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umbrarchist
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Posted: Saturday May 28th, 2005 22:09 |
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GlobaLIES This!
GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP GDP
GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP GNP
These two acronymns are what we hear from economists and politicians all the time. GDP mostly replaced GNP around 1990. GDP is Gross Domestic Product and GNP is Gross National Product. The difference is GDP takes foreign investment into account but that is irrelevant to this discussion.
GNP_blog
This discussion deals with what you RARELY hear and what you NEVER hear. What you rarely hear and may never have heard is NDP or NNP. Net Domestic Product and Net National Product. These differ from Gross because our economists subtract DEPRECIATION. The robots that General Motors uses to manufacture automobiles wear out and eventually have to be replaced. These robots are what economists call CAPITAL GOODS. Capital goods have to be replaced for the factories to keep running so the government allows businesses to deduct this depreciation from their taxes according to IRS schedules and economists subtract this from GDP to compute NDP. You may have noticed that the blog did not mention NNP/NDP.
The economists also claim that this depreciation is small each year so they normally don't talk about it at all.
What you never hear is that the equation the economists are using is WRONG!
When Joe Blow consumer buys an automobile it gets added to GNP. But his car wears out just like the automobiles purchased by car rental companies which file their depreciation with the IRS. Just because depreciation doesn't get filed doesn't mean it doesn't happen. The laws of physics don't care about money or if we get our equations wrong.
 
The purchase of capital goods, like automobiles by car rental companies, increases GNP and is represented by arrow A. This increases NNP as indicated by arrow A'. The B and B' arrows show the same effects resulting from the purchase of durable goods by consumers. Things are a bit more complicated for the C arrow. Since depreciation is subtracted from GNP, C' points down reducing NNP. This results in an equation with two arrows on the left side pointing up but only one arrow pointing down. These arrows on the equation make it obvious that something is missing. Since Depreciation in the upper equation refers to CAPital goods it is represented by Dcap in the lower equation with the same C arrow. The variable Dcon is added to represent Depreciation of CONsumer goods. The D arrow represents increases to Dcon which is inside the parentheses with Dcap so it is also subtracted. D' arrow on the left side of the equation points downward with C' resulting in two down arrows to balance the two up arrows A' and B'. This will result in a value very different for, NNP, from what the economics profession has been getting and not telling us about. I conservatively estimate that Americans have lost TEN TRILLION DOLLARS in depreciation of automobiles since 1945.
This creates a problem for the economics profession. If they say this equation is correct how do they explain getting it wrong since World War II? If they say it's incorrect how do they explain what is wrong with it to all of the people that know how to do grammar school algebra? So most of them say nothing.
THE ECONOMY is not just the flow of money. It is the WEALTH, tangible and intangible, of every economic unit in a society. A man with $10,000,000 in a safe deposit box could have ZERO income for the remainder of his life but live quite well. He might be eligable for welfare benefits because his lack of income would put him below the poverty line. People with no wealth must have income for food and rent so they are coerced into laboring for those with wealth. Why hasn't accounting been mandatory in all of our highschools since WWII? Would the economies of all of the advanced nations be in quite different states if accounting had been mandatory? How many people with economics degrees are employed by companies encouraging people to go into debt for things which depreciate for the economists to ignore?
These diagrams of GNP are what economists use to represent an economy. The one on the left is mine and the one on the right is from the blog. They are functionally the same but some names are different and arrows are in different locations. Firms on the right are business on the left and households on the right are work/con for worker/consumers on the left. The Goods & Services arrow is on the top in the right diagram and on the bottom in the left. Labor on the left is factor services on the right.
  
This is GNP minus the depreciation economists subtract but rarely discuss outside of professional economic circles, called NNP.
 
This is GNP minus all of the depreciation, including what consumers loose.
 
Maybe we should call it DNW for Delta National Wealth, change in national wealth.
On an international level this brings up the subject of planned obsolescence. Airplanes from World War II, the Spitfire, P-51 Mustang, P-38 Lightning, could fly at 400+ miles per hour. These planes were designed without electronic computers. How is it that 36 years after the moon landing automobile companies with computer aided design and computer aided engineering need to redesign machines that roll along the ground at less than 130 mph? If cars cost more because they are redesigned each year aren't the countries that import all of their cars losing vast amounts of wealth? Shouldn't the political leaders be aware of this ignored depreciation? How well do most politicians understand economics? FDR didn't understand what John Maynard Keynes was talking about.
