G.D.P. and its Origin
By: Stephen McCutchan
G.D.P.?
Did you just feel the earth move? I swear, I just felt the slightest tremor. Now, I’m waiting for the other shoe to fall. I suppose this is how insects feel before an earthquake.
Our government just introduced the new kid on the block, GDP (meaning Gross Domestic Product), who will soon be taking the place of our old friend GNP (Gross National Product).
Best as I can figure out, the difference works like this: under the old system, when an American Corporation owns a subsidiary overseas, say GM has an assembly plant in Mexico, the wages paid to the workers become part of Mexican GNP, but the profits are considered American GNP. In other words, GNP measures the wealth that a nation controls.
Under the new system, wages paid to the Mexican workers are treated the same, becoming Mexican GDP, but the profits of the operation are no longer counted in the American GDP. I other words, GDP measures only the wealth that a nation produces.
The difference between the two numbers would represent the ex-patriated profits that had been generated by multi-national operations. These "global profits" will disappear from the books as we drop our old GNP measure. That baffles me. Where will they go? Has a new star been born in the heavens?
There. I just felt it again. When the Titanic struck the iceberg, they say it barely rippled the wine in the goblets. I think we are being rippled off right now, but there's a Superbowl coming up, so trust me: Americans will never take notice.
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