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Italy to include prostitution and illegal drug sales in effort to boost GDP targets.

nuckin_futz

By nuckin_futz
in Off-Topic General

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nuckin_futz Canucks Franchise Player

nuckin_futz

Posted
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Geez I thought Berlusconi was bad but at least he stopped at indulging in drugs and hookers and not including them in bogus GDP figures.

It would be funny if it wasn't actually true.

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Hookers And Blow: How Changing The Definition Of GDP Officially Jumped The Shark

A year ago it was the US which first "boosted" America's GDP by $500 billion - literally out of thin air - when it arbitrarily decided to include "intangibles" to the components that 'make up' GDP (in the process cutting over 5% from the US Debt/GDP ratio). Then Spain joined the fray. Then Greece. Then the UK. Then Nigeria, which showed those deveoped Keynesian basket cases how it is really done, when it doubled the size of its GDP overnight when it decided to change the base year of its GDP calculations. Now it is Italy's turn, and like everything else Italy does, this latest "revision" of the definition of GDP easily wins in the style points category. As Bloomberg reports, "Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year." Yup: blow and hookers. And that, ladies and gents, how it's done.

ted%20hookers.jpg

Alas for Keynesian economists everywhere, since this "adjustment" largely shows that what one includes in GDP is now absolutely meaningless and for lack of a better word, a joke, it also means that the core concept of economic growth measurement has now officially jumped the shark.

But at least one will get a laugh out of the Italian GDP line items for hookers and blow. Bloomberg has the full story:

Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.

Renzi, 39, is committed to narrowing Italy’s deficit to 2.6 percent of GDP this year, a task that’s easier if output is boosted by portions of the underground economy that previously went uncounted. Four recessions in the last 13 years left Italy’s GDP at 1.56 trillion euros ($2.13 trillion) last year, 2 percent lower than in 2001 after adjusting for inflation.

The punchline:

“Even if the impact is hard to quantify, it’s obvious it will have a positive impact on GDP,”
said Giuseppe Di Taranto, economist and professor of financial history at Rome’s Luiss University. “
Therefore Renzi will have a greater margin this year to spend” without breaching the deficit limit, he said.

And that's what it is all about: literally making numbers up allowing the government to spend even more money it doesn't have on ridiculous political schemes, kickbacks, crony deals and corruption, and then when the people start to riot, blaming it all on "austerity."

http://www.zerohedge.com/news/2014-05-22/hookers-and-blow-how-changing-definition-gdp-officially-jumped-shark

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vavoom Abbotsford Prospect

vavoom

Posted
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Considering that GDP is a loose measure of economic activity, this is by all means justified. All black market activities should be included in GDP to truly measure economic activity. The only problem is the fact that it was not done before and they are only doing it now to make the figure look better for year to year comparison purposes.

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CanadianLoonie Canucks Prospect

CanadianLoonie

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The following joke perfectly explains the ludicrosity of GDP.

Two Keynesian economists, John Maynard Keynes and Paul Krugman, were walking down the street one day when they passed two large piles of dog $h!t.

Keynes said to Krugman, "I'll pay you $20,000 to eat one of those piles of $h!t." Krugman agrees and chooses one of the piles and eats it. Keynes pays him his $20,000.

Then Krugman, feeling richer, says, "I'll pay you $20,000 to eat the other pile of $h!t." Keynes, feeling bad about the money he lost says okay, and eats the $h!t. Krugman pays him the $20,000.

They resume walking down the street.

After a while, Krugman says, "You know, I don't feel very good. We both have the same amount of money as when we started. The only difference is we've both eaten $h!t."

Keynes says: "Ah, but you're ignoring the fact that we've increased the GDP by $40,000.

That is really all you need to know about GDP... it's all dog$h!t.

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Buddhas Hand Canucks First-Line

Buddhas Hand

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The UK is also going to do this ,

UK to Count Prostitution, Drugs When Measuring GDP
LONDON May 30, 2014 (AP)
By DANICA KIRKA Associated Press
AP_logo_update_20130709.gif

Britain is putting a price on vice.

Prostitution and the import, manufacture and consumption of illegal drugs like crack cocaine and heroin will be included in the official estimates of the country's economy, the national statistics agency said Friday.

Some of these activities, like prostitution, are legal in certain European Union countries, and comparable figures are needed. All member states need the same standard because they are used to assess a member state's contribution to the EU budget.

The new estimates also simply seek to get a more realistic picture of the economy — warts and all. At the moment, the only illegal activities included in Britain's GDP are estimates on alcohol and tobacco smuggling.

"As economies develop and evolve, so do the statistics we use to measure them," said Joe Grice, the chief economic adviser to the Office of National Statistics. "These improvements are going on across the world and we are working with our partners in Europe and the wider world on the same agenda."

Illegal drugs and prostitution are already measured in Estonia, Austria, Slovenia, Finland, Sweden and Norway, the ONS said in a report.

In Britain, they would add approximately 10 billion pounds ($16.7 billion) to gross domestic product in 2009, the ONS said. That remains a very small portion of the overall GDP, which now stands at 1.5 trillion pounds.

Nonetheless, calculations may prove challenging.

To measure prostitution, statisticians will have to tabulate up the value of things like brothel rental, condom sales, makeup and the clothing of sex workers.

For illegal drugs, the ONS will examine production and sales of crack cocaine, powder cocaine, heroin, cannabis, ecstasy and amphetamines. Growing drugs will be classed as "production," buying them for home use, "expenditure," while selling them as "income".

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