best economic model for max happiness and sustainablity?

[Birdjaguar]

GDP represents economic output. It's production measure only. It does not imply affluence of the population nor equality of distribution, though correlates somewhat with it. NYC metro has it so high because of all business headquarters but that money goes to a handful of CEO, Presidents, share-holders etc. not general population. That does not mean a waitress or shoemaker makes any more, especially when you will account for higher cost of living.

GDP is usually calculated one of three ways: consumption, production or income. In theory all three ways give you the same result. Unless noted, we mostly see the consumption method used in the press. GDP = C + G + I + NX (where C=consumption; G=government spending; I=Investment; and NX=net exports).

In the US consumption accounts for over 2/3 of the GDP. A trade surplus brings new money into the economy, making us richer as a nation (even if that new money is localized in specific places). As we have seen with the pandemic, when consumption takes a big hit, even a lot more government spending can't fix everything quickly.

Spoiler :

Consumption refers to private consumption expenditures or consumer spending. Consumers spend money to acquire goods and services, such as groceries and haircuts. Consumer spending is the biggest component of GDP, accounting for more than two-thirds of the U.S. GDP. Consumer confidence, therefore, has a very significant bearing on economic growth. A high confidence level indicates that consumers are willing to spend, while a low confidence level reflects uncertainty about the future and an unwillingness to spend.

Government spending represents government consumption expenditure and gross investment. Governments spend money on equipment, infrastructure, and payroll. Government spending may become more important relative to other components of a country's GDP when consumer spending and business investment both decline sharply. (This may occur in the wake of a recession, for example.)

Investment refers to private domestic investment or capital expenditures. Businesses spend money in order to invest in their business activities. For example, a business may buy machinery. Business investment is a critical component of GDP since it increases the productive capacity of an economy and boosts employment levels.

Net exports refers to a calculation that involves subtracting total exports from total imports (NX = Exports - Imports). The goods and services that an economy makes that are exported to other countries, less the imports that are purchased by domestic consumer, represents a country's net exports. All expenditures by companies located in a given country, even if they are foreign companies, are included in this calculation.

 

[Cokolwiek]

Of course you are correct, but anyways however you make it, it is mainly production/income/expenditure of big business, high-income individuals, and state of New York along with municipal government that boost its GDP, not average breadwinner.

 

[red_elk]

It ended as a societal and economical collapse with poverty for nearly all commoners and suicides for many. Ukraine in 80s and Ukraine post 90s, is a near first-world with high HDI, social and economical safety net of Scandinavian countries, and space technology compared to third world now behind China.

Ukraine suffered the most, their current GDP is still ~70% of what they had in 1988. While most of post-Soviet states surpassed it in early 2000-s.
They also lost about 20% of population.

 

[Cokolwiek]

Ukraine suffered the most, their current GDP is still ~70% of what they had in 1988. While most of post-Soviet states surpassed it in early 2000-s.
They also lost about 20% of population.

Of course, I may worded it wrong. I meant in the 80s, while still within the Soviet Union they WERE one of the most advanced regions of that country with a great safe safety nets and amazing economy. And now they are third world behind China.

 

[Birdjaguar]

Of course you are correct, but anyways however you make it, it is mainly production/income/expenditure of big business, high-income individuals, and state of New York along with municipal government that boost its GDP, not average breadwinner.

Please show me your sources that say Government spending and Business investment are bigger factors in the NYC economy than consumption. And, BTW, production is not used in the consumption calculation method.

Consumption refers to private consumption expenditures or consumer spending. Consumers spend money to acquire goods and services, such as groceries and haircuts. Consumer spending is the biggest component of GDP, accounting for more than two-thirds of the U.S. GDP

 

[Cokolwiek]

Please show me your sources that say Government spending and Business investment are bigger factors in the NYC economy than consumption. And, BTW, production is not used in the consumption calculation method.

