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%.
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