For 1 HOUR WRITER

Reply to these two:

Leah’s topic:

Top of Form

Simon Kuznets and the way he valued items in the GDP calculation

       Much of Simon Kuznets work focused on testing. Kuznet is credited as, the “inventor” of GDP (Gwartney, James D., Stroup, Richard L., Sobel, Russell S., Macpherson, David A., 2013, p. 144). The text shares that “[scientific thinking is economic thinking],” (Gwartney, James D., Stroup, Richard L., Sobel, Russell S., Macpherson, David A., 2013, p. 12). What Kuznet really accomplished for economics is to determine a way to test socio-economic variables (fertility, extraneous environmental conditions, labor conditions, etc.) and craft a theory that could then predict outcomes. Thus, the test of a theory is its ability to predict would be relevant to the topic of Kuznets’ valuation.

            Personally, I enjoyed discovering how Kuznet came to breaking down the gross domestic product and showing that it was not complete. He tested the Keynesian revolution. Challenging John Maynard Keynes was sort of like someone testing Warren Buffett economic thinking today, except that Buffett did not advise economic theory after having to borrow from his folks because Keynes lost substantially during the Great Depression. In Kuznets lifetime that would have been extremely important particularly in the 1930-1960’s.  Friedrich von Hayek had warned against buying into Keynesian economic theory, particularly relative to central planned economies (socialized economies) which he said led to tyranny. Kuznet busted a portion of what Keynes theorized because he excluded some production costs associated with provisioning goods and services.

            The GPD is cited over and over again to legitimize shifts in government activities however what GPD does is measure output relative to price adjustments (Gwartney, James D., Stroup, Richard L., Sobel, Russell S., Macpherson, David A., 2013, p. 144). I think Kuznet was right to disclose all aspects of GDP and it matters today especially because when tough economic decisions have to be made, in light of the Great Recession, placing additional burdens that impact quality of life for the poor and middle classes in particular, must be held to the light and tested. Throwing GDP in to curry political popularity for policy-making is unhealthy for society that in general has no idea what GDP really is.

            Simon Kuznets relationship with GDP reminds me most of the Christian relationship with Passover. All Christians recognize the importance of the Last Supper and Easter but only those who want to thoroughly understand it’s significance for them personally will return to Exodus 12 and then read through to Deuteronomy 16:1-8 and then read Jesus’ gospels. The Passover tradition and the New Testament of Christ. When Jesus chastised the Pharisees and Sadducees when they failed to see He is the Messiah and fulfilled the Messianic promise, Jesus got to the simple, all-important purpose of His human existence. Like politicians today, the Pharisees and Sadducees did not want to admit they knew they had lost the covenant they had shared with the Lord. Since they were leaders, it meant they were responsible.  Like the Pharisees and Sadducees, politicians today use GDP to elevate themselves but miss what it really means on an individual level. GDP is as important to economics as Passover is to Christians. It is fundamental in society and economics to everyone but most people do not know enough about it and that will not change unless something inspires them to investigate why it matters to them.

References

Blinder, A. S. (2008, August 23). The Conscise Encyclopedia of Economics. Retrieved from Library of Economics and Liberty: http://www.econlib.org/library/Enc/KeynesianEconomics.html

Dunaev, B. (2013). Optimizing the Growth of Real Gross Domestic Product. Cybernetics and Systems Analysis, 49, 98-109. Retrieved 08 22, 2014

Gwartney, James D., Stroup, Richard L., Sobel, Russell S., Macpherson, David A. (2013). Economics: Private and Public Choice (15th Edition). Stamford, CT, United States: Cengage Learning.

Vane, Howard R, Mulhearn Chris. (2005). The Nobel Memorial Laureates in Economics. Northhampton, Massachusetts, United States: Edward Elgar Publishing. Retrieved 08 23, 2014, from http://www.liberty.edu:2048/login?url=http://literati.credoreference.com.ezproxy.liberty.edu:2048/content/entry/elgarnobel/the_1971_nobel_memorial_laureate/0

Roy’s Topic

REAL GDP vs. NOMINAL GDP

Gross domestic product, or GDP, is the market value of all final goodsand services produced within a country during a specific period.  (Gwartney, Stroup, Sobel, MacPherson, 2013, pg. 131)  As of 2013 our top 5 highest GDP countries are the United States of America, China, Japan, Germany, and France. (2013)  GDP is made up of two different factors.  The first is the real GDP which is GDP adjusted for changes in the price level.  (Gwartney, Stroup, Sobel, MacPherson, 2013, pg. 141)  The other factor is the nominal GDP which is the GDP expressed at normal prices.  (Gwartney, Stroup, Sobel, MacPherson, 2013, pg. 141)

When people talk about GDP, unless otherwise stated, they are usually referring to the nominal GDP.  The nominal amount is usually higher than the real amount because the nominal value leaves price changes in the estimate whereas the real value is adjusted to remove effects of the price ranges.  So the largest difference the between the real and nominal GDP lies solely in prices due to inflation.  Real GDP accounts for price changes that may occur due to inflation.  This means that nominal GDP would be the one changing if the prices change but the output does not.

One of the better examples I could find that I felt best represented this comes from the book of Matthew , "And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. Then he that had received the five talents went and traded with the same, and made them other five talents."  I think that biblically this parable is a good representative for GDP.  As we discuss our economics we keep in mind that it all revolves around currency, prices, and costs.  Money, whether we wish it to be or not, is unfortunately a very important aspect of all of our lives.  So I would like to close with this passage from Psalms that I think we should all always think about and consider, "He that putteth not out his money to ursury, nor taketh reward against the innocent. He that doeth these things shall never be moved."

References:

Gwartney, J.D., Stroup, R.L., Sobel, R.S., & MacPherson, D.A. (2013). Economics Private and Public Choice. Mason: South –Western Cengage Learning

The King James Study Bible. Nashville: Thomas Nelson, Inc., 1988

Gross domestic product 2013. (2013, July 1). Retrieved August 21, 2014, from http://databank.worldbank.org/data/download/GDP.pdf