In the first part of this week’s podcast, Diane Coyle, professor of economics at Manchester University and author of GDP: A Brief But Affectionate History and The Economics of Enough, talks about measuring economic progress. What is the GDP (gross domestic product), and is it really an accurate benchmark for understanding economic performance? Find out on your favorite personal finance show.
Posts Tagged ‘GDP’
Israeli Prime Minister Benjamin Netanyahu is working to improve economic ties with politically friendly Latin American countries in order to compensate for the crippled economy of Israel’s main trading continent, Europe.
The new effort to increase Latin American trading, particularly with Chile, Peru, Colombia and Mexico, will compliment Netanyahu’s simultaneous effort to increase economic ties with China and other East Asian countries. These four Latin American countries formed the free-trade Pacific Alliance last year and account for about 36 percent of the continent’s gross domestic product (GDP). They all trade significantly with North America.
Currently in Latin America, Brazil is Israel’s main trading partner, taking in Israeli exports at about $1.1 billion per year and importing to Israel at about $400 million per year. In June, Israeli President Shimon Peres signed a free-trade agreement with Colombia.
Hugo Chavez’s death was met with tributes from Iran, Bolivia, China and El Salvador. The Western left did not waste much time adding their withered roses to El Comandante’s coffin. George Galloway called him another Spartacus. Jimmy Carter described him as a leader who fought for the “neglected and trampled.” Michael Moore praised him for declaring that the oil belongs to the people.
Whether or not the oil belongs to the people is a matter of some debate considering how much of it seemed to end up in Chavez’s pocket.
Chavez died with an estimated net worth of two billion dollars making him the fourth richest man in Venezuela and the 49th richest man in Latin America. For a while, Chavez weathered attacks from the media empire of Gustavo A. Cisneros, the richest man in Venezuela. Then before the 2004 election, their mutual friend Jimmy Carter brokered an agreement between them. Cisneros’ media stopped criticizing Chavez and both men bent to the task of getting even richer.
While the Bolivarian Spartacus lined his pockets with oil money, Venezuela’s middle-class was struggling to get by in a country where the private sector had imploded. Income increased on paper, but decreased in reality as inflation increases ate the difference. Around the same time that Comrade Hugo was launching the third phase of his Bolivarian Revolution, inflation had decreased household income 8.8 percent while consumer goods prices increased 27 percent.
On his deathbed, Hugo Chavez devalued his country’s currency for the fifth time by 32 percent, after tripling the deficit during his previous term when the national debt had increased by 90 percent. From 2008 to 2011, Chavez’s oil-rich government increased the debt by nearly 50 billion in a country of less than 30 million. That same year, The Economist speculated that Venezuela might go bankrupt.
Chavez had swollen the ranks of Venezuela’s public employees to 2.5 million in a country where the 15-64 population numbered only 18 million. With 1 public employee to every 7 working adults, the entire mess was subsidized by oil exports and debt. When the price of oil fell, only debt was left.
Those public employees became Chavez’s campaign staff with no choice but to vote for him or see their positions wiped out to keep the economy from crashing. And they won him one last election.
The dead tyrant leaves behind the lowest GDP growth rate and highest inflation rate in Latin America. He leaves behind an economy where more than half the population depends on government benefits or government jobs. He leaves behind a giant pile of debt for the people and 2 billion dollars in misappropriated oil money for his heirs.
But we don’t need to look to a leftist banana republic south of the border to see how profitable fighting for the poor can be.
Seven of the 10 richest counties in America are now in the Washington D.C. area. Arlington County alone added $6,000 to its average income in one year alone. D.C. and its bedroom communities got rich at twice the rate of the rest of the country and in the last election; Obama won eight of the 10 richest counties in the country.
Washington D.C. is richer than Silicon Valley. Median income in the D.C. area has hit $84,523 despite the city itself having horrendous unemployment and poverty statistics. The top five percent in D.C. earns 60 percent more than the top 5 percent in other cities and 54 times what the bottom fifth earns in that same city.
This wealth of government money isn’t a rising tide that lifts all boats. Income inequality in Washington D.C. is one of the worst in the nation. For families with children, the income inequality level in D.C. is double the average for the rest of the country.