FDR & Keynes
Mentioning FDR and Keynes brings up the subject of the Depression. The Depression was seen by many as a failure of Capitalism. Since govenrment officials did not understand how the economy worked many of the things they did to cure the Depression actually made it worse. Keynes developed the concepts we now refer to as MACROECONOMICS which included the concept of Gross National Product. Keynes told FDR to borrow money and spend it to "prime the pump" of the economy to generate cash flow. This made no sense to FDR and he didn't do it until World War II forced him to. The success of the American economy during WWII is taken as proof that Keynes was correct.
Life and technologies have changed greatly since that war. Keynes did not live in a world where people watched television for 30 hours each week. The first television commercial was broadcast in the US in 1941 and Keynes was in England and England was at war. TV didn't become significant until after Keynes died in 1946. The influence of Pavlov and von Neumann have grown in the world since Keynes followed the long run.
Vulcan Technology
Vulcan Economics
John von Neumann's 1944 book with Oskar Morgenstern, Theory of Games and Economic Behavior was a landmark of twentieth century social science. Interestingly von Neumann is also Nfamous in the computer industry. Nfamous because most people never heard of him even though almost all computers are von Neumann machines. Someone joked that von Neumann was actually an outer space alien who had trained himself to perfectly imitate a human being in every way. Computers have affected the economy because they made the management of huge corporate and government bureaucracies possible. They have also triggered rapid stock market fluctuations due to program trading which began in the 80's. Now the cyber-economic influence is global due to the World Wide Web. Human beings are information processors and their behavior can be affected by the information they receive, be it accurate or inaccurate. Plenty of people have a vested interest in hiding important information and in a "free" media saturated society the way to do that is to distribute lots of distorted information. The more things change the more they remain the same.
"All warfare is based on deception." - Sun Tzu, 500 BC
How much did the world change from the publishing of THE COMMUNIST MANIFESTO in 1848 to Marx's death in 1883? The American Civil War was fought and lost, or won depending on your perspective and the transformer was invented in 1876. A pretty good argument could be made that the invention of the transformer was more important than the Civil War. It is an electrical component fundamental to the manipulation of electricity and our modern society could not run without it. Technology has changed society and the workings of the economy. It is the perpetuation of 19th century ideas that partly keeps us from using that technology to solve our problems.
There is no reason why everyone should not know accounting and be able to do it on inexpensive von Neumann machines. This would result in von Neumann technology affecting the von Neumann theory of games. Changing the quality of play of millions of people would fundamentally affect the game. Global von Neumannism could make Marxism and conventional Capitalism obsolete. With all of their talk about globalization why aren't any economists suggesting this?
"Economics is extremely useful as a form of employment for economists." - John Kenneth Galbraith  
umbrarchist
Last edited on Tuesday November 7th, 2006 19:57 by umbrarchist
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Joe Bloggs
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Posted: Sunday May 29th, 2005 18:28 |
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Did you edit this article?
Sorry read it twice and although in terms of paragraphs I can understand, as a whole I am lost and truly lost in relation to the title.
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umbrarchist
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Posted: Sunday May 29th, 2005 20:14 |
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I wrote it. It is a compression of almost 30 years of thought on the subject. It was triggered by this thread:
http://www.blackchat.co.uk/theblackforum/forum27/12054.html
I'm talking about technology and economics. I don't know what your attitudes about Marxism and Capitalism are. Marx died almost 50 years before the concept of Gross National Product was developed by Keynes.
In 1998 a 300 MHz computer cost $3000. Suppose you bought such a computer that year for home use. Then $3000 was added to GNP because of your purchase. In 2001 that computer would have been worth about $500 so you would have lost $2500 in DEPRECIATION. Your Net Worth went down $2500 even though you didn't file it and economists don't subtract it from GNP. All depreciation of consumer goods is ignored.
Although the title implies I'm debating between Marxism and Capitalism, I am actually saying they are both wrong. We have been victims of an obsolete debate all of our lives.
The capitalist economists are lying and Marxists haven't figured it out and told us.
Umbrarchist
Last edited on Thursday June 2nd, 2005 06:22 by umbrarchist
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Joe Bloggs
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Posted: Sunday May 29th, 2005 20:27 |
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Haven't figured out what?
And what excatly are the 'capitalist lying' about?
Marx was talking about his own life time, with some prediction of how things would go (and no one as proved him wholly wrong there...
So what is the point you are making, sorry I was never big on the whole GDP ect stuff, so you will have to explain in terms a non economist would understand.
