Improving GDP

Under EU rules Britain will add illegal drug sales and prostitution to its calculations of GDP:

HPost: Britain makes £10 billion a year thanks to drug dealers and prostitutes, the government’s statistics watchdog is set to confirm.

The Office for National Statistics is expected to comply with new EU rules by revealing its first estimates for the size of the illegal industries and how it has reached these calculations as soon as March or April.

Prostitution in Britain is set to be valued at around £3 billion a year while the drug dealing sector is set to be valued at £7 billion, with both of them factored into the UK’s £1.6 trillion gross domestic product, according to the Times.

Comments

Another attempt to boost GDP. At first GNP was used, then it was found unflattering to some countries and they switched to GDP. China, as is typical with communist countries, inflates their GDP by extrapolating the coastal cities like Shanghai to the rest of the country, and encouraging inflation of statistics, as they do in Argentina. This EU move is another step in this direction of puffery and fraud.

Conversely, understating the size of the underground economy is highly attractive when bargaining for aid - it makes you seem poorer than you really are. This is the actual motivation for the statistics rule, if you would actually click the link.

...GDP overstating, understating, fabricating, and guessing is routine and curious. The quite foggy notion of GDP is of no practical to anyone, save politicians and bureaucrats in their posturing.

An old quip: the purpose of the GDP is to make everything else look small by comparison.

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Britain makes £10 billion a year thanks to drug dealers and prostitutes, the government’s statistics watchdog is set to confirm.

One could basically just tack this onto the GDP figure for financial services, this is undoubtedly the main driver of this sort of spending.

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I wonder how they will adjust GDP for Wikipedia replacing Encyclopedia Brittanica.

Indeed.

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By GDP logic this reduces GDP, which is a humbling reminder that GDP is a flawed measure of national prosperity.

The inclusion of prostitution and drug dealing, in contrast, is perfectly consistent with GDP logic and simply refines the measurement.

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One wonders why something legal such as prostitution wasn't already included in figures...

Not legal in Britain.

Indeed it is. Various auxiliary activities such as pimping may be illegal, but prostitution itself is 100% legal as long as both parties are willing and over 18.

http://en.wikipedia.org/wiki/Prostitution_in_the_United_Kingdom

I trust Alistair, just because he has the most British name ever.

No he needs a social climbing hyphen attached to Smythe for that.

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:-) It is a very traditionally Scottish name, though I was born Northern Ireland and spent most of my childhood there.

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Off the books income? Doubt street hookers file returns.

True, but that applies to a multitude of other businesses too.

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In the U.S., few street hookers have enough income to owe income taxes, and as far as FICA goes, it is a wash - they don't pay the FICA taxes up front, but don't get the benefit that go with those taxes on the back end.

And now you should definitely see what FICA means in Italian....

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Why stop at prostitution? If a woman works full time and gives cash to her stay-at-home husband (or vice-versa), why is that division of labor and distribution of money not worthy of inclusion in GDP figures?

Or, grand- parents baby sitting, picking up from school, shopping etc.

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We are not as poor as we thought we were

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They both clearly add value to some consumer. Think what it would add to American GDP! Our politicians typically don’t have formal mistresses - a form of "home production" of sorts - they usually buy these services (perhaps some seasonal adjustments are called for (e.g., summer interns.))

More from the American Heartland here! http://www.zerohedge.com/news/2014-02-04/how-broncos-fans-took-super-bowl-loss-their-own-hands

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Watch the Hookers and Blow industry to reach 100 billion pounds within a few years.

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GDP Uber Alles!
Growth Uber Alles!

We are all just cattle on CorpGovMedia's cattle ranch.

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I'll create my own GDP figures, with hookers and blackjack!

+1

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I'm curious how much the estimate will be for Italy, between the undercover economy, the Mafia, the Chinese Mafia, the Albanian Mafia...

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I wonder how sensitive these numbers are to stimulus.

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