But when you concentrate the wealth of the land in a single imperial city, then you end up with a sharp gap between the poor and the fighters for the poor. Mid-level jobs are disappearing, but high-level jobs continue to grow. Small businesses are going out of business, but lawyers and consultants are being hired at a breathtaking rate.
Washington D.C. has the highest concentration of lawyers in the country. One out of every 12 city residents is a lawyer. One in 25 of the country’s lawyers lives in Washington D.C. In 2009, the Office of Personnel Management reported that there were 31,797 practicing lawyers in the Federal government earning an average salary of $127,500 a year. Or to put it another way, the taxpayers were spending double Hugo Chavez’s two billion dollar net worth each year just to pay the lawyers.
Israel’s economy grew by 2.5 percent in the last quarter of 2012, as compared with 2.9 percent in the third quarter of the year and 2.8 percent in the second quarter, according to figures released by the Central Bureau of Statistics.
The numbers are also lower as compared with 2011, which saw growth rates of over 3 percent.
For the record, I’m a huge fan of Sarah Silverman and have been following her career forever, watched her Jesus movie on Netflix, followed two seasons of her sitcom on Comedy Central, absolutely loved her bit on the Aristocrats movie, and caught her act whenever possible. Unlike, say, Jon Stewart, or Adam Sandler, whose entire Jewish thing is about making funny cheh sounds, and Jerry Seinfeld, whose Jewish thing is, basically, Presbyterian, I believe Silverman is on a par with the serious Jewish-American comics of the day, Larry David and Richard Lewis.
This is because all three comics have pain in their comedy, and they use it to make us laugh so hard, our kishkes get shpilkes in our shkolniks.
Jewish Author Shalom Aleichem was funny because he took the repression and poverty of life in the pale of settlement in Czarist Russia and turned them into hilarious scenes. We laugh because it’s so sad. That’s Jewish comedy.
When Larry David’s dad doesn’t invite him to his mom’s funeral because he didn’t want to bother him, he’s so busy – that’s Jewish pain. When Richard Lewis, clad in black, is fearful of life itself for the mean things it has in store for him – that’s Jewish pain. When Sarah Silverman depicts herself as a mega-narcissistic LA girl, bereft of empathy or even an awareness of others – that’s Jewish pain.
And so, to start, I believe Rabbi Yaakov Rosenblatt missed the point when he was attempting to counsel Sarah Silverman on how to become happy and fulfilled as a woman. Because if our comics had any idea at all, or the inclination, really, to be happy and fulfilled, they wouldn’t be exposing themselves on a bare stage with nothing but a mike and a cutting tongue to protect them from drunken hecklers at two in the morning.
I tried it one summer in New York, I have no idea if the good rabbi ever did. Believe me, I have good reasons to admire Sarah Silverman, but to expect her to be a happy mother is like expecting (insert funny noun) to be happy (insert inappropriate verb).
And although I agree that the You Tube clip attempting to seduce Billionaire Sheldon Adelson was offensive, it was also funny and angry and a legitimate political attack. What folks on the right should do is come up with equally funny and effective clips — may I suggest a certain aging Hollywood star who enjoys talking to empty chairs.
Having said that, let’s talk about motherhood and babies, because, soon enough, the 170 comments on Rabbi Rosenblatt’s article veered away from dealing with the gifted comic and settled on the idea of compulsory child bearing for modern American women.
Or at least that’s what you’d think Rosenblatt was advocating, to judge by those comments. Which, of course, he didn’t. He only suggested (I’m paraphrasing because it’s more fun that way) that women by nature are hard-wired to be married and bear children, which is why some young girls start planning their weddings at age 7 and have the albums to show for it.
Put aside sentiment and politics, let’s talk economics. Here are a few of the leading countries in the world in terms of real Gross Domestic Product growth annually.
There’s Argentina, with 8.8 real GDP growth rate, and 17.34 births per 1000, as opposed to 7.36 deaths per 1000.
I propose that Argentina’s astonishing growth economically has everything to do with the fact that it has three times more people being born than dying.
In Turkey, there’s 8.5 real GDP growth rate, with 17.58 births per 1000, with only 6.1 Deaths per 1000.
India is another great example: 7.8 real GDP growth rate, births per 1000: 20.6 Deaths: 7.43
Even Israel, with a very good 4.8 real GDP growth rate, shows the same healthy trend: with 18.97 births per 1000 and only 5.5 deaths. In fact, Israel’s situation is even better than most because of its excellent medical services. Also, Israel isn’t showing the same stunning growth rate as, say, India, because our economy here has been pretty fabulous for some time, and so we are higher up the bell curve.
