Why GDP Is Overrated & Nobody Should Care About It!

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GDP is one of the most universally recognized terms in economics. Even outside people with an interest in the subject most adults would be able to tell you that GDP is a measure of how large an economy is.
They might not be able to tell you how it’s calculated or even what it stands for but they would get at least that part right.
And you know what, that’s probably all they need to know, it might be all economists need to know about the figure, because it might be the extent of what this figure can tell us.
Gross Domestic Product is a measurement of production in an economy, the idea is that the more stuff that is being created and transacted the wealthier the economy is and while this isn’t necessarily wrong it’s not the whole story.
The tachometer is a measurement of your car’s performance. Higher revs on the dial, normally mean your car is going faster, but there is actually no way to know without other information, like if that car is in gear or even if that car has wheels on.
This might be a bit of a rough analogy but in a world where people are becoming hyper-focused on GDP figures and what they mean for everybody amidst the chaos of 2020, it’s important to remember to check the other indicators.
Something to keep in mind amongst all of this is that GDP is a macro-economic measure, it looks at the whole economy as an aggregate or a total collective.
Sure the figures might not look great, but ask yourselves watching, did your lifestyle become 33% worse when a 33% drop in GDP was recorded?
For most of you watching I would imagine the answer is no, which might start to raise some eyebrows as to just how useful this measure is at telling economists what's really going on in the nations they are studying.
So ...
What are the limitations of GDP?
Are there better figures to look at to get an idea of how prosperous an economy is?
And how could focus on something outside of pure productive capacity be good for our economy?
#Economics #GDP #NetWorth
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[@EconomicsExplained]

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[@Joee1530]

Great episode! Based and econpilled!

[@dominikb.1313]

Ok

[@levihoffman5897]

Can you do a video on worker co-ops where workers on the stock in the company?

[@Joee1530]

Levi Hoffman YES!!! As a market socialist I need this

[@convertedaussiejedi2135]

The information I have posted here, is important in my humble opinion, it's to help the economy and everyone's economic situation hopefully🙏 OpenLearning=ASX-OLL 👨‍🎓 Product design is superior in the way it engages learners. They have one of the largest student enrolments amongst online learning providers. OLL has established relationships with top tier universities in Australia, Malaysia and around the world. They have a successful board of directors, who can use their individual networks to assist the companies expansion/growth plans. Their product offering/pipeline is growing quite well, example: (open universities Australia relationship & opencreds framework). They are agile and can easily adapt to new trends and capitalise on Market opportunities as stated in recent interviews. Online short courses and Micro Credentials are being viewed by many, to be able to help save our economy. By retraining our out of work workforce faster and way cheaper, this is becoming popular and Governments are starting to put support behind this new norm of the future in learning. Artificial Intelligence and Machine Learning: In-depth Short Course. www.openlearning.com/unswshortcourses/courses/artificial-intelligence-and-machine-learning-a-short-course/?UNSWAI This is new and is some opinions on OpenLearning's short courses/Micro Credentials. blog.openlearning.com/lifelong-learners-upskilling-online?Learner%20Experience&hss_channel=tw-616873983 This is a must read about OpenLearning's Micro Credentials. smallcaps.com.au/openlearning-open-universities-australia-micro-credentials-tertiary-students/ Below are some articles, out of many. This is to show where Education is going now and into the future. marketscale.com/industries/education-technology/online-infrastructure-higher-ed-future/ www.insidehighered.com/news/2020/08/27/interest-spikes-short-term-online-credentials-will-it-be-sustained thesector.com.au/2020/06/23/courses-now-easier-to-find-for-ecec-workers-thanks-to-online-microcredentials-market/ www.newamerica.org/education-policy/edcentral/federal-workforce-funding-support-local-covid-responses/ How business-led upskilling can reboot Australia www.pwc.com.au/about-us/insights/non-executive-directors/business-led-upskilling.html micro-credentials are pivotal to helping workers develop their leadership competencies. A life-long bridge between education and industry By: Mike Pereira Published: Sep 20, 2020 rtpark.uwaterloo.ca/news/a-life-long-bridge-between-education-and-industry/ The micro-credentialing system will be recognised by employers as a globally accepted industry standard meeting the current needs and demands of industry. australiancybersecuritymagazine.com.au/400k-investment-to-develop-tech-skills-in-queensland/ Wednesday, 16 September 2020 nsw.liberal.org.au/MORE-THAN-100,000-PEOPLE-TO-BE-PROVIDED-TRAINING-FOR-JOBS-OF-THE-FUTURE Wed, 16 September 2020 thewest.com.au/business/economy/nsw-commits-160m-to-jobtrainer-program-ng-s-2029881 The potential of online learning for adults: lessons from the COVID-19 crisis. www.oecd.org/coronavirus/policy-responses/the-potential-of-online-learning-for-adults-early-lessons-from-the-covid-19-crisis-ee040002/ Good short interview with CEO Adam Brimo on the current business of OpenLearning. www.proactiveinvestors.com.au/companies/amp/news/928488?__twitter_impression=true Motley fool article on OpenLearning=ASX$OLL www.fool.com.au/2020/09/08/the-openlearning-asx-oll-share-price-is-storming-higher-again-this-week/ OpenLearning Ltd ASX:OLL has some interesting prospects. Not only operating within the online education ecosystem, but also partnering with some of the major universities. Partnerships that could become the cornerstone of many more, bigger arrangements. www.moneymorning.com.au/20200827/party-is-over-for-australian-universities-education-and-the-economy.html OpenLearning=ASX$OLL signs agreements, to sell their Micro Credentials to other Online Learning Companies. In my opinion this is an example of OpenLearning's Platform and Micro Credentials being good enough that other companies are wanting them to sell. themarketherald.com.au/openlearning-asxoll-signs-agreements-with-open-universities-australia-2020-07-13/ PwC Australia has release a report which recommends a tighter partnership between industry and government to address future skills with micro-credentials. www.smh.com.au/business/workplace/australia-should-take-the-short-course-to-rebuild-report-20200822-p55ocj.html OpenLearning=ASX$OLL Website to start your own Educated research. solutions.openlearning.com/opencreds/?OpenCreds+-+OL+-+AU&hsa_acc=3841620712&hsa_cam=9492920576&hsa_grp=97998897313&hsa_ad=420831325866&hsa_src=g&hsa_tgt=kwd-354683504529&hsa_kw=micro-credentials&hsa_mt=b&hsa_net=adwords&hsa_ver=3&gclid=Cj0KCQjwtZH7BRDzARIsAGjbK2aKoU1fp12RHxlsf0d-JwMYC9omSW7udTysm32iRhvvDF_tvfS9CRUaAuaTEALw_wcB solutions.openlearning.com/press/ Adam Brimo talks all about OpenLearning m.kzbin.info/www/bejne/bneVZHmDjK1pea8 If offices are a thing of the past, how can we thrive working from home? leadersinheels.com/business/working-from-home/ OpenLearning=ASX$OLL Half year results. hotcopper.com.au/threads/ann-half-yearly-results-presentation.5592743/ Same half year report/results, just presented differently. hotcopper.com.au/threads/ann-half-yearly-report-and-accounts.5592710/ OpenLearning ASX $OLL & Australian Trade and Investment Commision Deal. hotcopper.com.au/threads/open-learning-australian-trade-and-investment-commision-deal.5551742/ Really good financial opinion/article below about, OpenLearning=ASX-OLL www.thesentiment.com.au/pandemic-poses-opportunity-to-online-learning-platform-openlearning/ OpenLearning(ASX:OLL) RELATED STOCKHEAD STORIES OF COMPANY GROWTH stockhead.com.au/company/openlearning/ stockhead.com.au/tech/openlearning-launches-new-plan-to-teach-financial-advisors/ AIC and OpenLearning partnership to deliver skilled programs in Indonesia, this is Government supported!! skills.australiaindonesiacentre.org/news/updates/aic-and-openlearning-partnership-to-deliver-skills-programs-in-indonesia/

