Double Counting R&D In GDP

This story is interesting. Now, R&D expenses will be counted as part of R&D.

Here’s the pro-State troll argument. Suppose you work in the R&D department and get paid $100k. That should be counted as part of GDP, because you spend $100k buying goods and services. However, those $100k goods you bought WERE ALREADY COUNTED IN GDP. In effect, the same transaction was counted twice!

Here’s another way to look at it. Suppose a buy a new car for $10k. That’s $10k counted towards GDP because the car was manufactured. Suppose I immediately sell that car for $10k. Does that mean the GDP increased by another $10k? No, it didn’t.

Suppose a corporation spends $500M in R&D, leading to sales of $1B next year. Now, the R&D spending is double-counted. There’s $500M contributed to GDP this year and $1B next year, but only $1B of goods were produced. If R&D is counted as $500M one year, then $500M should be deducted the next year as the R&D spending leads to goods and services being produced.

There are continual “enhancements” to the way that GDP and the CPI are calculated. The pro-State troll excuse is “This makes them more accurate!” However, the “enhancements” usually lead to bias, causing the economy to look better than it actually is.

3 Responses to Double Counting R&D In GDP

    • That video looked like someone trying to make something with a deeper symbolic meaning, but it actually being pretty lame.

      I should make some videos. I could do better.

  1. Anonymous Coward May 10, 2013 at 10:57 am

    I personally liked the video.

    At one level it is about the crumbling away of hierarchical, coercive society and man becoming enlightened and awakening to his true destiny.

    At one point a shoe is on top of a coin, symbolizing control of the world’s monetary systems.

    One of the first scenes is about two presidents dancing and fooling about instead of doing a proper job and addressing the real problems. Notice the phallic symbol on the blackboard – fooling about instead of doing real work.

    The video is about much more than that.

    I think it is very well done.

    All the symbols are there for a purpose. Look at the rabbit and the stag when you see the woman in white? What do they mean? What does the apple represent?

    Why does President ODumber sweat when the woman drops the apple? Is he worried about the people become enlightened and realizing that both political parties are the same and never fix any problems?

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