GDP goes to who?

[oscar111]

I see the average family gets 50K. 72 million families. So that is only 4 trillion $.

Where does the rest of GDP 10 trillion go to?

eg., how much to

ONE raw materials

TWO necessary new factory machines and production method research

THREE other places, people?

%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
I am looking for the economy before any pay of taxes. ie, the pre-tax economy. I already know the overview of tax flows.

Thank you very much,
Oscar

[POed_Ex_Repub]

1. A question about that average...

Is that mean, median, or mode?

[lcordero]

2. 400 people "own" 1 trillion dollars of that GDP

[oscar111]

3. oscar:replies to both above helpers

Hi, and thanks! Stay on this thread, please!

I read that 50K <49, really> is "what the average american family income is before taxes". Probably referring to only the middle class group... the mean of them . I have seen this same figure many places.

Hi, to second responder.... very intriguing. Any info on where the rest of the 10 T goes? so far, i see the destination of only 4 T.. mentioned in the original post.. and your 1 T. Thus, 5 trillion $ is Missing In Action! Pls help a newbie! Half the economy is MISSING! arrrruuuugggghhh! Call Dan Rather!
Thanks,
Oscar

[mastein]

4. GDP is production

I seem to recall that GNP, gross national product, is consumption (C), plus Investment (I) plus government spending (G) plus/minus the balance of payments, that is exports (x) minus imports (m). (We run a huge trade deficit so that last figure (x-m) is actually a negative number.

GDP is GNP without the (x-m) factor above.

The number you are talking about in your post is essentially consumption. All along the line we get parts of all three, for example my family spends several thousand dollars a year on consumable goods including everything from the refrigerator to cars to dinners out (Consumption). We also put something into both the 401(k) and our child's scholarship account,(Investment), we pay taxes and get tax returns, be it sales tax on consumable goods or our end of year tax return, and receive services like police and fire patrols without even knowing about it (Government).

It takes investment to bring raw materials to market. Most raw materials are worth almost nothing without refinement etc, thus they have value added to them as they are refined.

Machinery, everything from computers to stamp and dies are considered investment in this model.

On Edit: The 50K number you have there, represents median, i.e. what half of the people make more and half of the people make less. Obviously, the "upper half" quite often make multiple times that 50K. and unfortunately, several parts of the lower half make much less.

Hope this helps, let me know if it doesn't.

[oscar111]

5. Mastein, thanks + a question, please

Mastein, you seem to be highly versed in these matters.

If GDP is not , and seems to be not, what i thought,

prithee tell me what is the term for total wealth produced per year in the US? < i have heard the term somewhere, "value of total goods and services produced" >. I want to be able to wrap my mind around everything important happening in the economy, in skeletal outline. ie, to see where all the wealth goes: some to the raw materials, some to new factory machines, some to wages, etc.
I want to leave tax and gov activity out of it at this stage.

I want to see a model that looks at the economy as a democrat would, with the parts picked, all tethered in reality, not abstract finance terms.
Alas , much of the model you gave, appears to be viewing the economy from the odd angle of corporate eyes.
I hope you can be patient with me and please try to recast what you know in fully tactile concepts. Sure, some parts cannot be, but many can.

I had Samuelson's book in a course, and reviewing it now, i can see how odd the corporate eye is. < he's also a sloppy writer, to the max! >

eg, in the model i seek, your family spending on 3 areas is not even included. But your wages are. In short, where does all the wealth generated per year, go? In the first cycle, that is. Where to , and if possible, how much to each? I have figured out 4 T goes to ordinary folk's wages.

/// This is not the economics spoken of in Samuelson or the nightly news. This is economics as seen by a democrat, wondering what changes can help the middle class. What changes can be used to revive FDR's programs. Patterns that are useless to a corporation. But useful to democrats.

Hope you find this interesting,
Oscar

[mastein]

6. I am not that great

I have a total of one academic class in economics, and that luckily was a macroeconomics class. There are many better and smarter than me on the topic here in this forum that could better answer your questions.

I think what you are talking about is GDP where you ask total value of goods and services produced, and there are a couple of ways in addition to the formula I gave to get there. Unfortunately, I do not have my text nor workbook from when I took the course so I cannot look it up, but I do remember a series of bar charts starting with GNP then going (back then it was still down) to GDP and several more down the line ending in personal income, discretionary income, and disposal income. I do not remember the exact progression but I think it might be useful in answering your question. Sorry, but you are pushing the limits of my recall. I will ask those with better background and more current information to jump in.