[@EconomicsExplained]

Alan Greenspan and Ben Bernanke are walking down the road. They come across a pile of horse manure lying on the asphalt. Alan Greenspan says: "If you eat it I'll give you $20,000!" Ben Bernanke runs his optimization problem and figures out he's better off eating it, so he does and collects his money. Continuing along the same road they come across another pile of horse manure. Ben Bernanke says: "Now, if YOU eat this I’ll give YOU $20,000." After evaluating the proposal Alan Greenspan eats it and collects the money. They go on. Bernanke starts thinking: "Listen, we both have the same amount of money we had before, but we both ate horse manure. I don't see us being better off?" Greenspan replies "Well, that's true, but you overlooked the fact that we've raised GDP by $40,000 and created 2 jobs!”

[@dominikb.1313]

Ok

[@manasmahanand732]

Hey, where is the video on communism vs capitalism?

[@howto7755]

Economics Explained love it

[@AlecMuller]

Actually, they have *less* money than before, because the tax man is gonna get his cut.

[@BowlOfHotDogs]

people laundering money would be very proud of themselves when looking at the gdp scale

[@dj_laundry_list]

Economics explained: the best way to watch stock footage

[@psn1992]

Jake Tran

[@autohmae]

Or would that be stonk footage ? ;-)

[@tchaffman]

@@psn1992 Jake Tran is good commentary for when I'm making a list of movies and documentaries that I definitely need to watch again 😂

[@a4blue2]

Many of the "Port-Style" Stock Footage seemed to be Hamburg, Germany this time :D

[@DineshKumar-ly5es]

I noticed Bitcoin is already taking over the world economy and financial market bit by bit

[@QuestionEverythingButWHY]

“If you torture the data long enough, it will confess.” ― Ronald H. Coase

[@themongolsarecoming_9437]

I like this one better

[@dongster529]

This bot is everywhere

[@timgooding2448]

Still trying? Give up all your doing is pissing people off. How's your channel going. HaHa.

[@zyansheep]

@@timgooding2448 how many subs do *you* have?

[@anshb6872]

I see you in almost every educational video @question everything

[@shivambarke]

Me: I am here to learn economics KZbin Ads: No learn get rich quick schemes :-(

[@phenomiks]

Same thing, right?

[@ghostnoodle9721]

Squid King KZbin: You like economy? How would you like to take 100% of your investment and make it 0%?!?!

[@phenomiks]

Ghost Noodle sounds good to me!

[@djVania08]

I hate these things. There were today some fellas on an Ad (one of dozens in the last couple of months) that were telling me, that the only thing I need for my financial independence is STRATEGY! ... that they will provide! Thank you!

[@oppionatedindividual8256]

There are courses to ACTUALLY LEARN economics

[@onthecover5042]

Fun fact: GDP is overrated

[@Venkat-sy2fu]

thank you albert

[@edwardmauer7442]

@Jaskaran Singh Add incestuous adulterer to that, and sympathizer of autocratic tyrant Vladimir Lenin.

[@davecullins1606]

If a country cheats and says that its GDP is higher than it really is, then its GDP is *literally* overrated. Like in China.

[@Soleilune1995]

@@edwardmauer7442 Albert Einstein was smarter than you.

[@autohmae]

Andrew Yang said the same thing...

[@afzal5029]

GNP = Gross Nantional Product This is absolutely fine, no issues whatsoever

[@nicholashildenbrand8632]

I was about to say...is it a joke based on his accent or something? But nah its just misspelled

[@Ikbeneengeit]

Nantional means before adjusting for inflation, right?

[@SuperLusername]

@@Ikbeneengeit afaik no. Nominal GDP is before adjusting for inflation while Real GDP is after inflation.

[@Ikbeneengeit]

@@SuperLusername I was making a bad joke, sorry. You got real and nominal backwards 😉

[@SuperLusername]

@@Ikbeneengeit ah ok

[@4dtoaster819]

EE: GDP is overrated and nobody should care about it! EE when rating countries: Lets designate 2/5 of score directly to GDP measures

[@NotShowingOff]

Inventing another metric is controversial.

[@St3v3NWL]

@@NotShowingOff Purchasing power? Trading volume?

[@alpheusmadsen8485]

@@NotShowingOff If he wanted to, he could use one of the two alternatives to GDP created by either Milton Friedman or Murray Rothbard (I can't remember which one): a version of GDP without government spending, or a version of GDP with government spending subtracted (the latter of. which assumes that government spending has a negative impact on the economy, which I think is a reasonable assumption).

[@vinithepooh4514]

@@alpheusmadsen8485 what are you talking about? You think government spending worsens the quality of life?