I didn't say business investment and I didn't say consumption. I said ALL of production/income/expenditure of big business, high-income individuals, and state/city of New York outclass production/income/expenditures of average breadwinner in NYC area like Manhattan waitress or cashier, it's obvious by the way.
Here you are a graph that represents this: https://www.statista.com/statistics/304883/new-york-real-gdp-by-industry/
Here you have it in the whole state. You can extrapolate that commoners that comprise those who are employed in construction or retail trade, are much smaller part of NYC GDP than any member of upper middle class and upwards who holds securities and work in professional/finance occupation, as real value added of for example construction is nearly eleven times smaller than that of finance, insurance, real estate, and leasing.

 

[Hygro]

A trade surplus brings new money into the economy, making us richer as a nation

This is a mixed bag.

Say we have a trade surplus over Burundi. They are giving us their surplus currency, we are giving them surplus stuff. We now have the money that Burundians will always accept to pay their taxes, and have easy access to buy more Burundian labor and capital, if they are willing. Burundi labor and capital gives us no new technology capital and, at likely, no significant labor techniques. Not useful.

Who gets the better end of that deal? Depending on the sovereignty of their currency, either they got the better end of the deal or we both lose.

Let's do the reverse.

Say we have a trade deficit with Burundi. They are working extra hard to give us surplus stuff, we are giving them extra money. We are printing extra money that's giving us basically free imports. In exchange, they now have dollars, giving them access to labor, capital, education, whatever we sell, that they can use as an investment to grow. The only thing we "lose" here is the size of the gap between us, because with our money they catch up to us faster.

 

[Cokolwiek]

Say we have a trade deficit with Burundi. They are working extra hard to give us surplus stuff, we are giving them extra money. We are printing extra money that's giving us basically free imports. In exchange, they now have dollars, giving them access to labor, capital, education, whatever we sell, that they can use as an investment to grow. The only thing we "lose" here is the size of the gap between us, because with our money they catch up to us faster.

Feeding a possible competitor. It backfired like hell with China.

 

[Birdjaguar]

I didn't say business investment and I didn't say consumption. I said ALL of production/income/expenditure of big business, high-income individuals, and state/city of New York outclass production/income/expenditures of average breadwinner in NYC area like Manhattan waitress or cashier, it's obvious by the way.
Here you are a graph that represents this: https://www.statista.com/statistics/304883/new-york-real-gdp-by-industry/
Here you have it in the whole state. You can extrapolate that commoners that comprise those who are employed in construction or retail trade, are much smaller part of NYC GDP than any member of upper middle class and upwards who holds securities and work in professional/finance occupation, as real value added of for example construction is nearly eleven times smaller than that of finance, insurance, real estate, and leasing.

That is a nice site. Because GDP uses one set of categories and that graph uses a different set, we are talking apples and oranges. Consumption spending is included in many of those categories (insurance, rents, leases, construction, utilities etc.).

 

[Hygro]

Feeding a possible competitor. It backfired like hell with China.

Helped a lot of Chinese people go from authoritarian government and extreme poverty to authoritarian government and mild poverty.
Yeah, we should definitely require our trading partners be "good guys" with standards first. It's not too late, we still have about $40k GDP/capita over them.

 

[Birdjaguar]

This is a mixed bag.

Say we have a trade surplus over Burundi. They are giving us their surplus currency, we are giving them surplus stuff. We now have the money that Burundians will always accept to pay their taxes, and have easy access to buy more Burundian labor and capital, if they are willing. Burundi labor and capital gives us no new technology capital and, at likely, no significant labor techniques. Not useful.

Who gets the better end of that deal? Depending on the sovereignty of their currency, either they got the better end of the deal or we both lose.

Let's do the reverse.

Say we have a trade deficit with Burundi. They are working extra hard to give us surplus stuff, we are giving them extra money. We are printing extra money that's giving us basically free imports. In exchange, they now have dollars, giving them access to labor, capital, education, whatever we sell, that they can use as an investment to grow. The only thing we "lose" here is the size of the gap between us, because with our money they catch up to us faster.

Outside money entering an economy pays local workers (of any sort). One or more companies have more income to spread around in some fashion. The communities where those companies are, are a bit richer. If those companies are paid in a currency that cannot be used by the company locally, then there is no benefit to the community. If I sell tractors to Burundi and they pay me in Burundi pesos that can only be spent in Burundi, then I gain little or nothing. The value of exporting is that it brings new money into a place. If it doesn't do that then it is a different kind of deal.

