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.


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.

  2. Pingback: The Great Stagnation and GDP « Our Dinner Table

  3. Pingback: Why C+I is a better measure for the health of the economy | Our Dinner Table

  4. Pingback: Reinhart and Rogoff: Lesson in statistical terms | Our Dinner Table


Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s