[@rajesh_404]

This metric can be one but not the only one.

[@prolarka]

laymen: GDP next level: GNP, GINI, CPI, net income, debt... It is more constructive if you encourage others to understand these as well.

[@luk4aaaa]

He should do episodes on all of these and then explain what relation they have to each other

[@nicholascarter9158]

"Unreported services are not important to the economy of Switzerland." *Panama Papers has entered the chat*

[@JosiahTaschuk]

Oh man this has me dying 😂

[@nicholascarter9158]

@@JosiahTaschuk too soon

[@entropicpedro]

Gaaadaaamn Bruv😂😂🤣🤣🤣🤣🙌🏿🙌🏿🙌🏿🙌🏿🔥🔥🔥🔥🔥🔥

[@Lobos222]

LoL, I was thinking along the same lines... Funny how he mentioned Switzerland as the opposite to criminal activity. HAHAHAHA

[@grrumakemeangry]

Lobos222 switzerland has hardly any crime

[@caiocaguiar9310]

9:22 Everybody laughing at EE for misspelling, but deep down we all know that EE is laughing at us for freely boosting engagement metrics.

[@knockhello2604]

Would love to see the make up of this audience

[@pjd3090]

About an engine: It should count. Why? Without it a broken car is just a pile of metal - it is no longer sth used to move from the point A to the point B. The new engine (re)creates this functionality, the value is added. BTW: I really like and appreciate your content, keep going!

[@-_--ex5lt]

But like if the company gives warranty and it get broken in that period then it should remove the value? As they are giving the item for free.

[@hriatpuiachhakchuak8394]

So basically i could rebuild thousands of cars, and mess up GDP information

[@lars_huson]

@@hriatpuiachhakchuak8394 Only one way to find out...

[@Udenhoved]

I would argue that if and only if the car manufacture has given you a warranty, then the repair of the car has already been calculated into the GDP. Let me explain. When given a warranty the car manufacture calculates the chance of you needing that warranty, so it creates some form of long-term liability, which it states as an expense within its Income Statement (in the accounting period of the purchase). Therefore would the product of the repair of the car would be calculated twice in the GDP, if and only if you have purchased the car with a warranty. I hope it makes sense. Feel free to ask questions.

[@nicholascarter9158]

I don't quite think this captures the problem people have with including the engine. If the answer to the question "Does an engine belong in GDP?" is "That depends on whether it's used in a new car or an old car." then now you have to run down every single component manufactured to figure out if it went into a brand new product (so it's not its own finished product) or if it went to repair an already existing product (in which case it is). If a ball bearing is used to create a brand new crankshaft that will be used to repair an old engine, is it new or old? Part or whole? In or out?

[@ilikeoversizedcoats1837]

Medical student here: chiming in about your comment about measures of health being "just fine". Actually, thats exactly how most medical investigations work. In medical lingo, we talk about the specificity and sensitivity of certain medical investigations (refered to as Ix from here out) - like CT scans/X rays, certain physical exam special-tests, and blood/urine/CSF tests. Simply put, the specificity and sensitivity of the tests talk about how well the test reliably picks up on certain findings in certain diseases. There are only a handful of investigations that approach the near-perfect ranges for either sensitivity or specificity, and usually never for both. So yes actually, a lot of measures doctors use are "good enough" or "just fine" levels of imperfect tests and measurements - they're the best we've got in current medical evidence, and most of the time they do the job well!

[@pushkarlakhe13]

“One of the great mistakes is to judge policies and programs by their intentions rather than their results.” Milton Friedman

[@AT-AT26]

Interesting how he said that. Considering how much he helped with the shock doctrine

[@David-km2ie]

@@AT-AT26 www.cato.org/publications/commentary/defaming-milton-friedman

[@BrutusAlbion]

@@Etaoinshrdlu69 yeah it worked out fine for the Roman Empire too when the senators paid less taxes than the average middle-income self-employed farmer ... Every Roman citizen would want to protect the state knowing that he is keeping a fat slob in power who pays less taxes than he does despite making 100 times the income. Of course you're going to sacrifice yourself for the greater good right? It's all for the good of the state and society ... And they wonder why Rome fell ...

[@David-km2ie]

@Herra Kjartan Hahaha😅

[@David-km2ie]

@@BrutusAlbion Billionairs already pay less taxes since they have a different form of income. Furthermore they are profiting the most of government programs. Maybe if we stop all those subsidies for the rich we can lower taxes for the poor.

[@rakaipikatan8922]

"You guys post too much famous people quotes" - Plato, Jurassic Era (Colourized)

[@appleslover]

Plastisized*

[@rakaipikatan8922]

@@appleslover *Fossilized

[@appleslover]

@@rakaipikatan8922 aquasized

[@fwingebritson]

I agree, and people so intimidated that they cannot annunciate, pronunciate, salavicate, and spit out their own thoughts should not post anything at all.

[@alisterfabian9991]

@@appleslover *Sized

[@asahearts1]

Engine question: Yes, the parts and labor should be included. The fact that the engine will eventually break down is reflected in the starting price of the engine. You would pay a lot more for an engine that would never break down than one that depreciates over time and needs money pumped back into it from time to time to get its value back. By buying the engine and using it, you have extracted its value.

[@fwingebritson]

manufacturers could, but would never again build anything that outlives the owner. Neither does society at large accept such a notion given that things are no longer passed down to the next generation, but thrown away to make room for the new style.

[@nicholascarter9158]

I don't quite think this captures the problem people have with including the engine. If the answer to the question "Does an engine belong in GDP?" is "That depends on whether it's used in a new car or an old car." then now you have to run down every single component manufactured to figure out if it went into a brand new product (so it's not its own finished product) or if it went to repair an already existing product (in which case it is). If a ball bearing is used to create a brand new crankshaft that will be used to repair an old engine, is it new or old? Part or whole? In or out?

[@p0xus]

As well as the value that is added to the mechanic shop who did the repairs, and the shipping company that shipped the parts, etc.