Finding a sum total for the real value of all imports and exports can be challenging, but as a rule, exporting goods and services to others is a net gain to the exporter. It's a complication of many individual transactions and it is at the transaction level where companies are successful or not. If I have a custom cowboy boot business serving Albuquerque, I'm a service sector business. If I add a website and attract customers from NYC and London, then I am now an e-based business and making my community wealthier with those NYC dollars and British pounds.

 

[amadeus]

Well New York Metro Area have a larger GDP than most countries but most of the wealth is in Manhattan Borough as the rest of the boroughs are under US average GDP per capita.

But I’m not talking about raw GDP data, I’m talking about systems. Many of the same laws that apply in New York also apply in Gary, Indiana.

 

[Hygro]

Outside money entering an economy pays local workers (of any sort). One or more companies have more income to spread around in some fashion. The communities where those companies are, are a bit richer. If those companies are paid in a currency that cannot be used by the company locally, then there is no benefit to the community. If I sell tractors to Burundi and they pay me in Burundi pesos that can only be spent in Burundi, then I gain little or nothing. The value of exporting is that it brings new money into a place. If it doesn't do that then it is a different kind of deal.

Finding a sum total for the real value of all imports and exports can be challenging, but as a rule, exporting goods and services to others is a net gain to the exporter. It's a complication of many individual transactions and it is at the transaction level where companies are successful or not. If I have a custom cowboy boot business serving Albuquerque, I'm a service sector business. If I add a website and attract customers from NYC and London, then I am now an e-based business and making my community wealthier with those NYC dollars and British pounds.

Well, okay, hold on.

The Burundi Francs for your tractor are still going to equal like, $30,000 or whatever a tractor goes for. It's a lot for them, but if they're buying it they're buying it. So you're still gaining $30,000 worth of purchasing power. But the only privilege of Burundi Francs is the ability to buy Burundi things (or their bonds, basically staying money). Otherwise, you go trade it in London back into Dollars (they take a cut).

But what if, instead of working extra hard (i.e. you are producing enough to trade extra things for surplus money) for surplus Burundi money which gives you no privilege, you do that to get US Dollars! If your labor time was not maximized without exporting, because their wasn't enough demand, it's not the trade that's making you richer, it's the increase in demand. We could print our own money to buy the same surplus, and now we have more stuff and the harder work.

Ok, that could wasteful, we don't need extra tractors rotting, and we don't want to work unnecessarily. So let's print the same money and buy someone else's work (if we don't mind them catching sooner—as humanists that's a good thing).

But, if we can export to more people that makes more people part of the system, which does allow for greater specialization and therefore an expanded total economy (of the trade federation or whatever). So in that regard it's good to "try" to run a trade surplus with partners who are able to in turn sell us technology and practices we don't yet have. But the best outcome for everyone in the alliance (whether a country like the USA or a trade group, or the whole world if we are all politically on the same team aka no war threat) is that the guys on top trade out money for (ideally good) things.

So I'm not knocking trade in favor of protectionism, but I am saying that a that a trade surplus is not macroeconomically virtuous or enriching.

 

[Cokolwiek]

That is a nice site. Because GDP uses one set of categories and that graph uses a different set, we are talking apples and oranges. Consumption spending is included in many of those categories (insurance, rents, leases, construction, utilities etc.).

Yes, but I've never argued that aggregate consumption isn't important in NYC GDP. I only pointed out that GDP, especially per capita without taking things like Gini and so on is a poor indicator of affluence or median income of NYC resident.

Helped a lot of Chinese people go from authoritarian government and extreme poverty to authoritarian government and mild poverty.
Yeah, we should definitely require our trading partners be "good guys" with standards first. It's not too late, we still have about $40k GDP/capita over them.

