Lawry, Quite so.
We should remember that these national statistics are of no use to anyone but governments. We don't need them and wouldn't even if they were accurate. Harry _______________________- Lawrence wrote: >This is reminding of Hernando de Soto's remarkable book and theses, that >3rd world countries have large grey market economies, not measured by >GNP/GDP. He argues that if these grey market transactions were legalized >or recognized legally, that the economies of these countries would be seen >as much more robust that they presently seem. > >Cheers, >Lawry >>-----Original Message----- >>From: Ed Weick [mailto:[EMAIL PROTECTED]] >>Sent: Thursday, July 11, 2002 11:12 AM >>To: Lawrence H. de Bivort; Keith Hudson; [EMAIL PROTECTED] >>Subject: Re: More Porkie Pies? >> >>The possibility that GNP may be overstated, as in my previous posting, is >>only one of its alleged sins. Many people wondered what else it may be >>hiding and what it reall tells you. A strong condemnation of using GNP >>or GDP as an indicator of societal progress appeared in Atlantic Magazine >>in October 1995 under the title "If the GDP is Up, Why is America >>Down?". It was authored by Clifford Cobb, Ted Halstead, and Jonathan >>Rowe. Here is a sample paragraph: >>The GDP is simply a gross measure of market activity, of money changing >>hands. It makes no distinction whatsoever between the desirable and the >>undesirable, or costs and gain. On top of that, it looks only at the >>portion of reality that economists choose to acknowledge--the part >>involved in monetary transactions. The crucial economic functions >>performed in the household and volunteer sectors go entirely unreckoned. >>As a result the GDP not only masks the breakdown of the social structure >>and the natural habitat upon which the economy--and life >>itself--ultimately depend; worse, it actually portrays such breakdown as >>economic gain. >> >>I've had to refresh myself on the meaningfulness of national accounting >>measures recently in connection with a project I'm working on. Here's >>what I wrote on the idea, espoused by many people, that GNP should be >>extended into "full cost accounting". It's based on Herman Daly. So if >>it's wrong, blame him. >>"The usual measure for national product (GNP) consists of two >>elements. One is product that must be used to replace or replenish >>machines and equipment that have been used to produce the national >>product, or depreciation . When the latter is subtracted from national >>product one is left with the other element, the product that is available >>for the current purposes of investment and consumption. This is termed >>Net National Product (NNP) . The problem, however, according to >>proponents of full-cost accounting, is that depreciation estimates and >>other costs , as conventionally measured by national accountants, are >>understated and hence NNP is overstated, giving a false impression of >>available product. >> >>To move to a full-cost accounting system, two adjustments would have to >>be made. One is simply to extend the principle of depreciation to cover >>consumption of natural capital stocks depleted through production. The >>other is to subtract expenditures necessary to defend society from the >>unwanted side effects of production and consumption. >> >>The concept of consuming natural capital is easily understood, especially >>in an economy dependent on non-renewable resources, but even in one >>dependent on renewable resources that are over-exploited, such as cod in >>Newfoundland. Once the resources are gone, they are gone. They cannot >>be replaced, and if enough of them are used too quickly, an economic >>decline is unavoidable. Defensive expenditures, on the other hand, are >>essentially unwanted by-products of the production and use of national >>product. They can include the over-exploitation of envi-ronmental >>resources in the general course of economic growth, the costs associated >>with urbanization (pollution, crowding, commuting etc.), and the costs of >>unhealthy consumption and behavioral patterns. >> >>Instances of putting full cost accounting into practice are >>rare. Statistics Canada has worked on the development of a new component >>of the national accounts that will integrate environmental factors into >>the traditional Canadian System of National Accounts. These new accounts >>would provide data on the physical quantities and monetary values of >>Canada's natural resource stocks; on the depletion and uses of these >>resources; on waste emissions to the environment; and on environmental >>protection expenditures." >> >> >>Ed ****************************** Harry Pollard Henry George School of LA Box 655 Tujunga CA 91042 [EMAIL PROTECTED] Tel: (818) 352-4141 Fax: (818) 353-2242 *******************************
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