[OPE-L] misusing national accounts data

From: glevy@PRATT.EDU
Date: Fri Nov 18 2005 - 08:03:22 EST

I sent Jurriaan a copy of a working paper by Jochen Hartwig,
"On misusing national accounts data for Governance Purposes"

< http://e-collection.ethbib.ethz.ch/ecol-pool/incoll/incoll_1029.pdf >.

Many of you should be interested in that paper -- after all,
many here teach national income accounting as part of macro
courses and/or use those accounts for empirical research purposes.

Jurriann replied as follows (forwarded with his permission).

In solidarity, Jerry

----- Original Message -----
From: Jurriaan Bendien
Sent: Wednesday, November 16, 2005 11:39 AM
Subject: Re: misusing national accounts data

No I haven't seen it, though in my field of interest. Thank you for making
me aware of it. My criticism of national accounts is not so much that they
are pure nonsense, but rather that it takes quite a bit of reaggregation
to make sense out of them. At present, for example, in the Netherlands
real GDP growth is practically zero (well, 0.3% or something like that).
If you were to regard GDP as a measure of national income, you would
conclude that it is static. But in fact, much net property income is not
included in GDP, and in particular capital gains, rents and a portion of
net interest receipts. The reason is the specific definition of income
regarded to be related to production. So in reality, the national income
is increasing more than real GDP growth, the late Seymour Melman called it
"profits without production". This becomes visible only when you look at
income & outlay accounts, BOP data, tax data and the capital accounts
data. In many countries, capital gains are not taxed, or taxed only
selectively, and for that reason, no reliable data exists on capital gains
- realised from sales, or present as asset appreciation. Whereas FDI data
present a picture of foreign assets held, typically data on the value of
domestic assets is rather fragmentary. Consequently it's often difficult
to say what the magnitudes are. At a guess, about a quarter of realised
incomes in advanced capitalist countries these days represent income from
property transactions of one kind or another. This masks the fall in
Marxian output values. The most telling feature of "profits without
production" is the overall stagnation of fixed investment, and if you look
at disaggregated fixed investment data, you realise that a lot of it
consists of computers and furniture, furnishings etc. rather than real
plant & equipment that would increase productive capacity. Not altogether
surprising if average real capacity utilisation is at 70-80%.

This archive was generated by hypermail 2.1.5 : Sat Nov 19 2005 - 00:00:02 EST