[@OopsFailedArt]

Thank you I was coming here to make this exact argument

[@HuFlungDung2]

IMO, a new engine is NOT a repair. It is a new engine and restores the value (to some degree) of a depreciating asset. Just as refilling the fuel tank 'repairs' the loss of fuel down the fuel line. Unfortunately, GDP doesn't consider depreciation (AFAIK). Does it consider appreciation? Real value is what comes from the labor of people working. That is why I don't believe in the conspiracy theory that the 'elites' want to impoverish us to take over the world. There is no benefit in not having people producing. You can be 'king' of the ant colony in your lawn. So what?

[@knobjockey6882]

The extra ‘n’ in gross “nantional” product must be for “net foreign income”.

[@thedoruk6324]

Now this thumbnail title is extremely *unexpected* & *recent!*

[@kaelanirevyruun1676]

Lol I read the text and all I could think of is “The NUMBERS, Mason! What do the NUMBERS mean?!”

[@warren5037]

Man, I remember learning almost all of this back in High School. The teacher really made sure to drill it into our heads with tons of questions. He made us look into HDI and MPI as well.

[@tchaffman]

"We need to start measuring the right things in order to make sure our economy is geared toward maximizing our health and well-being. Instead of stock market prices, we should be maximizing our quality of life, health, mental health, childhood success rates, and environmental sustainability." - Andrew Yang

[@shorewall]

I've long argued that life is all about incentives. And right now, we have screwed up incentives. Fix the incentives, and the problems will solve themselves.

[@IL_Bgentyl]

Humanities core is self preservation, family, friends, and then others

[@CD4017BE]

"Maximize the probability that in 1.000.000.000 years there is still sentient life in this solar system." What would happen if we took this as a serious ultimate goal? And what side effects could it have?

[@voxomnes9537]

@@IL_Bgentyl 'Human nature' = 'I do not understand the forces that sculpt a personality or a society, and believe these forces to be fixed and unchanging properties, despite the whole of human history suggesting otherwise.'

[@fatpotatoe6039]

@@voxomnes9537 The whole of human history is contrary to your belief. That is how men can speak of a single "human nature".

[@30803080308030803081]

What really grinds my gears about the focus on GDP is that there is so much production and consumption that are not exchanged. If you don’t work for money, but you are a homemaker who does a lot of work for your family, then you are producing services that are valued by your family and yourself. This work isn’t a part of GDP, but it is undeniably valuable, and measurably so.

[@Alice-si8uz]

Or voluntary work that doesn't involve being paid but still serves an essential part of the day to day running of a society...

[@biterness2323]

Governments only care about works that can be taxed

[@rodrigo.diasfe]

As always great video. I'm glad I was safe from all of those macroeconomic indexes by always being very poor. 10/10 great economic analysis would watch again.

[@economicsinaction]

Therapist: *"GDP is overrated it can't hurt you"* The Fed: *"Money printer goes BRRRRR"*

[@nabo1871]

"nah, if we bail out enough rich people we'll get nice looking numbers" *K shaped recovery has entered the chat

[@princevimbai1]

Your videos are helping me prepare for those A level economics essay questions and I am loving it! Thanks for the videos!

[@jolandajong4068]

GDP is overrated. The United States has higher gdp per capita than most of it's peers, at the same time US lacks behind in so many aspects.

[@hectorcardenas2171]

Beautiful Jolanda

[@retro8919]

Yea and the US excels in so many aspects also. Your point?

[@shorewall]

@cupoftestosterone Most American cities are leftist hellholes, so I agree with you there. :D I agree that consumerism is the problem. Production for its own sake, goosing the GDP, while ignoring underlying issues.

[@jolandajong4068]

@@retro8919 ​ My point is that US gdp doesn't translate in decent living standards for citizens compared to other advanced nations, hence GDP is overrated. What might those aspect be? It's def not in the human rights department or affordable healthcare/education, you know thing that actually matter to most people, and impact their lives.

[@retro8919]

Jolanda Jong GDP was never ment to be the measure of standard of living. Americans get to enjoy privileges that 90% of the world do not. If you think our education system is below standard why don’t you look at how many foreigners come here to go college here. Don’t start with the tiny European nations or ill bail out quick. We are a nation of 330 MILLION

[@jumpanama]

When a metric becomes the goal,it stops being a good metric

[@typha]

11:40 I might argue that a first home is a much larger increase in living standards than a third yacht.

[@exantiuse497]

Exactly. That (and many other analogies in this video) was nonsensical

[@BeastnHarlotDFO]

I was just thinking about this yesterday, uncanny. Great video.

[@sebastianfrowein6675]

Hey EE, I wanted to thank you for all the interesting videos. I’ve been enjoying them for a while now. I just started studying economics in Switzerland and for me that has made watching your videos even more interesting as I’m starting to get a deeper understanding of the concepts and mechanisms your describing. I wonder if you’d consider making a video about yourself I would be very interested in your background (if you already have sorry I didn’t find it).

[@Ididntchoosethisname]

Here is a little example of how weird GDP is: Consider a divorce. In terms of well-being, it is usually better to be in a loving marriage than divorced. But suppose a couple does get a divorce. They'll then need two homes, two sets of pots and pans, two bedrooms for each child, two of everything whereas before they might only have needed one. Plus they need to pay the divorce lawyers and for court documents. All of this is great for GDP. So if a country wants a great boost for their GDP. Just encourage divorces. Is it a better world with happier healthier people? Nope. But the GDP figures will look great.

[@tech8222]

Capitalism at it's finest

[@VikramRawat-rw9lm]

cries in Broken Window fallacy

[@MrZouizoui]

WOW! Ive talked about this in my advance economics class. First time I see a piece of content talking about that subject

[@robertbailey4243]

Absolutely love this channel. Keep it up

[@andrewwong7617]

Yup, this is very true. I think there's 2 other points that could have been mentioned with regards to value of GDP. Instead of just mentioning the "underground" economy, there are services that add value that aren't reflected in GDP figures, such as childcare. If every mom swapped kids and babysat someone else's kid in exchange for money, then GDP would all of the sudden skyrocket, as lots of money is exchanging hands, yet no difference in value would be added, arguably even lower value with poor parenting. This is what Andrew Yang was mentioning in his UBI request - that a stay-at-home mom's value isn't added to GDP. As well, financial services (investment banks, hedge funds) and real estate rent collectors (buy low sell high people, after the value of the home has already been accounted for) - they are placed inside the "production boundary" as adding significant value to economies, yet little of what they due reflects as real value-added to the economy. In places like Canada, Real Estate leasing (not home construction, just the renting) is the #1 driver of GDP, and Finance is #4. Is a person that buys up 100 homes, and re-lists them for higher rent to young families who can't afford a new home since limited home supply has driven up prices, added more value to the economy than if that young family just mortgaged the new home themselves?

