thanks for the suggestion. I'll read Andrei's writings. My economic thinking is deeply influenced by Prof Michael Hudson who is also on Unz Review. it's a pity few people read classical political economics today.
I wrote a short piece on the damage of University of Chicago on western economics and politics that might interest you. I believe neoliberal economics and neocon foreign policies ruined the west (and the world). They are the two sides of the same coin and originate from the same destructive ethno religious group.
Great points overall, but one factual correction: China does include imputed rents for owner-occupied housing in its GDP calculations. Historically, the National Bureau of Statistics (NBS) employed a cost-based method, estimating imputed rents using construction costs and depreciation rates. However, in December 2024, the NBS revised its methodology to adopt rental value estimates, aligning more closely with international standards.
practices like those used by OECD countries, which estimate imputed rent based on market rents for comparable properties. This change contributed to a 2.7% upward revision of China's 2023 GDP, adding 1.34 trillion yuan from housing services alone. The shift was partly due to improvements in China's rental market data, which had previously been incomplete.However, China's imputed rent estimates remain conservative compared to countries like the U.S., where imputed rent accounts for a larger share of GDP (around 6-8%). In China, housing services from owner-occupied homes are estimated to contribute only 3-4% to GDP, despite high homeownership rates (over 80%). This suggests that China's imputed rent calculations may still undervalue housing services compared to market-based approaches.Critics argue that China's conservative methodology, even after the revision, underestimates household consumption and GDP, potentially by as much as 5% for housing services alone. This affects international comparisons, as methods like the OECD's use of market rents typically yield higher GDP figures.
Yes, I agree—China remains more conservative than the U.S. in estimating self-rentals. You've hit the nail on the head by raising this issue. At a minimum, GDP estimates should reflect actual market transactions. Treating non-monetary activity as if it were monetary distorts the real picture of economic output. In that regard, I’m less surprised that the UK includes illegal drug sales in GDP (setting aside moral and economic efficiency concerns) than that most countries fabricate non-existent rental transactions to inflate GDP. Once you start down that path, it becomes a slippery slope—for example, if I own two houses, one I live in and one is unoccupied, do I rent both to myself? Apparently, in the U.S., they claim to impute rents only to owner-occupied primary residences, not vacant or second homes unless they are actually rented. But how do they know which of my houses is vacant? The answer: they rely on household surveys, which are often unreliable. This is exactly what happens when you start inventing fictional transactions—there’s no end to the paradoxes, and it opens the door to GDP manipulation, which is exactly what politicians want.
totally agree. I think the GDP formulation used today is not condusive to apple to apple comparison between countries. in fact, it is subject to wild manipulation like India counting cow dung as GDP to the tune of $4.7 billion in 2022. direct comparison of productive output is much more insightful, though imperfect - for example, steel production volume, car production, college degrees granted, etc.
good point. I wasn't aware of the inclusion of imputation in recent GDP accounting. even with imputation of owner occupied housing, it's not an apple to apple comparison as Chinese estimation is more conservative and under values housing contribution vs US. Also there is no healthcare insurance imputation as in the US.
abover is a portion of what Grok summarizes about Chinese housing imputation -
you should read andrei martyanovs blog, called smoothie blogspot, he is on the same page as you, he is a soviet American Californian and he is great as well. BTW I found you on unz review. Love from Johannesburg south africa.
What ever happened to GROSS NATIONAL PRODUCT (GNP)?
I recall, maybe 35-40 years ago the push by Fatmerican economists to dump GNP for GDP.
I also recall the shit argument that GDP is more accurate "Because the total amount of $$ spent, whether productive or disaster, is an accumulated value". But when are deleterious events considered by the calculus of "total $$ spent" ever a good thing?
thanks for the suggestion. I'll read Andrei's writings. My economic thinking is deeply influenced by Prof Michael Hudson who is also on Unz Review. it's a pity few people read classical political economics today.
I wrote a short piece on the damage of University of Chicago on western economics and politics that might interest you. I believe neoliberal economics and neocon foreign policies ruined the west (and the world). They are the two sides of the same coin and originate from the same destructive ethno religious group.
Great points overall, but one factual correction: China does include imputed rents for owner-occupied housing in its GDP calculations. Historically, the National Bureau of Statistics (NBS) employed a cost-based method, estimating imputed rents using construction costs and depreciation rates. However, in December 2024, the NBS revised its methodology to adopt rental value estimates, aligning more closely with international standards.
https://www.reuters.com/world/china/china-says-new-housing-metrics-behind-upward-revision-2023-gdp-2024-12-27/
practices like those used by OECD countries, which estimate imputed rent based on market rents for comparable properties. This change contributed to a 2.7% upward revision of China's 2023 GDP, adding 1.34 trillion yuan from housing services alone. The shift was partly due to improvements in China's rental market data, which had previously been incomplete.However, China's imputed rent estimates remain conservative compared to countries like the U.S., where imputed rent accounts for a larger share of GDP (around 6-8%). In China, housing services from owner-occupied homes are estimated to contribute only 3-4% to GDP, despite high homeownership rates (over 80%). This suggests that China's imputed rent calculations may still undervalue housing services compared to market-based approaches.Critics argue that China's conservative methodology, even after the revision, underestimates household consumption and GDP, potentially by as much as 5% for housing services alone. This affects international comparisons, as methods like the OECD's use of market rents typically yield higher GDP figures.
Yes, I agree—China remains more conservative than the U.S. in estimating self-rentals. You've hit the nail on the head by raising this issue. At a minimum, GDP estimates should reflect actual market transactions. Treating non-monetary activity as if it were monetary distorts the real picture of economic output. In that regard, I’m less surprised that the UK includes illegal drug sales in GDP (setting aside moral and economic efficiency concerns) than that most countries fabricate non-existent rental transactions to inflate GDP. Once you start down that path, it becomes a slippery slope—for example, if I own two houses, one I live in and one is unoccupied, do I rent both to myself? Apparently, in the U.S., they claim to impute rents only to owner-occupied primary residences, not vacant or second homes unless they are actually rented. But how do they know which of my houses is vacant? The answer: they rely on household surveys, which are often unreliable. This is exactly what happens when you start inventing fictional transactions—there’s no end to the paradoxes, and it opens the door to GDP manipulation, which is exactly what politicians want.
totally agree. I think the GDP formulation used today is not condusive to apple to apple comparison between countries. in fact, it is subject to wild manipulation like India counting cow dung as GDP to the tune of $4.7 billion in 2022. direct comparison of productive output is much more insightful, though imperfect - for example, steel production volume, car production, college degrees granted, etc.
good point. I wasn't aware of the inclusion of imputation in recent GDP accounting. even with imputation of owner occupied housing, it's not an apple to apple comparison as Chinese estimation is more conservative and under values housing contribution vs US. Also there is no healthcare insurance imputation as in the US.
abover is a portion of what Grok summarizes about Chinese housing imputation -
you should read andrei martyanovs blog, called smoothie blogspot, he is on the same page as you, he is a soviet American Californian and he is great as well. BTW I found you on unz review. Love from Johannesburg south africa.
What ever happened to GROSS NATIONAL PRODUCT (GNP)?
I recall, maybe 35-40 years ago the push by Fatmerican economists to dump GNP for GDP.
I also recall the shit argument that GDP is more accurate "Because the total amount of $$ spent, whether productive or disaster, is an accumulated value". But when are deleterious events considered by the calculus of "total $$ spent" ever a good thing?