Comment by CapricornNoble
8 days ago
Your post is more a criticism of including military spending in GDP, not anything particular to Russia's GDP-PPP calculation.
8 days ago
Your post is more a criticism of including military spending in GDP, not anything particular to Russia's GDP-PPP calculation.
I could be wrong, but my impression is that GDP is usually thought of (by non-economists) as a trailing index that has some sustainability baked in, by inertia if nothing else. Military spending would normally track reasonably well with that. What Russia is doing... doesn't sound sustainable.
> What Russia is doing... doesn't sound sustainable.
1. The Russian economy is more robust than expected. I recommend RUSI's recent work on the subject: https://rusi.org/explore-our-research/publications/commentar...
2. Russia only needs to sustain its current war effort longer than Ukraine can sustain its own war effort. Considering that Ukraine is heavily dependent on external aid just to maintain its current ability to lose slowly, and its single most important source of foreign aid is trying to drop it like a bad habit.....signs point to Russia's economy having enough runway to achieve some kind of victory, after which they can dial down the production levels and return labor to the civil sector.
This is a very late reply, but whatever. My point is what Mr. Bloody Dictator is doing is just plain dumb. Even for some super fans of Putin who completely ignore tens of thousands civillians Russia killed in Ukraine, millions of refugees, etc.
Russia demography was abysmal long before COVID due to pre-WW2 and WW2 ripple effects. And during this invasion country lost like ~500,000 man dead or severely crippled and probably twice that amount to migration.
Basically in a few years country efficiently lost like 3-5% of it's working populaton with another 5-10% moved to produce "munitions" or something that will rot till next big war. Anyone who try to sell this as economy growth is a moron.
And btw it's exactly Japan scenario except for different reasons:
https://en.wikipedia.org/wiki/Demographics_of_Russia
https://en.wikipedia.org/wiki/Demographics_of_Japan
>My point is what Mr. Bloody Dictator is doing is just plain dumb. Even for some super fans of Putin who completely ignore tens of thousands civillians Russia killed in Ukraine, millions of refugees, etc.
It's not "dumb". The Russian National Security establishment considers a NATO-integrated Ukraine[1] as an Existential Threat. Their cost-benefit analysis is working with different criteria than what you are including in your value assessment.
> Russia demography was abysmal long before COVID due to pre-WW2 and WW2 ripple effects. And during this invasion country lost like ~500,000 man dead or severely crippled and probably twice that amount to migration.
Yeah, Russia's demographics are fucked and I don't think they are doing enough to fix that. But you are leaving out some relevant data: https://unric.org/en/ukraine-over-6-million-refugees-spread-... There's roughly 1 million Ukrainian refugees who relocated into Russia. I don't know the breakdown, how many of those are able-bodied working age men or fertile women, but the point is the math isn't as clear-cut negative as you are presenting.
> Basically in a few years country efficiently lost like 3-5% of it's working populaton with another 5-10% moved to produce "munitions" or something that will rot till next big war. Anyone who try to sell this as economy growth is a moron.
Y = C + I + G is one of the most foundational equations in Introductory Macroeconomics. G = government spending...including stuff like bombs and tanks that sit in storage for decades. Arguing that military spending does not contribute to economic growth is just tilting at windmills.
Here's some reading to support this:
National Bureau of Economic Research: https://www.nber.org/system/files/working_papers/w15496/w154... During World War II and the Korean War, real GDP grew by about half the amount of the increase in government purchases. With allowance for other factors holding back GDP growth during those wars, the multiplier linking government purchases to GDP may be in the range of 0.7 to 1.0
LeMonde: https://archive.is/UK1MM#selection-2013.256-2017.478 To pay bonuses and salaries, the state spends "between 1,500 and 2,000 billion rubles a year." As a result of the considerable sums spent on the war economy and the payment of contract workers, a largely consumption-led growth has emerged. Gross domestic product jumped 4% year-on-year in the second quarter, according to a preliminary estimate by Rosstat, the Federal Statistics Service, published on August 9. Unemployment is at an all-time low of 2.6%. Based on these macroeconomic parameters, the World Bank placed Russia on its list of "high-income" countries in July.
[1] https://www.rferl.org/a/ukraine-president-signs-constitution...