are unhoused people I know from Food Not Bombs who refuse food from strangers because too many of them have gotten adulterated food. And most of them have stories about people offering them money to do degrading things.)
So this $200 in GDP represents an activity that's injurious to public health, morally bankrupt, and leaves everyone participating in it worse off.
But from the Economics 101 worldview, the economists created $200 worth of entertainment, because both of them were willing to pay $100 to see each other eat shit and that means, by definition, eating shit was worth $100 in entertainment.
Which makes the punchline an even more vicious satire of capitalism and its bullshit metrics than it originally appeared.
Bro what are you doing
Have you ever eard of "fecal microbiota transplant" ? Because that's basically eating shit.
No rational person would accept $100 to eat feces.
Well, actually, big pharma will make you pay for it, which is even better :)
They basically traded each other the entertainment of watching the other one eat shit. The money was actually entirely unnecessary.
If, instead of eating it, one economist picked up some shit and sold it to the other. Then, the other sold it back. This would suggest the "goods" part of goods and services also doesn't have value.
Add a zero and let's go.
After the second economist watches the first economist eat bear shit. The second economist will now know that eating bear shit is worth more than $100 and wouldn't accept just $100 back they would ask for more than $100. That's capitalism
Or knows it's an easy way to make $100, so then secures a loan to cage a bear, and plans to hire a team to eat the shit instead for $75, all while pocketing the surplus $25 and skimming from the bear's feed - finally defaulting on the original loan.
a 3/4 split for the laborer is way more generous than anything that occurs in reality.
I wish there was a way to calculate profit per an hour worked so we could peg pay to that instead of whatever the fuck we use now.
That’s why sales people can make so much money in cases where they get commission. They aren’t exactly the most important part of the team, but when they close a deal the revenue they created is right there in black and white.
It's nearly impossible for a lot of jobs.
lmao “hire a team to eat the shit”. Summed up the state of many things here.
You're gonna go far.
And now they owe the government $20 each in tax.
Bitcoin fixes this.
(sarcasm)
This isn't capitalism, this is just a flaw with the metric of GDP. Capitalism would be the first guy ransoming $100 for shelter, and forcing the second guy to eat the shit to get the shelter.
GDP as the benchmark for economic performance is a key piece of propaganda that supports capitalism though. It’s the most prominent of several numbers that we use to orient and measure the success of the economy despite having little correlation with actual human well being.
Calling that propaganda is far fetched. It was the standard because it gave the best measure of economic strength before the information age gave us easy ways to gather other measures.
It's a relic of how things used to be and needs to be reevaluated.
GDP is good metric to measure industrial output of a country. However for any sort economic activity, which does not include exchanging money, it does not work. A homestead farmer, who is mainly self sufficient, besides selling some goods on the market, is in a much better position then a clothes factory working earning the same amount of money. Both would contribute about the same to GDP. Another one would be the very simple fact that having a natural disaster usually increases GDP a year later or so, due to increased spending on rebuilding. That clearly is not a sign of economic strength of the country though.
Many of the prominent, public uses of GDP would be better replaced with life expectancy, which has been around since 1660. And if you don’t like that one, we’ve had lots of much better economic data for the past 50 years, so take your pick. Yet we still look at GDP and little else to measure how successful the economy is.
GDP in and of itself may have some validity in measuring specific types of economic activity, but its use as a singular number to measure overall well-being is propaganda and always has been.
Literally all points by Nicola Sturgeon in her TED talk. I recommend it.
The reason it's not been reevaluated it what makes it propagandistic. It's wrong in clear ways, but it's not been abandoned because it's still useful to the beneficiaries of the status quo.
The real punchline that everyone seems to be missing is that economists are willing to eat shit for money.
Which is sure metaphorically true with the ones the media puts out there.
It's the same requirement for being a regular talking head on any TV channel. Watching Anderson have to let Israeli PR by without any critical questions drove that home for me. Real economists are out there dropping giant data laden takes on the economy. Like some of the ones at Rand that calculated the amount of systemic wage theft since productivity diverged from wages.
The joke doesn't work because both transactions were welfare enhancing. In the end, both of them agree that eating shit is worth it to see the other do it. At least $200 of value was created.
The joke doesn't work because both transactions were welfare enhancing. In the end, both of them agree that eating shit is worth it to see the other do it. At least $200 of value was created.
Yes. And after overanalyzing it I realized that's the second level of the joke.
The Economics 101 idea is that value is defined by how much money someone is willing to pay for something. And the satire of that idea is vicious. Because by every measurable standpoint those two economists are worse off coming out of the forest than going in - they've both had a exceptionally unpleasant experience and are now at risk for parasites and food poisoning and other health concerns. And yet they're patting each other on the back saying they created value for the economy.
And there are people on this thread - like you - seriously arguing that watching someone eat shit is worth $100 by definition because someone was willing to pay $100 for it, and therefore the two economists really did create $200 in value.
If that's what capitalism means by "welfare enhancing" it uses a different definition of welfare than any rational human being ever.
But that's why economists are the butt of the joke, I guess.
And if you agree with the characters in the joke, the joke is on you.
This falsely assumes that economic actors necessarily have sound judgment about value. Imagine someone who has had a bad day at work going and spending $10 for the privilege of being rude to a fast food clerk. If given the option would they directly trade the humiliations they themselves endured to earn that money to be able to inflict the same? Probably not, but their workday is already over, they don't see a way to translate the cash they have onhand into an overall better life, and this is what they feel like doing in the moment.
This falsely assumes that economic actors necessarily have sound judgment about value
Does this matter in the context of this post? I.e. are GDPs "the sum of shit people pay for" or do they get adjusted for "sound judgment of value"?
Increase in GDP is very often assumed to be a positive thing and represent an improvement in society, and as far as I can tell the point of the joke is that this is a false assumption.
Perfect illustration of how GDP is only a rough measure and imperfect.
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