Comments on: All GDP all the time http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/ Tue, 02 Dec 2008 15:51:35 +0000 http://wordpress.org/?v=2.0.1 by: Ravages http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-745 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-745 As usual, I am gonna sound off and then later say I stand corrected. But anyways, here goes. I dont think there is a wastage in the sense that the dancer is doing a service and is getting paid for it, in Kind. But on the other hand, the dancer isnot involved at all in the production of wheat and paying her wheat might be considered wastage. But, going by real economic thoughts (i try to) it is not a wastage As usual, I am gonna sound off and then later say I stand corrected. But anyways, here goes.
I dont think there is a wastage in the sense that the dancer is doing a service and is getting paid for it, in Kind.
But on the other hand, the dancer isnot involved at all in the production of wheat and paying her wheat might be considered wastage.

But, going by real economic thoughts (i try to) it is not a wastage

]]> by: swami http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-746 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-746 I dont consider it 'wastage'. But there are some random thoughts floating in my mind. This means that in an economy of 100 people if the basic needs of all 100 can be taken care of by the work of 10 people - then the remaining 90 can indulge in artistic activities and increase the GDP. In the example that we had - the needs of the three people in the economy (Ravi Yazad and dancer) was just 200 rs worth of wheat. But the increase in GDP was by paying the dancer. Interesting.. Replacing the dancer by a thief(or some other problem maker) and assuming that Ravi and Yazad pay that problem maker 60 bucks just to 'remain idle' - ie - not create any problems, then it would mean that they have created a market for "remaining idle" and thus will increase the GDP by 60 bucks. Does this sound plausible? I dont consider it ‘wastage’.

But there are some random thoughts floating in my mind.

This means that in an economy of 100 people if the basic needs of all 100 can be taken care of by the work of 10 people - then the remaining 90 can indulge in artistic activities and increase the GDP. In the example that we had - the needs of the three people in the economy (Ravi Yazad and dancer) was just 200 rs worth of wheat. But the increase in GDP was by paying the dancer.

Interesting..

Replacing the dancer by a thief(or some other problem maker) and assuming that Ravi and Yazad pay that problem maker 60 bucks just to ‘remain idle’ - ie - not create any problems, then it would mean that they have created a market for “remaining idle” and thus will increase the GDP by 60 bucks.

Does this sound plausible?

]]> by: Gautam http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-747 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-747 I'm too embarrased by my wrong answers to say anything. :-) I’m too embarrased by my wrong answers to say anything. :-)

]]> by: Ravages http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-748 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-748 I am a little intrigued by Swami's comments. In the economy of 100 people---10 people are farmers. SO the remaining can devote time to artistic pursuits. How will that increase GDP? I mean, not all of their artistic efforts will be likeable. SOme might be amazing failures in their art. And which might mean that they dont sell. So how will the GDP grow that way? Or am i putting the cart before the horse? I am a little intrigued by Swami’s comments.
In the economy of 100 people—10 people are farmers. SO the remaining can devote time to artistic pursuits.
How will that increase GDP?
I mean, not all of their artistic efforts will be likeable.
SOme might be amazing failures in their art.
And which might mean that they dont sell. So how will the GDP grow that way?
Or am i putting the cart before the horse?

]]> by: digdug http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-749 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-749 ravi, wouldn't the GDP in case 2 be 200 if the guard's service is considered as part of the production process? well it is 260 if the security service is considered as a 'final' service ofcourse! since the security service is considered as a final service anyway, wouldn't the GDP in case 3 be 260 too? 'cause GDP concerns itself only with the value of the service however artificial and forced upon it is. Ofcourse this is precisely what you were alluding to too. In case 4, I thought the amount of wheat produced would be 30% less(30% less land!) than in the other cases which is why I thought the GDP would be 0.7*200+60..was I wrong with the assumption? ravi, wouldn’t the GDP in case 2 be 200 if the guard’s service is considered as part of the production process? well it is 260 if the security service is considered as a ‘final’ service ofcourse!
since the security service is considered as a final service anyway, wouldn’t the GDP in case 3 be 260 too? ’cause GDP concerns itself only with the value of the service however artificial and forced upon it is. Ofcourse this is precisely what you were alluding to too.
In case 4, I thought the amount of wheat produced would be 30% less(30% less land!) than in the other cases which is why I thought the GDP would be 0.7*200+60..was I wrong with the assumption?