What mild poverty? They are world leader in economics and already implementing many measure to make their growth more equal and more sustainable (they really work to be coal free in some generations) that of course hamper they growth but it is still double the US economy. Yeah, basically they lifted around 800 million people from poverty to middle class. That may be the most effective and grand economic program ever achieved, at least in modern times. And of course it had given their people source of pride and sense of justice and good rule, while greatly reducing crime and suffering. However they are increasingly totalitarian under Xi. And it is too late. The multipolar (so to speak) world which was one of China goals is already in place. US is not a guaranteed world leader in Europe or Asia, or Middle East anymore. China is already supporting anti-Western governments like Iran, Russia, and trying to steer UE away from the Atlantic trade with US to continental New Silk Road with China. Economic and political stability, trade and security of such nations like South Korea, Japan, Taiwan, Australia are not guaranteed anymore by playing on US only and they are more and more aware of that. US Armed Forces itself don't know if it could save Taiwan or Japan from China invasion or trade blockade. Korea is rather destined to be China satellite sooner or later.

 

[Birdjaguar]

Well, okay, hold on.

The Burundi Francs for your tractor are still going to equal like, $30,000 or whatever a tractor goes for. It's a lot for them, but if they're buying it they're buying it. So you're still gaining $30,000 worth of purchasing power. But the only privilege of Burundi Francs is the ability to buy Burundi things (or their bonds, basically staying money). Otherwise, you go trade it in London back into Dollars (they take a cut).

But what if, instead of working extra hard (i.e. you are producing enough to trade extra things for surplus money) for surplus Burundi money which gives you no privilege, you do that to get US Dollars! If your labor time was not maximized without exporting, because their wasn't enough demand, it's not the trade that's making you richer, it's the increase in demand. We could print our own money to buy the same surplus, and now we have more stuff and the harder work.

Ok, that could wasteful, we don't need extra tractors rotting, and we don't want to work unnecessarily. So let's print the same money and buy someone else's work (if we don't mind them catching sooner—as humanists that's a good thing).

But, if we can export to more people that makes more people part of the system, which does allow for greater specialization and therefore an expanded total economy (of the trade federation or whatever). So in that regard it's good to "try" to run a trade surplus with partners who are able to in turn sell us technology and practices we don't yet have. But the best outcome for everyone in the alliance (whether a country like the USA or a trade group, or the whole world if we are all politically on the same team aka no war threat) is that the guys on top trade out money for (ideally good) things.

So I'm not knocking trade in favor of protectionism, but I am saying that a that a trade surplus is not macroeconomically virtuous or enriching.

As i see things, what is important is that local economies keep and create jobs that are paid for by folks outside their economy. That is what makes a place more prosperous. Exceptions and theory are less important. If selling cowboy boots in London makes me hire two more shoemakers, then I've improved things. More people have more money to spend.

 

[Hygro]

Yes, but I've never argued that aggregate consumption isn't important in NYC GDP. I only pointed out that GDP, especially per capita without taking things like Gini and so on is a poor indicator of affluence or median income of NYC resident.

What mild poverty? They are world leader in economics and already implementing many measure to make their growth more equal and more sustainable (they really work to be coal free in some generations) that of course hamper they growth but it is still double the US economy. Yeah, basically they lifted around 800 million people from poverty to middle class. That may be the most effective and grand economic program ever achieved, at least in modern times. And of course it had given their people source of pride and sense of justice and good rule, while greatly reducing crime and suffering. However they are increasingly totalitarian under Xi. And it is too late. The multipolar (so to speak) world which was one of China goals is already in place. US is not a guaranteed world leader in Europe or Asia, or Middle East anymore. China is already supporting anti-Western governments like Iran, Russia, and trying to steer UE away from the Atlantic trade with US to continental New Silk Road with China. Economic and political stability, trade and security of such nations like South Korea, Japan, Taiwan, Australia are not guaranteed anymore by playing on US only and they are more and more aware of that. US Armed Forces itself don't know if it could save Taiwan or Japan from China invasion or trade blockade. Korea is rather destined to be China satellite sooner or later.

China's GDP/capita is like $10k and with PPP it's like $16k. I dunno what lifestyle you're accustomed to but that's still fairly poor. You multiply that by 1.4 billion people or whatever and yeah, as a total country they can do some big things. But in terms of averages and persons, they're smack in the middle and that's not middle class by any American or North/West European standard.

As i see things, what is important is that local economies keep and create jobs that are paid for by folks outside their economy. That is what makes a place more prosperous. Exceptions and theory are less important. If selling cowboy boots in London makes me hire two more shoemakers, then I've improved things. More people have more money to spend.