If it helps I consider myself a 'marxist'
Last edited on Sunday May 29th, 2005 20:33 by Joe Bloggs
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umbrarchist
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Posted: Sunday May 29th, 2005 21:16 |
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Suppose you have a 55 gallon drum sitting next to a lake. There are 2 men on either side of the drum using beer mugs to put water into the drum. An economist stands nearby counting and recording the number of mugs of water going into the drum each minute. So the number of mugs going in each minute is the GBP, Gross Barrel Product. BUT! There are 2 holes at the bottom of the barrel. One man is a capitalist and the economist has a gauge measuring the water coming out on his side. He subtracts this and puts it in his written reports to the government and other economists but most of the time he never talks about it.
There is water leaking out of the other hole for the worker consumer, but it is not measured. It is ignored. They pretend it doesn't exist.
Obviously the amount of water in the barrel is affected by the leakage from both holes. The equation that I am using is intended to account for both.
I haven't heard any Marxist sayng accounting should be mandatory in school. I once had a conversation with a man selling THE WORKER'S VANGAURD newspaper about it but he appeared to think it wasn't important. Everyone doing their accounting properly would notice their losses due to depreciation even though they can't deduct it from taxes. It could mean more people thinking about depreciation BEFORE they buy.
umbrarchist
Last edited on Thursday June 2nd, 2005 06:28 by umbrarchist
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COLTRANE
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Posted: Wednesday June 1st, 2005 13:30 |
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i WILL GET TO THIS AND HAVE BOOK MARKED IT
thanks for the link
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COLTRANE
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Posted: Wednesday June 1st, 2005 17:04 |
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| http://www.blackchat.co.uk/theblackforum/view_topic.php?id=8368&forum_id=9&highlight=capitalism++progress
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umbrarchist
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Posted: Sunday June 5th, 2005 06:53 |
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I read much of the thread and did searches on Marx and Smith. No hits.
Adam Smith disapproved of what he called joint stock companies. A joint stock company is what we now call a corporation. In 1886 the US Supreme Court decided that a corporation was a "person" and deserved similar rights. It was a case involving Santa Clara County and a railroad. Neither Marx nor Smith knew about a corporation being a PERSON. A corporation with tens of thousands of stock holders where no one owns as much as 1% isn't PRIVATE OWNERSHIP it is COLLECTIVE OWNERSHIP. Communism for the RICH!
I think the term CAPITALISM does not accurately apply to the system we have in the US and much of the world today. I think what I call CORPORATE CONSUMERISM was being phased in around 1900.
Freudian psychology didn't get started until after Marx's death. The 1st television commercial wasn't broadcast until 1941. How much psychological knowledge is put into commercials today to get consumers to overconsume?
We have obesity and tremendous credit card debt.
Adam Smith would not be impressed.
umbrarchist
Last edited on Monday June 6th, 2005 01:02 by umbrarchist
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Apedemak
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Posted: Wednesday May 16th, 2007 14:14 |
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^Hup
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Posted: Wednesday May 16th, 2007 15:00 |
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Interesting.
Umbrarchist.. I'm currently working on a project and I could use your input, later on when I finish. At your earliest convenience(if you want), please pm me some contact information(email would be suffice).
Nice
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Tahliba
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Posted: Thursday May 17th, 2007 14:48 |
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Umbrachist
Can you explain Surplus Value Theory?
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umbrarchist
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Posted: Thursday May 17th, 2007 16:58 |
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Umbrachist
Can you explain Surplus Value Theory?
Maybe. LOL
The problem is explaining some theory with some simplified example that hardly ever exists in the real world.
The manufacture of some product requires labor and some production facility, i.e. factory. So producing 100,000 widgets costs $200,000 in labor. The widgets are sold for $400,000 so there is $200,000 in GROSS PROFIT. That might be seen as SURPLUS VALUE. But the factory cost $2,000,000 and the owner only had $500,000 so he had to borrow $1,500,000 and he is paying interest on the loan. So some of that gross profit he keeps and some goes to pay on the loan and they have to make still more widgets to pay it off.
So suppose he pays off the loan and he keeps selling widgets at $4 each. He could raise the workers salaries, but will he?
This gets into the supply and demand concept for labor. What if widgets start being imported for $3? The economy is very big, complicated and interactive. But how consumers spend their money over the decades can have long term effects. I can only wonder what the US would be like if accounting had been mandatory since 1945. I saw an article in a magazine some years ago that only 13 states required that some kind of financial information be taught. A few more states had guidelines but not requirements.
Marx did not live in an age of CONSUMERISM. The problem has not been scarcity since 1945 it has been wasted abundance. But the last 60 years of stupidity are bringing us back to scarcity again.
http://en.wikipedia.org/wiki/Surplus_value
I am about ready to put our economists up against a wall and shoot them.
umbra
Last edited on Thursday May 17th, 2007 17:00 by umbrarchist
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