[@shorewall]

I agree. The problems with our modern economy starts with Funny Money, and GDP is a big fat contributor to that.

[@Diamondragan]

@Pixel Smile Real money is just Monopoly money that other people are willing to accept in exchange for goods and services.

[@vmycode5142]

I was waiting for this video my whole life, thank you EwE

[@za012345678998765432]

Total Factor Productivity is an interesting alternative measure. Would love to see a video about it as I didn't find very good explanations of it and don't fully understand it myself.

[@businessguide6219]

Amazing! Never thought I'd be finish watching this video!

[@QuestionEverythingButWHY]

“In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.” ― Confucius

[@manasmahanand732]

Poverty is something to be ashamed of on both situations, wealth is not

[@manasmahanand732]

@Adarsh kumar Not all wealthy people do that. Wealth generated ethically without fraud is something to proud of regardless of how badly the country is governed

[@RenegadeShepard69]

@@manasmahanand732 You can be proud of whatever you want, but I'm just here to tell you that the wealthy couldn't care less about you being proud of them or not. Quit with the bootlicking.

[@AnthonySenpaikun]

@@RenegadeShepard69 nor does the poor care about you defending them, you're nothing special. might as well shut up.

[@nbvvful]

@@RenegadeShepard69 how is that bootlicking his point is right

[@vampirevore]

lol, literally in high school economics class they taught us that gdp is an inadequate measure. loved the video and perspective as always though

[@tiaandeswardt7741]

Everyone knows this. But at this stage it might be the best we have, since other measures can become extremely complex and it is hard to compare across countries.

[@mohamedaymanerrahmouni]

It will be awesome if you talk about the maintenance cost in an economy in relation to investment and growth.

[@hw.guthrie]

Informative.

[@cccpredarmy]

Wow thank you to do the job for me! I had so many debates about the GDP and was always put down by the ignorance my opponents. I noticed that most of people are simply just parrots of their own mass media and "todays trends" without even questioning the called information. To add to your great points I have 2 other examples: Removing the appendix is one of the most simple surgeries a patient can get. In USA this surgery costs on average 33000$ and can go up to 65000$ (JFK Medical Center in Atlantis); In Austria it costs around 2530$; In Russian Federation - around 400$ (in a quite expensive hospital). This surgery is not a rocket science and is performed very quickly and without any special medication. There is practically nothing a doc can do wrong... and yet there is almost 90 times difference in price. NO matter where you do it Russia or USA the result will be the same. All those countries which have those insanely high costs for simple surgeries are being considered into their GDP under "provided servicies" and thus blowing it up substentially. And yet GDP numbers don'T care about productivity at all. Example #2: We have 2 enterprises A and B with same profits. Enterprise A decides to boost the health of its employees. It uses 10 million$ per year of its profit to build a medical facitily, pay the doctors and medication and treats the employees accordingly. Enterprise B also decides to spend 10mil$ on healthcare of its employees and buys them holiday tickets every year for that amount of money. Or even better: let's say the highest 10 positions of the employees get the 1mil$ holidays tickets while the others get nothing. On paper both enterprises spent 10mil$ on healthcare but the reality is that enterprise A did it DIMENSIONS better in terms of life improvement for its people. The same goes to GDP - money spend on something doesn't mean you spent it in most rational way so GDP NEVER shows the productivity of a certain country. Think about it!

[@sp0ngeymario]

Hey could you do a video on worker co-ops or Marxian economics? Thanks :)

[@reddog5031]

So we can apply the ideas of Karl Marx properly this time? unlike Cuba, Cambodia, East Germany, Mozambique, Tanzania, Ghana, Soviet Union, North Korea where the ideas weren't properly implemented ? Yeah, Farm collectives really worked in the Ukraine in the 1930's

[@nathanhall8647]

FWIW, I would be interested in seeing a video on the explosion of lumber prices in the last few months. A standard 2x4 stud was $2.50 before COVID is now up to almost $8. When building a house and you have to buy almost 1,000 2x4s, that is a huge price hike on the contractor.

[@dishankjain4894]

I appreciate your sharing of sources on screens

[@Artak091]

Yes it things like a car repair should be counted in gdp. My logic is that the shop had to buy the parts to use to replace whats broken on your engine, which means someone had to collect the resources and shape them into parts every step of the way those transactions are being taxed and used to pay salaries, those salaries paid by the transactions will be used to buy food, pay rent or mortgage or for any other thing which will also be taxed and so on.

[@adamsvensson8818]

"Living standards have increased, they have just increased massively for one person rather than 500." I mean, is it a massive increase in living standard to get a boat? I´d argue its a marginal increase in living standard for one person, at the alternative-cost expense of a massive increase for 500 people. They´re not equally meaningful even if we just compare to one person. A small point to an otherwise great criticism of GDP-fixation. Edit: Oh no im the hippie

[@calvinhoward3808]

Yeah, most people I know love that first beat up car they get when they're young adults. Mine cost $2,000, but changed my life more than most rich people w/ private jets.

[@luk4aaaa]

Boats and if you’re really rich, private jets, are almost purely for comfort and accessability, but it’s not nearly the same as going from not having a car to having a car, because you go from being able to buy a business class plane ticket, to just owning your own plane.

[@shubhamsagarsingh9451]

wow, but I wasn't notified ASAP.

[@NothingByDesign]

I love the new (new to me at least) chapter layout.

[@twobrotherscycleanda]

Yes a mechanic's labor should be factored into GDP. We are some of the few people left at actually do something tangible.

[@Aaron-wq3jz]

Yea it does but dont get your feelings hurt

[@nottoday3817]

Technically yes, but you don't 'produce', you maintain.

[@hauntedshadowslegacy2826]

Honestly, why bother worrying whether you're factored into the useless number anyway? It's useless. Like, all fine and good that you work with your hands, but the whole point of this video is that GDP is a pointless, stupid, worthless number that doesn't provide reliable information to anyone. How about we factor mechanic's labor into a new number? One that acknowledges poverty's existence? Regardless, mechanics are pretty cool. My brother's a mechanic.