Or if selling locally makes you hire two more shoemakers, you've improved things.

What you said was a trade surplus makes you richer. I'm saying that that's complicated. I don't think America running a trade surplus over say Mexico would make America richer. I think in the long run it would do the opposite since all we're doing is slowing their potential growth (say if they ran a surplus against us) while not having things worth buying since we're ahead of them in technology. The import of a currency is its access power, and that's basically only important with regards to technology and expertise.

 

[Cokolwiek]

China's GDP/capita is like $10k and with PPP it's like $16k. I dunno what lifestyle you're accustomed to but that's still fairly poor. You multiply that by 1.4 billion people or whatever and yeah, as a total country they can do some big things. But in terms of averages and persons, they're smack in the middle and that's not middle class by any American or North/West European standard.

As I said, GDP per capita is a poor indicator of affluence. You invert how it's measured. It's not 16,000 dollars by country multiplied by it, it's whole economy first, dividing it by population doesn't make a lot of sense and you should take local prices into account (which PPP does but not to a full extent). I suggest you take a trip to China, both large cities and some provinces, it's cheap beyond flight ticket and see how different Chinese live or ask someone who was there. You are also not taking cultural differences into equation. Not everyone wants to be as mad rich as typical American or Western European. Some cultures are not that materialistic or consumption-driven. Chinese don't work in order to have a big suburban house with five bedrooms, two cars, new iphone every other year. Upper middle income class life is not shown or accepted as worthy or desirable in their culture.
On this front China already won. They showed to many dictators or just aspiring nations from Middle East, Asia, or Africa that you don't have to follow Western rules to have a good economy, good growth or political stability.

 

[Birdjaguar]

China's GDP/capita is like $10k and with PPP it's like $16k. I dunno what lifestyle you're accustomed to but that's still fairly poor. You multiply that by 1.4 billion people or whatever and yeah, as a total country they can do some big things. But in terms of averages and persons, they're smack in the middle and that's not middle class by any American or North/West European standard.


Or if selling locally makes you hire two more shoemakers, you've improved things.

What you said was a trade surplus makes you richer. I'm saying that that's complicated. I don't think America running a trade surplus over say Mexico would make America richer. I think in the long run it would do the opposite since all we're doing is slowing their potential growth (say if they ran a surplus against us) while not having things worth buying since we're ahead of them in technology. The import of a currency is its access power, and that's basically only important with regards to technology and expertise.

Trade surpluses are complicated. That is why I like to think of things in terms of jobs created. More people working in your town or state or nation usually means things are going better. That is why you have to grow the e-base jobs (not service sector) faster than the population. That gives the jurisdiction/government the surplus funds it needs to provide improved services. I try to keep things simple enough that you can find actual pathways to act sensibly.

Selling locally can increase the service sector economy, but often it just cannibalizes a competitor. Local folks buy my boots rather than some one else's. No new dollars are introduced into the economy; they just circulate differently. You cannot grow an economy that way or you could just open 500 laundromats. The outside dollars are the key.

 

[Narz]

Helped a lot of Chinese people go from authoritarian government and extreme poverty to authoritarian government and mild poverty.
Yeah, we should definitely require our trading partners be "good guys" with standards first. It's not too late, we still have about $40k GDP/capita over them.

Lol thats naive. If "good guys" made your iPhone you wouldn't be able to afford it.

 

[Cokolwiek]

Lol thats naive. If "good guys" made your iPhone you wouldn't be able to afford it.

Half-true. I don't like to assign countries as good guys or bad guys, it's naive in itself, apart from obvious situations like World War Two, but those iPhones could have been made in pro-Western countries that are far more manageable to contain like Vietnam, Thailand, India, Pakistan, some others also, for not too much higher price. It was just a failure of unguided big capital seeking every cent of profit, and blinded to geostrategic and political factors, not restrained by the state and long-term policy. I guess decision-making people at Apple couldn't even comprehend that people elsewhere might live in not-such affluence and peace-loving naivety as they in California and support authoritarian regimes and don't buy all cultural stuff that the West is producing.