Did you know? GDP ignores digital value

Real world experts are starting to think about all the economic value stored up in digital currencies. Here's a blog post about it by Joel McKendrick, pointed out to me by Robert Gehorsam. Thanks Robert!

Comments

[Stabs]

1.

Playing Devil's Advocate: if Google Maps runs for 15 years, never charges anyone a penny, then stops how much value should be added to the GDP of the country it originates from?

Are we in danger of doing the 90s dotcom bubble thing here of perceiving value where the products are not actually going to be monetised?

[Edward Castronova]

2.

Google maps adds tons of value. Value and money are different things.

Value and GDP are different things too. For purely practical reasons, the GDP is defined only in terms of things that are monetized. Things that are never traded are hard to quantify. So GDP excludes them.

Thus, GDP includes child care if it is done by strangers in return for money, but excludes it if it is done "for free" by a child's parents. It surely isn't "free," and it surely adds value, but the GDP excludes it.

A conceptual accounting of wealth should include every material thing - including work - that is valuable to people. A mother's love is not part of our wealth, but the loving work she does is. And loving work is better than indifferent work too. That too should be accounted for.

Now, the dotcom thing. It's totally different. The dotcoms did not have value. There, the system was assuming value where none existed. That's not good.

Summary: Assuming value where there is none, is bad. Dotcom. But also, assuming no value where there clearly is, is also bad. Google maps, child care in the home.

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Consider stocks and bonds. Let's say I have a safe full of them (I wish). I never sell them. They are pieces of paper. Are they part of my wealth or not? Of course they are. If the companies associated with them have high value, they add a lot to my wealth. If not, then they add little or nothing. It's not about the stocks and bonds, the papers, nor about whether they are traded or not. It's about the value of the underlying companies.