Tweet [1]
By definition, GDP is made of domestically-produced goods for consumption, investment, government expenditures, and exports, that is, C+I+G+X. When they actually measure GDP [3], however, statisticians only find a C, an I, and a G that include imported goods and services. In order to correct for that, they have to remove all imports from the formula, which becomes the familiar C+I+G+X-M, where M represents imports. Compounding the error, the formula is usually written as C+I+G+(X-M), where (X-M) is labelled “net exports,” a subliminal version of the trade balance. It looks as if net imports subtract from GDP while, in fact, M is subtracted only because it was already hidden in the available data.
Mark Perry rewrites a Bloomberg report on trade to make it more accurate [4].
Michael Rappaport compares us in our roles as consumers to us in our roles as voters [5].
Brian O’Brien is no fan of conscription [6].
Steve Landsburg imagines a conversation between Greg Mankiw and Larry Summers on corporate taxes [7].
Back to trade and protectionism: here’s Walter Olson on wine [9].