[@captinobvious4705]

Isn't the engine thing called ' the broken window fallacy'?

[@kenmacsweyn448]

Just wanted to point out the "Gross Nantional Product" typo at 9:23. Thanks for the video!

[@frocco7125]

Good video!

[@javaughnbailey9610]

I feel like GDP just accounts for the value of the business activities in a country but something like average net worth would be alot more accurate in calculating the wealth of the people (with cost of living in mind of course)

[@thelouster5815]

Wealth of the people?! What is this communist talk I’m hearing??

[@HR15DE]

it just there to show you now one cares about avarage joe. its all about bussineses dealing with other bussineses

[@javaughnbailey9610]

@@thelouster5815 sorry 'the financial account of each individual person in a specific country', is what I meant to say 😉

[@gyuzen]

Median is also way more useful than average in those kind of calculations. But as you said, GDP is probably far more useful in term of taxation, even if it gives us an economy strictly based on basically creating the shortest-possible lifespan items to sell.

[@sor3999]

Collective net worth can be misleading too. Just because Amazon and Tesla stock are hyperinflated doesn't actually mean these companies are generating that much value. Same thing with housing. A household can say they have a networth of $700,000 but doesn't say anything to people having to cram into apartments.

[@shahdkhan4593]

15:05 that's a pretty good Segway there Mr EE but if you really want to have the best you should learn from the best and there's is only one person you can learn from (drumroll) Mr Linustechtips

[@EconomicsExplained]

I can only live in awe of that mans smoothness

[@benlee4357]

This channel is probably why I’m getting my degree in Economics. Thank you for the inspiration.

[@envirogoth]

based

[@louisfaasen4511]

Acorn, spreadsheets are sooo patient.

[@PaulSitarz]

Tracking GDP is interesting because it gives us an idea about how the economy is performing overall. By keeping track of its changes, policymakers can determine which phase of the cycle we are in and adjust policies (monetary and taxes). It also matters to investors, best-performing investments depending on the cycle too

[@tiaandeswardt7741]

@Jaskaran Singh Of which GDP per capita is one aspect, if I remember correctly.

[@unitedstatesofamerica4737]

Gdp don't measure inflation of a country

[@ls93780]

part of the issue is that government spending in and of itself can massively skew the numbers and give a false impression. The best example being how (if you go by GDP) the worst recession in US history (at least prior to 2020) was actually in 1946 when GDP collapsed, and didn’t recover for years if not decades, yet this period is recognized as one of the greatest economic boom periods in US history. GDP is a very easy number to manipulate as well, the current political party could have a bad economy, respond by spending s dump truck of cash, see GDP go up as a result and then go yo the voters, and a lot of times themselves, saying “see look we fixed the economy” but they were printing that money out of thin air (inflation) and spending it on paving new trails in national parks and building new highways that nobody ends up using, or never being completed, did that government spending really do anything? The answer is no, but they’ve tricked themselves, and the voters, into thinking it did by looking at the GDP figures.

[@USAFORBETTER]

I think any and all money should contribute to gdp. You give you’re friends 5 dollars (+gdp), friend invests that 5 dollars in a bank (+5 to gdp), bank puts $10,000 in company (+10,000 gdp) company buys $10,000 worth of wood (+10,000 gdp) hires 5 woodworkers at $20 an hour to turn the wood into chairs, woodworkers work for 10 hours each (+1,000 gdp), sells chairs and makes 100,000 (+100,000 gdp), etc…

[@12kenbutsuri]

Of course fixing up a product and reselling it should be counted into GDP, they created "information" into the system. In terms of physics, they lowered the entropy, which a very valuable product, even if new "mass" wasn't introduced. If fixing isn't counted, any software products shouldn't be counted either, like Google products, meteorology or almost every non-factory jobs, since they are just selling information.

[@ekananda9591]

What're you talking?

[@12kenbutsuri]

@@ekananda9591if fixing a product should be introduced in gdp or not.

[@retro8919]

eka nanda seriously

[@krinkovakwarfare]

This is probably the best answer

[@12kenbutsuri]

@@retro8919 sorry, it kind of was my fault, before editing it, I just rote 'it' instead of 'fixing', which might have been confusing before watching the whole video.

[@scifience8297]

please do a video on the economy of Yugoslavia

[@dannykennedy3227]

9:27 “Gross Nantional Product” Never heard of that before

[@SurrealKeenan]

9:23 "Gross *Nantional* Product"

[@JohnSmith-qq7fm]

That accounts for all the knitting products created by Grandmothers.....

[@InfamousAustinT0]

Andrew Yang has entered the chat

[@diogocosta783]

Hey:) I really enjoy your content, everytime I got home from classes the only thing I am thinking about is watching an informative videos of yours :D keep up the work mate :) By the way could you do a video about LUXEMBOURG one of the richest country in Europe. Hope you see this message :)

[@dexterek011]

9:24 nice to see familiar IKEA store from my home town, Wroclaw, Poland.

[@leondsouza8598]

Is it just me who is wondering how I'm supposed to set aside $30/ month when my monthly pocket money is $20/month

[@andrewgreenwood9068]

yes many Australians are incredibly pissed off at the minerals council for that campaign.

[@s4098429]

The mining companies already pay tax based on what they dig out of the ground, it’s called ‘royalties’. But these ‘royalties’ are only paid to state governments. Federal government only collects the corporate tax income, which every company is subject to. The big miners were of course angry at the thought of having to be taxed twice for just being a mining company. Any Australian with just a little knowledge on the Australian tax system would not have been surprised, or angry, at the mineral council’s objection to the federal governments proposed ‘new’ tax.

[@andrewgreenwood9068]

@@s4098429 except for the fact that the amount they pay in royalties is very low compared to there total earnings. also most Australians do actually believe that mining companies don pay enough tax. the 2 taxes were also different. royalties are more like a license to use a countries resources and are completely separate from other taxes. also the government should have the interests of its citizens not multinational corporations as its to concern so if they can improve their lives by increasing taxes on companies they should do that.

[@ace5]

Video idea: how does one verify the trustworthiness of a financial institution. For example acorns. Or any other investment firm. Like if i want to invest in index funds, how do i best avoid a bernie madoff situation?

[@ChocolateMilkCultLeader]

You should do a longer form podcast.

