Must-Read: Matthew Yglesias: GDP Measures GDP
Must-Read: Matthew Yglesias identifies and nails an important distinction: “mismeasurement” because GDP does not capture economic surplus has next to nothing to do with issues about capacity utilization, economic slack, and proper stabilization policy. It does, however, have a lot to do with debates about living standards, utopia, happiness, political economy, and inequality.
: GDP Measures GDP: “Every few months I see chatter popping up indicating…
…that people think something or other — most recently it’s the consumer surplus associated with Facebook — shows that GDP isn’t being propelry measured. These critiques are almost always wrong. GDP is a measure of what it measures — monetized economic output. It is also the case that lots of things in life are not measured by GDP. Some of that is the fuzzy intangibles, but some of it is very concrete. A maid is GDP. Cleaning your own damn house is not. But either way, the house is either clean or it isn’t. But that’s not a measurement error. Cleaning your own house really isn’t market economic output.