Comment by vkou
2 years ago
> GDP is generally a pretty decent stat because people tend to pay things to do things that provide them with some sort of value.
Only if the net value is positive-sum.
Setting a city on fire, or giving cancer to a million people, or just going down the street, smashing every parked car's window with a tire iron will likely increase national GDP.
Liekwise, people pay a lot of money for net negative-sum industries - the health insurance industry in the US immediately springs to mind. We'd all be better off without that parasite.
We do have to assume that externalities are not so material as to render such stats misleading, yes.
I mean, we have to pay someone to guarantee coverage in the event of catastrophic losses. You might even call them insurance companies.
If only there was a way to have just one of those insurance companies, maybe run as a government agency of sorts... Wait, I got one of those where I live, it's called the Ontario Health Insurance Plan. It is not amazing but it easily clears the extremely low bar of being better than the US health insurance setup.
Over in Manitoba they've got one of those for car insurance too. Amazingly, people continue driving there just the same, the government insurance plan never needs subsidies and Manitobans pay way less for insurance. Almost as if the concept of the free market being the best solution for market X needs to be tested once in a while just to be sure, and results may be surprising.
It's possible for really motivated individuals to run a government department well, if you have people of excellent character, work ethic and competence doing so, but there's not a load of incentive for them to be run well outside of that unlikely combination.
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Too bad Manitoba guillotined its public telecom. How's Bhell treating you these days?
The risk pooling isn't the problem, its not why the industry is an unproductive leech on our society. The insane amounts of waste and bureaucracy it produces, and the price inflation it facilitates is.
(Not to mention suboptimal health outcomes arising from the perverse incentives it creates.)
Net negative sum would by definition lower GDP.
GDP is a proxy for 'amount of work done that people were paid for'.
If I pay Fat Tony to break your legs, and then you pay a doctor to put them back together, this whole adventure increased GDP, but is a net-negative-sum activity.
"People have to do more work to accomplish the same amount of results" isn't a worthy goal in itself.
And me not working due to broken legs is somehow not relevant to the GDP? My capital being misallocated is not relevant to GDP? I think your example is quite likely to lower GDP...
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