If my neighbour owns a house (outright) and lives in it, I pay nothing, and no impact on GDP
If I rent from my neighbour for $10k a year, and he rents from me for $10k a year, GDP increases by $20k a year, but nothing has really changed, expect the amount of money paid in taxes.
So that's why you have imputed rent as part of GDP. Fine, I get that.
How about this scenario
I have a kid and look after it, I pay nothing, and no impact on GDP
My neighbour has a kid and looks after it, he pays nothing, and no impact on GDP
I look after my neighbours kid 3 days a week and he looks after mine, in an exchange, no impact on GDP
I look after my neighbours kid 3 days a week and he pays me $300, and he looks after mine 3 days a week and I pay him $300. GDP increases $600 a week, and more money is taken in taxes.
Do we include all unpaid work?
If I (a painter) pay my neighbor (a gardener) to garden my front yard and he pays me to paint his garage, then GDP increases.
If I do the gardening myself, and he does the painting himself, GDP doesn't increase.
How about me looking after my old parent vs me working overtime and paying a care home to do it?
> How about me looking after my old parent vs me working overtime and paying a care home to do it?
Yes of course the latter will have an impact on the GDP, and the former not. You are producing more work for money and you are buying more work for money.
If someone is paid to dig holes and fill them up right after, the country is not any wealthier even though GDP is increased, in fact slightly less wealthy because of wear and tear on the shovel/excavator.
A company that pays contractors to do nothing but dig up holes and fill them back up again will quickly go bankrupt, so most people aren't going to engage in such enterprise.
Just because you found a way to hack the GDP in an online argument doesn't immediately throw its usefulness in the real-world.
e.g. repairing a water main, then laying some underground electrical cables, then laying some fiber optic wire.
Due to inefficient coordination, country A may have the same patch of ground dug up and filled three times.
Whereas country B, more efficient, only has to dig once, do all the work, then fill it up once.
So country B records lower GDP but in fact ends up slightly wealthier.
Shadow economies also exist and comprise different % in different countries.
I think the confusion here is because it seems odd that taking care of your parents by yourself is not considered productive unless you exchange money for it. GDP is an imperfect measure, and by definition does not take into account such voluntary/unpaid activities.
The caregiver is doing the same work either way. Where is the wealth increase coming from?
The OECD definition seems suspect, an increase in money reserves does not guarantee an increase in wealth when there's been inflation. Do you have a source for it?
I neglected to mention I work in an old peoples home. The overtime is the exact amount of care my parent needs.
In a more realistic examples, alcoholics purchasing booze, obese people overeating, and people wasting their lives watching TV all contribute to GDP.
Not really because even if you are living in your own paid-off house, the rent will be added to the GDP.
> If I do the gardening myself, and he does the painting himself, GDP doesn't increase.
There is a law being worked out somewhere (probably Europe) that will tax any activity you are doing. If you paint your garage, this activity will be evaluated financially and you'll have to pay taxes on it. Not doing so is tax evasion.
* last one was /s but maybe not really?
New feudalism
But capital increase. Next time this capital will hit market - when you decide to sell fruits or home with beautiful garden it will be taxed and will increase GDP.
GDP is statistics anyway, so any work that doesn't rot and hit the market will eventually show up in GDP.
This is not true, at least in the US. If you're a homeowner, they estimate how much it would cost to rent your own home and include that in the GDP.
> So that's why you have imputed rent as part of GDP. Fine, I get that.
I then came up with other parts where economic activity is not imputed
It could be backed by products that nobody wants (wars and such) or it could be at the expense of other quality of life metrics such that the juice is not worth the squeeze.
It's like lifting weights to get huge instead of to get strong.
How can a smart, presumably educated person not know that rent counts as economic activity?
To say the world is poorer than in 2008 is just utterly preposterous.
Per capita GPD in China went from 3500 to 12500. India 1000 to 2200.
There is half the world. US, Canada and Europe is only 15% of the population but I don't know how the case can be made we are poorer than in 2008 either.
https://www.propublica.org/article/yieldstar-rent-increase-r...
Of course it's "economic activity". But if I sublet to someone that sublets to someone that sublets to someone that lives in an apartment, that's a 4x increase in money flow but there's no production of goods or services at all.
It makes sense to have the cost of building and maintaining homes represented somewhere, but rent is a poor proxy for that.
Right, which is why the insult in the post I quoted is getting things very wrong.
> GDP only considers the value of the final consumed goods and services, and rent is a consumed service. If you're a homeowner, they estimate your rent and use that instead.
I understand that but it's a notably flawed way of going about it. Prices in general can have a loose coupling to value but with rent it's extra bad. A small change in housing stock can trigger a massive swing in rent and GDP even though the service being delivered doesn't change.
Watch this. Counting rent is about as sensible as counting financial services.
Of course renting is an economic activity that should be reflected in the GDP, and it is as "real" as anything else. To focus solely on international trade feels shortsighted as well. When a doctor sees you and charges you $200, that's going into the GDP but not into any trade balance.
The world is richer since 2008 by almost any metric you can think of, including inflation-adjusted per capita income which is independent of GDP.