C + I

In macroeconomics, GDP = C + I + G.

That means the total value of the economy, or Gross Domestic Product = Consumer Spending (C) + Investment spending (I) + Government spending (G).

I prefer my own measure: Gross Productive Domestic Product.

GPDP = C + I – 2G

That means each dollar government spend reduces the productive health of the economy by two dollars.

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5 thoughts on “C + I

  1. Interesting formula.

    The [-2G] portion reminds me of the fact government produces nothing. Of course you immediately hear the non-economic notion that government does in fact produce something e.g. roads, teach the children, etc.. In fact, government produces nothing because the coercive power of government taxation merely transfers funds from the private sector [transfer payment] to the public sector (funds that otherwise could be used in the private sector). Hence its not a creation of production it’s merely a transfer of production.

    Moreover, F.A. Hayek made the grand point that “state” aka government is in charge of coercive taxation to create funds to provide services the public wants/needs, but nowhere is it written that government needs to provide the particular services. Government has arbitrarily decided to provide the service whereas the private sector could better provide the service from the same pot of funds collected through coercive taxation.

    Why did government arbitrarily decide to provide the services? The argument is that politicos, through the mechanism of government, could expand their powers.

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