[@rzslo9084]

I heard the arguement once that stay at home mothers dont contribute to gdp, yet still do the work of maids, teachers, daycare and restaurants. The only thing that matters is average net worth - cost of living dont know if there is an acronym for this already but this just feels like a way more accurate representation of how wealthy a nation is.

[@shorewall]

I think most people think of the standard of living/cost of living when they think of the economy. Only the media and the government don't. :D

[@vincentnicosia780]

While I felt that this video was pretty good overall, it does seem to rely on a strawman argument. Personally, I have never seen anyone argue that GDP is the only economic metric that matters. If anything, most discussions concerning it have been fairly critical (mostly using the same arguments featured in the video). For instance, the 2008 recession technically ended in June 2009 in the United States. However, there were virtually no observers who argued that the American economy was fine at that point simply because the nation's GDP was growing. Similarly, Ireland's GDP increased by over 26% in 2015 due to Apple's tax reporting. However, reporting on that topic seems to indicate that no one is under any illusion that it actually reflects economic conditions on the ground. To be clear, I am largely speaking from my experience as an American. The idea that people don't keep the limitations of GDP figures in mind may be more relevant elsewhere. But to my knowledge, this doesn't seem to be the case. Sources: www.federalreservehistory.org/essays/great_recession_of_200709 www.irishtimes.com/business/economy/ireland-s-gdp-figures-why-26-economic-growth-is-a-problem-1.2722170

[@jasonpiro3618]

Yeah services are definitely important enough that they should be included. Think about it, it should at least be reflected in the score in some form or another if there's elevator repair guys, underwater welding, etc. Even just for repairs or maintenance, it should be reflected in some aspect or another.

[@wassollderscheiss33]

Even the advertisments are good when they are narrated by you!

[@Ganjor420]

Yes, installing a new engine should count for GDP because technically a car without an engine can not count as a working car. So the new engine and the rest of the old car can only be car-parts and when you put them togeter you create a "new" car. And obviously some value is created aswell since the car without engine has no actuall value beyonde the raw materials.

[@s4098429]

You could take this further; if a car is melted down, forged into car parts then ‘re-assembled’ into a car, has a new car been created?

[@IsYitzach]

Oh, you mean Goodhart's Law as codified by Marilyn Strathern: "When a measure becomes a target, it ceases to be a good measure."

[@kleanthis1000]

There is a common concern from students and graduates that online learning is viewed(by employers) differently or even, inferior to those who studied the ‘traditional’ way, on campus. I would like to point this out since during this uncertain period Universities from all over the world are primarily focusing on online courses especially Universities that you have to pay handsomely like UK. Online Courses are extremely cheap and affordable while the traditional way of studying at a University is extremely expensive, leading to high fees and debt for the young students. I know you recently made a video about something similar but I think it would be interesting to discuss the recent developments of online learning and what would be the economic impact on countries that provide this kind of service to students in all over the world. E.g. UK and US Btw your videos are amazing! Thank you.

[@juliansuares2751]

Good video

[@blackshadow-ps3fx]

As far as the engine goes I'd argue it should be counted. The engine being replaced adds value to the car since the new engine would have less wear and tear. For this reason in an ideal world the GDP increase would be equal to value of the new engine minus the value of the old engine. How would you caculate the value of the old engine? I'll answer that with an accounting example. Engine value =1000, estimated life=10 years, therefore every year it decreases in value by 100 If after three years the engine is replaced then GDP goes up by 300+labor. Whatever happens to the old engine would be a separate figure. Edit: Of course it'd be ridiculous to assume that this could possibly be implemented, and this is obviously oversimplified but, hypothetically this is how the engine should be counted when it comes to GDP.

[@nicholascarter9158]

But the thing that creates a paradox is that, because of how we reckon finished products, the Engine value is actually 0 for the first engine, and that makes it weird. Why is the value of a new engine based on how old all the *other* car components are?

[@UltimateOnionSupream]

Well, in my opinion the whole mechanic and engine repairing will be counted as the revenue of service provided from the mechanic at the end of the day. Considering 2 facts. First is the nature of revenue and second is the nature of final goods and services (common measurement of GDP). So the nature of revenue is the sum of the total transaction without the considering of the cost and tax. So assuming the mechanic repairing the car by replacing the engine that cost $1000, he will charge above a $1000 for both his time and engine. Second the nature of GDP. Assuming the whole transaction of the repairing cost $1500. the mechanic will record $1500 in his revenue. Therefore the revenue of the mechanic will include both his final service and the final product engine. Among the $1500, $1000 is the engine produce and $500 is the service he provide. The final GDP will be recorded as $1500. Which include both the new engine and the mechanic service. But no new car were made. The question is, does it matter no new car were made? We know that in this particular year the country produce and extra $1500 of goods and services under the motor vehicle repair service sector. If this is significant enough, then policy maker can focus on developing this market. I could extend this already long comment with the theory of supply and demand. But that will be too long and I will stop here. The only limitation in this is what if the engine is an inventory from the manufacturing side but not the mechanic side. If that’s the case the possibility of recording the production of engine all over again is high. But that’s a different topic. So yes I do agree with your point @blackshadow. They should be calculated for the overall view of the country economy. Which is the point of GDP.

[@blackshadow-ps3fx]

@@nicholascarter9158 It isn't I just said they were both $1000 for simplicity. Most likely the engine replacement would be a direct upgrade, however the original equation still works regardless of the value of the new engine. For example if the new engine was a superior model and costs 1500 then the equation is 1500-(1000-300) because its the new engine minus the value of the old engine adjusted for depreciation. Of course this doesn't get into whether or not the old engine would be as valuable which it likely wouldn't but if you adjusted for obsolescence and supply/demand it wouldn't even be theoretically possible to employ such a system due to the sheer complexity.

[@blackshadow-ps3fx]

@@UltimateOnionSupream The above comment is also for you btw

[@ekananda9591]

You don't need to calculate the value of the old engine. The formula to calculate GDP is c + g + I + x. Buying new components is included in investment component of GDP

[@gumbercules3925]

Seems like average household purchasing power should be the guiding metric

[@brentjackson6966]

You, me and Bill Gates are living in seperate households on some island. The average household purchasing power is astronomical but does that do anything useful for your living conditions or mine?