Now check out some liberal Western democracies, with self-fulfilled, emancipated women who have better things to do than get married and pregnant:
Over the last year Palestinian authorities have spent a great deal of time calling for a unilateral declaration of a Palestinian state while refusing to resume peace negotiations with Israel. Although they garnered political support for this in the UN General Assembly in September 2011, a new report from the World Bank, from April 2012, and made public in July 2012, indicates that the efforts of the Palestinians and their supporters would have been more usefully employed in thinking about the economic viability of such a future state.
The conclusion of this sobering report, which contradicts the more optimistic picture of the Palestinian economy presented by the IMF in 2011, is that although the Palestinian Authority [PA], the official representative group established in 1994, has made steady progress in many areas towards establishing the institutions required by a future state, the economy is currently not strong enough to support such a country. The report is a bitter commentary on the the Palestinian economy — especially compared to the economies of Israel and even Jordan — currently in a self-inflicted decline induced by the violence it brought on itself by launching the Second Intifada in September 2000.
The crucial problem according to the report is that the Palestinian economy has become increasingly dependent on foreign aid to drive its growth, a means of generating income that is insufficient for economic sustainability. Foreign aid has given the Palestinians billions of dollars — by 2008 about 56% of GDP. This led to a GDP growth of 7.7% between 2007 and 2011; in some years its growth even reached 9% a year.
But that growth is artificial and is not sustainable for three reasons. Foreign donations have funded government expenditures and been largely in the area of government services, real estate, and other non-tradable sectors. The productive sectors have declined in importance: there has been a decrease in manufacturing, down from 13% to 10%, and in agriculture from 9% to 6%.
The inflow of foreign aid in 2007 led to some improvement in GDP in the West Bank. Gaza experienced growth because of the foreign aid and the expansion of trade through tunnels from Egypt. However, the Palestinians now face a crisis because important donor countries have so far not sent aid or have sent less aid in 2012. The PA now has a deficit of $1.5 billion in its budget of about $4 billion, and a cash shortfall of $500 million. It has been promised $100 million from Saudi Arabia which is insufficient to end the crisis.
Those who admired the second Intifada, heralded by Yasser Arafat but which generated violence for over two years and halted progress to peace negotiations, will now realize that it was a disaster, a severe blow to the Palestinian economy. The violence only resulted in the West Bank and Gaza suffering a severe economic contraction. Between 1999 and 2002, real GDP fell by 27%. In 2007 real per capita GDP was 23% below the 1999 level. Industry, agriculture, tourism, and some other services declined. Public administration, defense, and public services such as health and education grew from 20% of GDP to more than 27%.
The report argues that the PA must increase private sector growth, must improve its trade infrastructure to lower costs and increase efficiency, must improve the investment climate and must improve the quality of the workforce. Sustained economic growth entails a strong dynamic private sector that can generate jobs both to employ a rapidly growing population and to provide resources for government to provide services.
This necessary dynamism is lacking. The Palestinian private sector is overwhelmingly dominated by small family-owned businesses. The high cost of doing business lowers competitiveness. The Palestinian businesses mostly focus on the local market. In addition, relatively high wages, compared to other countries such as Turkey and India, high transportation costs, and low level of innovation also reduce competitiveness.
Yet, even with significant growth, it is unlikely that the PA can support an administration of its current size. It must reduce costs, raise revenues, and move to fiscal sustainability. Politically, the report recognizes that investment would be increased if a peace agreement were reached between the Palestinians and Israel.
The Palestinian economy over the last decade has been characterized by high levels of unemployment and underemployment, some of the highest rates in the world. These have varied between 20% and 30%. Those rates are accompanied by low levels of labor force participation, about 41%. Even more troubling has been the decline in youth employment and economic participation, and the extremely low level of female labor participation. In 2010 youth unemployment in general was about 34%, and 53% in Gaza. During the last decade, the rate for women participating in the labor force was below 16%. The result of this high unemployment and the decline in private sector wages relative to government wages, has led to high levels of poverty: in 2009 it was 22% in the West Bank and 33% in Gaza.