If this was happening in China, Westoid China Watchers would be publishing doom and gloom articles about how the collapsing property sector is going to cause the Chinese economy to go into a death spiral.
I know this because that’s exactly what’s happening right now.
Even funnier when you consider that housing and rent is about 15-20% of US GDP, including “virtual rent”, which is imaginary rent which is counted in GDP. Literally imaginary in that it measures home owners living in their own houses paying rent to themselves.
USA has higher GDP than China… If we measure in nominal US dollars and pretend that every homeowner in the US pays themselves rent.
I wonder how much China’s GDP would increase if you counted all the homeowners (which is like 80% of the population) as paying fictional rent to themselves.
The cost of rents increasing is not something you want to be padding your gdp (nearly 10%). This only benefits the FIRE sector while making production more expensive, necessitates an increase in wages or greater deprivation, and produces more unearned income and rent seeking.
How exactly is the value of the land I sit on going up productive? I don’t have to do anything to improve it, I can live in a shack, but because the price of the land increases I am somehow engaged in a productive use of capital? The only winner there is myself and the bank, when I sell the property for 10x and the next owner has a 30 year mortgage to live in the same shack. I guess the state also benefits because the fake dollars in rent I pay each month keeps going up and so to does their gdp. None of that is productive.
The land is productive because you are living on it. If you didn’t own the property, you would need to pay rent to live somewhere else, which would be included in gdp.
I’m not making a judgment about whether gdp itself is good or not, but including imputed rent makes sense for consistency’s sake
If this was happening in China, Westoid China Watchers would be publishing doom and gloom articles about how the collapsing property sector is going to cause the Chinese economy to go into a death spiral.
I know this because that’s exactly what’s happening right now.
Even funnier when you consider that housing and rent is about 15-20% of US GDP, including “virtual rent”, which is imaginary rent which is counted in GDP. Literally imaginary in that it measures home owners living in their own houses paying rent to themselves.
Imputed Rent
No one I have told about this had ever even heard of the concept.
USA has higher GDP than China… If we measure in nominal US dollars and pretend that every homeowner in the US pays themselves rent.
I wonder how much China’s GDP would increase if you counted all the homeowners (which is like 80% of the population) as paying fictional rent to themselves.
While China doesn’t calculate their gdp statistics the same way as the US, I believe they do also include imputed rent in the calculation https://www.thefreelibrary.com/Reestimating+China’s+underestimated+consumption.-a0407668620
It is capital that is being put to productive use, I think including it in gdp is fair
Neoclassical economics on hexbear!?
The cost of rents increasing is not something you want to be padding your gdp (nearly 10%). This only benefits the FIRE sector while making production more expensive, necessitates an increase in wages or greater deprivation, and produces more unearned income and rent seeking.
How exactly is the value of the land I sit on going up productive? I don’t have to do anything to improve it, I can live in a shack, but because the price of the land increases I am somehow engaged in a productive use of capital? The only winner there is myself and the bank, when I sell the property for 10x and the next owner has a 30 year mortgage to live in the same shack. I guess the state also benefits because the fake dollars in rent I pay each month keeps going up and so to does their gdp. None of that is productive.
The land is productive because you are living on it. If you didn’t own the property, you would need to pay rent to live somewhere else, which would be included in gdp.
I’m not making a judgment about whether gdp itself is good or not, but including imputed rent makes sense for consistency’s sake
Economics is not a science, it is your moral duty to be anti-intellectual towards economics.