[@gumbercules3925]

@@brentjackson6966 fair point

[@hauntedshadowslegacy2826]

In economics, 'average' just shouldn't be used to measure the whole spectrum. Like, ever. Purchasing power is a good metric, sure, but it needs to be divided up somehow between regions (cuz a studio apartment in Seattle is ~$2k per month while a 2-bed house in the non-Seattle suburbs is ~$200 per month) and financial brackets. Someone earning $60k a year in Seattle would fall below the poverty line, but someone earning that same amount in rural Texas would be living comfortably.

[@benjamino.7475]

HDI Video would also be sweet^^

[@danachos]

Do a video on GNH, Gross National Happiness, please! Bhutan uses this measure often instead of GDP, from what I remember!

[@rafaelvazquez7465]

we should just look at taxable income for a year as a gauge of the "economy"

[@PhilfreezeCH]

Rafael Vazquez this would work if taxes weren‘t as easy to dodge. So we would first have to make the taxe code simpler (simple means less tax holes) without lowering taxes overall and then making it as robust as possible.

[@rafaelvazquez7465]

​@@PhilfreezeCH theres many reasons why it wouldn't work but it would be beneficial if it was as widely reported as GDP because like a lot of statistics, when reported on its own it can be manipulated, but if cross checked by other metrics you can eliminate a lot of the holes and better asses the true weak spots in the economy

[@wclifton968gameplaystutorials]

This sounds like a good idea but it wouldn't work for North Korea which has no taxes or work for countries like Monaco or the Cayman Islands which only has a Value Added Tax (Sales Tax) since it could not represent the true value of the economy...

[@Jack-he8jv]

​@@wclifton968gameplaystutorials why does it matter whether those places can use it or not?

[@panda-bean]

I dream that Andrew Yang influences the adoption of the American Scorecard evaluating an array of metrics ranging from college success to carbon production to gdp to suicide.

[@whynotsa6866]

@David Smith well maybe the democrats prefer Biden, after all he beat the socialist! (Satire)

[@LordDoucheBags]

David Smith yang is a moron

[@panda-bean]

@@LordDoucheBags care to explain? And please try not being unhelpfully inflammatory

[@lafcadiothelion]

I learn more from this channel than I did in university economics courses

[@somethingisntsomething7936]

Can u do an episode on a countries debt and how world debt is so high

[@FingeringThings]

Economists be like huh

[@CatholicSatan]

Re: What's added/not added to GDP. Didn't the EU change the rules so that (illegal) drugs and prostitution was added to GDP so as to determine contributions? And I believe that lawyering is included in US GDP but not European - which makes international comparisons moot.

[@physioweng]

9:24 typo there, Nantional I noticed because I love watching EE too much

[@luk4aaaa]

You hit me right in my patriotism when you used Norway as an example, love your stuff dude haha.

[@12kenbutsuri]

I sell home made bottled water to a friend for 2000 dollars, then he can sell it back to me after one second for 2000dollars and so on. We will gradually lose money from tax, but it will skyrocket the nations gdp if everyone does it lol

[@hvhhvvggg8663]

Literally just have a group of a 100 people sell the thing to each other and u will have a trillion dollar economy

[@matth23e2]

Did he say right at the beginning that reselling isnt a part of the GDP calculation....

[@chimagamer4157]

You don't have to to pay taxes since you didn't make a profit

[@Crustee0]

@@matth23e2 he did say it shouldnt, but in practice its counted.

GDP is for politicians: the higher it is, the more government can collect in taxes. Add to the monetary system and it all makes more sense.

[@apacheattackhelicopter8185]

No, the countries with highest GDP don't have highest taxes

@@apacheattackhelicopter8185 tax amount or percentage? ;)

[@Midruto]

Bro have mercy on your fellow Aussies I ain't staying up to 11-12 everytime you release a new vid

[@sanjaykumar-mz6tf]

Gross Nantional Product. 😁 Btw: love your videos. I watch it when i do the dishes

[@AstolfoGayming]

9:23 Gross NaNtional Product

[@EconomicsExplained]

haha oh boy why you have to do this, I could be blissfully unaware.

[@Andreas4696]

NaN

[@emilebichelberger7590]

NaN

[@pavelow235]

"Quotes are easier to type out than original thoughts" -Me

[@AdamHarrisTrader]

Nice vid! GNP = Gross Nantional Product? What's Nantional?

[@Sllee93]

Such a good analogy using the car RPM and speed...why aren't you my economics teacher????

[@jolly-rancher]

The average net worth of a Japanese citizen is not even close to being as much as that of a Qatari citizen. You fell in the trap of confusing citizens and residents. It's the reason GDP per capita figures are modest and sometimes even poor for GCC countries.

[@lettuce1305]

Look up Global Wealth Databook 2019 report by Credit Suisse, if the data is dependable then yes the median wealth of the Japanese citizen is quite a bit higher than that of the Qatari citizen.

[@dasasian6799]

An oil based economy where all the revenues go to the government and somehow all the quatar citizens are rich ? Compare that to an economy where the wealth come from the manufacturing power of its people . Go figure !

[@jolly-rancher]

@@dasasian6799 Yes, doesn't change the fact that the statement in the video is wrong.

[@lettuce1305]

@@jolly-rancher the thing is where's the fact that you're talking about? Your own opinion? At least I was able to provide some sort of data to support the video's claim. To me and especially if we're talking about the Median, it kinda make sense if the median wealth for a Japanese citizen is higher than for a Qatari. The majority of the wealth is controlled by the few in Qatar, namely those oil sheikhs and royals. Obviously not everyone in Qatar is an oil sheikh.

[@jolly-rancher]

@@lettuce1305 Read the BBC piece "Qatar's delicate balancing act" to get a general idea about how misleading those numbers are. And no, the median net worth of a Japanese citizen isn't even close to that of the average Qatari. The difference is close to an order of magnitude.

[@chrisdavey3113]

Strangely, I was just thinking about this the other day. Focusing on GDP can incentivise consumerism. Disregarding the quality and also if these products and services are even needed it beneficial for society.

[@ShaunMbhiza]

In South Africa, we recorded a 50%+ drop when comparing q1 to q2 which caused a huge panic. For starters we've never measures quarter on quarter. Looking at year on year it was a 17% drop. I guess Corona gave some economists relevance and they dicided to cause panic.