One note is that Americans have the lowest savings rate in the world, and it probably won't be get better any time soon especially with interest rates so low. One other structural reason is the huge amount of benefit the government gives to 401(k)s etc over savings.

One general note on corporations and metrics. I do not think that we should view all corporations as evil. There are many very good actors out there looking to do what is right by their employees and customers. We would not have computers nor automobiles nor kitchen appliances etc. were it not for corporations. A well run corporation will benefit all by pricing their goods fairly, treating their people well, and properly stewarding their company. Unfortunately, the lack of enforcement regarding corporate malfeasance, and the corporate welfare state has tipped the balance away from honest players. As Democrats our main goal is to get responsibility on all sides so as to level the playing field so neither workers nor investors (see Enron for example) are exploited by the Captains of Industry.

I could probably do a bit better explaining the C+G+I+(x-m) equation for GNP/GDP where it would be more relevant to you, but I think a good entry level macroeconomics text and or course would do a much better job than I could here.

It might be better for me to take this discussion in smaller chunks, as I post here only while I am at work and don't have tons of time. Once again apologies for not being able to answer your question... but maybe... I can come up with something in the morning.

Matt

[oscar111]

7. Still, Where Does The Money Go? oscar

Hi ,
and thanks for the good reply. I agree mostly.. except that many inventions you cite, or parts of them, happened from individuals who would have done it in any model.
Inventions even happened under 1700 and 1800 and some 1900's kings. The various models are basking in borrowed glory , which belongs to inventors, really.

All of us dems need to know the economy's overall shape to refute freepers. but i only hear partial answers so far.

Are we really all ignorant of the economy's BIG PICTURE? Heaven help us at the watercooler debates!
Freepers will mop up the floor with dems, and own all of D. C.

[DFLer4edu]

8. Here are a few sites that should help

http://www.rationalrevolution.net/american_income_taxation.htm
http://www.ufenet.org/research/wealth_charts.html
http://www.sciam.com/article.cfm?articleID=00000F28-A5BE-1C71-9EB7809EC588F2D7

[oscar111]

9. Thanks, DFL, and ...

pls tell me who puts out the rational rev site. Dont want to get on any list of Ashcroft's for visiting that site.

Also, pls tell me what DFL stands for? Might want to change DFL so it communicates, not mystifies. LOL.
Hope this helps, and
BIG THANKS FOR THE SITES!!! I look forward to seeing them.

[oscar111]

10. No answer yet!Oscar begs all for answer!

My Thanks to DFL, ... i visited last two of your sites, .. alas no answer.

I seek "snapshot" flow of income from the GDP to the parts of the population/economy. Who gets the GDP pie? How much goes where?

/// Dems HAVE to know this, to see how much we can put into new programs to help end hunger, get free dr's, etc. Is there an exciting huge amount to easily wipe out all poverty? Is caveman paul harvey right... "no where near enough. Liberals live in fantasy land. Ignore them."

///Yet -->NO ONE HERE KNOWS, it seems. What a sorry state dems appear to be in!
HELP! WHERE DOES THE GDP GO ?

Oscar

ps {DFL, pls tell me who puts out the rational rev site. Dont want to get on any list of Ashcroft's for visiting that site.}

[oscar111]

11. Statistical info for LW-where?

Since no one at DU was able to answer my basic question, I conclude we are in great need of a book/site of statistical info relevant to a democrat's goals for the economy.

A book where one quickly could look up stats. Not long wordy essays.

Something like a Yearbook of Facts, or Almanac, ... for Democrats. Has the dem party ever been organized enough to put such out? Or even a newspaper?

I still want to know also, where the heck the GDP goes. How much to who? Only $4 trillion has been explained so far.

6 trillion is MISSING. Well, unexplained, that is.

[German-Lefty]

12. I think he answered the question.

Something like a Yearbook of Facts, or Almanac
Sure it does seem like a good idea to have a site that somewhere.

Since no one at DU was able to answer my basic question...
Dude, I think your question was answered. That 50K was the median, not the mean income of families. So if Bill Gates makes 1000 times as much, that number won't change at all.

Here's a cute site that shows how insanely sharp the income curve shoots up at the end:
http://www.lcurve.org/

By the way ~500G$ is spent on the military so that's a good fraction of GDP. The biggest parts of GDP consumption and investment.

When Stalin wanted to know his economy was getting stronger, he'd compare the amount of say Pig Iron produced this year vs. last (and he'd send people to Siberia if the didn't figure out how to "improve" these numbers").

