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I get the impression that it's economic heresy to say that a dollar of GDP generated one way is more "useful" than another, but I just can't get myself to buy that. Extreme case where everybody was doing nothing but paperwork seems less "efficient" than same GDP w/ no paperwork
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I know vaguely that there have been arguments about the toy case where economic activity is digging holes and filling them in ...
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I think this is what I was vaguely gesturing at
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Suppose there are some economic activities that are zero sum, where R&D just steals market share. Maybe advertising, signaling education credentials, political campaigns. As an economy grows richer, do these sectors occupy a larger share of the economy? Is there a name for this?
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Oh I love this - carnot limit to economic efficiency. I’ll bet the productive value is similar to a heat engine at the 20-40% range too.
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GDP is supposed to track the value of goods produced so whether or not they’re consumed in theory shouldn’t impact it. I don’t think this can really be measured because in a sense your trying to measure against something that isn’t known (optimal path).
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A way of framing this is that the “waste heat” is “future savings” due to “technology” which in econ includes process improvement. If we realize we can make French Fries with half the number of potatoes technically half the potatoes in the past were “waste heat”.
Bookmarking this one as I'd also be really interested in the answer - tax admin time spent in house is no more useful to the economy than tax admin time outsourced to a third party - but that latter presumably gets directly counted as "GDP" (as well as generating VAT revenue)
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This is an interesting question in that gdp takes every dollar of output as equal when clearly as levels increase the marginal value of the next dollar decreases and a single number can't represent the amount of consumer surplus baked into earlier dollars of output.
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