For a long time, the saying that the total amount of GDP in the United States has been overestimated on the Internet. But this statement has caused huge controversy in our country: some people say that the virtual economic component accounts for too much of the US GDP, so the US GDP is not as real as ours; some people say that whether it is the real economy or the virtual economy does support Americans to enjoy a relatively superior material life, while also having the ability to develop military and maintain hegemony. So what reason is there not to include these virtual economic components in GDP? Here we first need to explain what the concept of GDP means.
GDP is the English abbreviation of Gross Domestic Product, which is translated into Chinese as the GDP of domestic (regional) . This economic indicator was proposed by Russian-American economist Simon Smith Kuznets in his book "National Income and Capital Composition" in 1937. The Bretton Woods Conference held in 1944 decided to use GDP as the main tool to measure a country's total economic output. Since then, GDP has become the most important indicator to measure a country's economic development, and this indicator was not widely adopted worldwide until the 1950s.
It can be seen from this that the concept of GDP itself was invented and created by the United States. Only the US Bureau of Statistics will know whether the US GDP is overestimated, but it is certain that GDP cannot be accurately calculated by 100%. In fact, the method of calculating the total GDP of countries around the world is different. The production method currently used in my country is to calculate the total output of each national economic sector and then deduct the intermediate consumption of each department accordingly. The advantage of this algorithm is that it avoids repeated calculations and useless calculations, and the disadvantage is that it ignores the output value of non-productive services such as medical care, education, and finance.
In fact, when my country counts GDP, small-scale transactions of street stalls and self-employed private enterprises are not included in it. The United States uses the expenditure method for accounting GDP : the total expenditure of the entire society to purchase the final product = (personal consumption + personal domestic investment + government purchase + net export total value) - (total value of imported products + labor). The advantage of this algorithm is that it can more accurately count the output value of individual service industries, but the disadvantage is that it repeatedly calculates the virtual economy components. Some people may have preconceived ideas that our calculation method is correct, so the US GDP is seriously overestimated after a lot of repeated calculations.
In fact, we can think from another perspective: Is it possible that it is not that the United States’ GDP has been overestimated, but that our GDP has been underestimated? In fact, the calculation method of GDP is just a number game. No country in the world can guarantee absolutely 100% accuracy in GDP. There will always be some parts that have not been counted, and there may be repeated calculations. Small and micro enterprises with annual operating income of less than 5 million in China are tax-free, but in the United States, no matter how much you make, you have to pay taxes as long as you have business activities and turnover. This means that all walks of life in the United States are contributing GDP.
can be profits created in industries such as self-employed individuals, small and micro companies, farmers, and freelancers in China. What's more, the legal differences between China and the United States have also caused some illegal industries in China to be legally operated in the United States: the United States has a legally operated casino, while the United States Nevada allows the porn industry to operate legally. In other words, the United States can also include the income of the gambling and pornography industry into GDP. Gambling and pornography are illegal in China. The state has hit these behaviors hard, so how can it be possible to include the income of these industries in GDP?
Many hospitals and schools in the United States are private, so medical care and education have become an industry in the United States. Education accounts for about 15% of the GDP of the United States, but China has never heard of including primary schools, middle schools, universities, and kindergartens in GDP statistics. In the United States, whether you live in your own house or rent someone else's house, you will be able to calculate a portion of the rent. If you live in your own house, it is equivalent to living in the house you rented to yourself, but you pay the rent for yourself. This part of the rent will also be included in the GDP statistics. House rentals in China are largely not included in GDP statistics.
Some differences in calculation methods like this will of course lead to a large gap in GDP data between China and the United States. Can this prove that the US GDP is overestimated? This is actually just a preconceived idea from our own standpoint. China and the United States have different social environments and legal systems. This has led to the fact that the two countries have different levels of GDP statistics. How to directly quantify and compare different calibers? If you stand on the US side, you may feel that China's GDP is seriously underestimated. This is indeed true to some extent.
Americans have more ostentatious social and cultural personalities, while we Chinese are more implicit and low-key. This difference in national character is reflected in GDP statistics: China would rather calculate less than overestimate, and the United States would rather overestimate. Strictly speaking, GDP statistics for both China and the United States are not 100% accurate: China has a large number of parts that are not included in the statistics, while the United States has many parts that are repeated. Although there are many repeated calculations in the US GDP data, the US actually has parts that are difficult to include in statistics like our country.
Currently, the United States outsources all low-end manufacturing industries to developing countries , leaving only high-end core technology industries in its own country. The output value created by multinational companies such as , Apple, is calculated into the GDP of processing countries. Although the output value is calculated into the GDP of the processing country, the majority of the profits are actually made by Apple . In addition, the Chinese and American capital of South Korea's , Samsung and Taiwan's TSMC are both major shareholders, but the output value of these companies is not included in the US GDP. Some American companies also register abroad for tax avoidance. These American companies make money but are not considered the GDP of the United States.
There is indeed a considerable proportion of the US GDP data to be repeated, but a considerable proportion of the profits of US overseas multinational companies are not included in US GDP, so it is hard to say whether the US GDP is overestimated or underestimated. It can only be said that the GDP data itself is estimated. The estimated data is certainly impossible to be 100% accurate, and this estimation is to a considerable extent an actionable digital game. For example, eggs were originally sold for one piece. If the egg price baseline is raised to 3 yuan per one, will the GDP be released?
The most convenient way to play this kind of game is actually India: India directly counts the plastic sheds in slums as real estate, the income of individual vendors is also counted as service industry income, and the rise in the stock market is also counted as GDP. In fact, this practice of hyping up GDP paper data has no practical significance except satisfying vanity. Since GDP data can be manipulated, can it accurately reflect a country's economic strength? In fact, the total GDP data can only be used as a reference indicator for a country's economic scale. GDP data can be considered manipulated, but if it is too outrageous, it will still be misleading.
If anyone calculates that Nepal 's GDP is greater than that of China and the United States, it is a false one. Although the total GDP data can serve as a reference for a country's economic scale, it cannot completely accurately reflect a country's economic quality. A large economic scale does not mean the quality of the economy. India's economic size is much larger than Singapore, but no one thinks that India's economic quality is better than Singapore. Using indicators such as per capita GDP and per capita disposable income to measure a country's economic quality is actually more reliable than using total GDP data.
Large economic scale does not mean that the people live a prosperous life, nor does it mean that the country is strong. It is better to look at the country's strength than to look at the GDP data that can be manipulated by humans, such as the specific hard indicators of this country's gold reserves , foreign exchange reserves, oil reserves, grain output, steel output, and arms output. At the 2020 National People's Congress and the Chinese People's Political Consultative Conference, it was clear that GDP growth will no longer be used as a hard indicator of national economic development. This shows that our country is breaking the past concept of blind superstition about GDP. In the future, we should use more scientific indicators to measure economic and social development.
