Thursday, July 1, 2010

Government Desperate to Promote Happy Thoughts

Credit Writedowns is running a piece without comment titled GDP 2.7% Higher if R&D Treated As Investment. Here is the beginning:

Gross Domestic Product (GDP) would have been, on average, 2.7 percent, or $301.5 billion higher between 1998 and 2007 if research and development (R&D) spending was treated as investment in the U.S. national income and product accounts, the Bureau of Economic Analysis (BEA) announced today. The 2010 R&D Satellite Account updates and extends BEA’s estimates of the effect of R&D on economic growth through 2007, and now includes coverage of the most recent business cycle expansion.

This does not make sense to me. R&D is nothing but an expense unless or until it leads to a saleable product, and ideally a profitable product. It is bad enough that production of junk food and drink is given weight in GDP, but leisure time is given no weight. BEA must be desperate.

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