]]> by: Yazad http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-750 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-750 Ravi's model has many errors, among them the way he describes "value" -- I shall deal with it in a separate post. I just want to disassociate with the "Yazad" in the model. Maybe Ravi (and others) can take the <a href="http://www.avesta.org/zglos.html#Glos_Y" rel="nofollow">Zoroastrian angel Yazad</a> instead of me in the model. He's known to be the <a href="http://tenets.zoroastrianism.com/aasan33.html" rel="nofollow">divine problem solver</a> and can perhaps even solve Ravi's confusion about GDP. :-) Ravi’s model has many errors, among them the way he describes “value” — I shall deal with it in a separate post.

I just want to disassociate with the “Yazad” in the model. Maybe Ravi (and others) can take the Zoroastrian angel Yazad instead of me in the model. He’s known to be the divine problem solver and can perhaps even solve Ravi’s confusion about GDP. :-)

]]> by: Ravikiran http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-751 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-751 <b>Swami:</b> I am pleased to see that my model is producing results. If you've realised that a measure of a country's prosperity is not whether everyone does *some* work, but when people produce things that other people (or they themselves ) want, then I've achieved an objective here. <b>Ravages:</b> They need not all turn into artists of course. They may do other things. The assumption is that they do things that people want. The best way to measure that is by looking at voluntary transactions. <b>digdug:</b> Yes if you assume that the security guard is protecting the farm, Yazad is paying him 60 bucks and (and has cut my pay from 100 to 70 bucks) then your answer is correct. In that case, the value of the protection is already built into the price of the wheat. As for case 3, you are right. That's how economists measure the GDP. I am just pointing out that there is a questionable assumption there. As for case 4, I did mention that Yazad is growing rice on 30% of the land. <b>Gautam:</b> Happens to the best of us. You double counted somewhere. <b>Yazad:</b> What seems to be the problem? I've defined "value" as something that a person wantsand is willing to work for. I've pointed out that GDP is actually a proxy for measuring value. I've almost said that the GDP of a country like the USSR is 0 because there is no way you can find out whether the things that were produced were actually things that anyone wanted. I thought you'd like that. Swami: I am pleased to see that my model is producing results. If you’ve realised that a measure of a country’s prosperity is not whether everyone does *some* work, but when people produce things that other people (or they themselves ) want, then I’ve achieved an objective here.

Ravages: They need not all turn into artists of course. They may do other things. The assumption is that they do things that people want. The best way to measure that is by looking at voluntary transactions.

digdug: Yes if you assume that the security guard is protecting the farm, Yazad is paying him 60 bucks and (and has cut my pay from 100 to 70 bucks) then your answer is correct. In that case, the value of the protection is already built into the price of the wheat. As for case 3, you are right. That’s how economists measure the GDP. I am just pointing out that there is a questionable assumption there.

As for case 4, I did mention that Yazad is growing rice on 30% of the land.

Gautam: Happens to the best of us. You double counted somewhere.

Yazad: What seems to be the problem? I’ve defined “value” as something that a person wantsand is willing to work for. I’ve pointed out that GDP is actually a proxy for measuring value. I’ve almost said that the GDP of a country like the USSR is 0 because there is no way you can find out whether the things that were produced were actually things that anyone wanted. I thought you’d like that.

]]> by: swami http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-752 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-752 Ravi - but my question is, do you consider the money paid to the thief as 'wastage'? Ravi - but my question is, do you consider the money paid to the thief as ‘wastage’?

]]> by: Ravikiran http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-753 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-753 1) Are you giving money to the thief voluntarily? 2) Does giving money to the thief make you happy? If yes, then no. If no then yes. My point was that when you aggregate accounts at the national level, it is difficult to find answers to such questions, hence to that extent GDP is deficient as a measure of prosperity. 1) Are you giving money to the thief voluntarily?
2) Does giving money to the thief make you happy?
If yes, then no. If no then yes.

My point was that when you aggregate accounts at the national level, it is difficult to find answers to such questions, hence to that extent GDP is deficient as a measure of prosperity.

]]> by: swami http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-754 Tue, 30 Nov 1999 00:00:00 +0000 http://www.yazadjal.com/2004/02/27/all-gdp-all-the-time/#comment-754 "...hence to that extent GDP is deficient as a measure of prosperity.." Good! I think I am ready for the next lesson, if there is one... “…hence to that extent GDP is deficient as a measure of prosperity..”

Good!

I think I am ready for the next lesson, if there is one…

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