Our modern economy doesn't let you count commodities to measure production. Products are constantly being improved and replaced by better ones. So what we do is try to use market to estimate the value of goods produced this year with the value produced last year.

Example:
Last year you buy for consumption a PC with a 1GHz processor for 500$.
This year a business buys one with a 2GHz processor for 500$.

According to the way we calculate GDP, both machines are of equal value!

All you economists can look at is the market values of different things at particular times versus the currency and the volume of activity. Which leads you to the next fun problem, defining inflation.


I hope this doesn't confuse you more then helped. I'm no expert, but just pretend your a scientist trying to figure out what the economy is doing. What would you measure?

To get a good idea of what makes up GDP and how it's calculated look here:
http://www.bea.gov/bea/newsrel/gdpnewsrelease.htm
at Table 3.--Gross Domestic Product and Related Measures: Level and Change From Preceding Period.

Here's a quick wrap up:
Gross domestic product....... 10,985.5

Personal consumption expenditures. 7,753.2 (next 3 are a break down)
** Durable goods................... 941.1
** Nondurable goods................ 2,209.4
** Services........................ 4,602.7
Gross private domestic investment. 1,671.4
Net exports of goods and services. -494.9
Government consumption expenditures
and gross investment............. 2,055.7

So it looks like Americans spend most of GDP on personal stuff, then government services, and then we invest.

[Viking12]

13. Recalculate

Your initial calculation is flawed; you multiple apples to determine oranges. You incorrectly multiplied the median income to get the percentage of total GDP. The MEAN is an average which would allow you to do that. However, the MEDIAN is the middle point; 50% of the household incomes are above that figure and 50% of the household incomes are below that point. Think of it this way: Four friends are sitting in a bar. Person A makes $30k, B makes $40k, C makes $ 50k, and D makes $60k. In this case the average AND the mean both happen to be $45k. But then Bill gates walks in, his income is $10,000k. The median goes to $50k because that's the point at which the population sample is split 50/50. However, the MEAN has risen to $2036k.

To calculate household income as a portion of GDP, you would need to ADD all incomes, not multiply the median. If you were to do this you would arrive at a figure very different from $4 trillion.

Furthermore, Gross Domestic Product (GDP) is the market value of goods and services produced by labor and property in the United States. GDP also includes business transactions so aggregate household income is only a portion of GDP. An almanac of sorts is available at: http://www.bea.doc.gov

Third, the DFL = Democratic-Farmer-Labor Party. That is how the Democratic party is identified in Minnesota. Mid 20th century the Democratic and Farmer-Labor parties merged and kept all three names.

Fourth, fuck Ashcroft. Read whatever you like. Don't let "threats" inhibit the exercise your rights to become an informed citizen.

[German-Lefty]

14. Does Eron style accounting figure into GDP?

GDP also includes business transactions so aggregate household income is only a portion of GDP.

Say group of cronies has companies A and B subverted. Company A buys 10M$ consulting services or software from B and vise versa. Both companies put down that they made an investment of 10M$ and had sales of 10M$. This makes the stock holders think their companies are growing and selling things. In truth they may not be doing anything productive. The point is it's hard for investors to tell.

It seems like they can screw up GDP this way too. It looks like their contribution is 20M$ to GDP.

Of coarse the only way to stop this it to fight such collusion directly.

[oscar111]

15. Viking,GermanLft:questions

Hi,
thanks to both of you.
Viking, what then would the number be for the total income of ye venerable Middle Class?

German, thanks, but you are trapped { like 99% of americans} in the economic concepts trotted out by the RW. I am seeking the GDP as viewed by Democrats, using our own concepts.

Who owns the various parts of the GDP? Calling them things like "investment"/"consumption" does not tell us who owns the investment money, or who gets how much consumption money.

// Roughly how much is in each partof the GDP? Middle Class ... and lower too ... income is one part.

//Another part is Plowback.. money that must be spent on new factory machines + research. I estimate 2 Trillion.

Viking, if 4 T is middle class income {insert your own number pls}, and 2 T is Plowback, then who/what gets the remaining ~8 T?

DON'T ACCEPT MUDDY RW CONCEPTS,
Your original poster.

[stevebreeze]

16. the rational revolution site is a great one!

For similar types of data you you might want to check out Center for Budget and Policy priorities site.

http://www.cbpp.org/1-18-00sfp.htm
:kick: