THE tinkering of federal government accountants is rarely newsmaking stuff. But after a few tweaks to the way the Bureau of Economic Analysis calculates the gross domestic product, those accountants have pulled off something seemingly remarkable: in the blink of an eye this week, they made the size of the American economy grow by $560 billion.
Not only is this a big change — that output, 3.6 percent of the total, lifting the economy to $16.6 trillion this year, is like adding a New Jersey to the nation’s economy — but it raises important questions about what we consider economic value and costs, and what we leave out.
The changes involved are pretty simple. Beforehand, if a factory bought a drill press, the government would count that as an investment that would generate income over time, depreciating along the way until its value added fell to zero.
But consider the movie companies or TV studios that produce lasting hits like “Star Wars” or “Seinfeld.” They, too, spin off years of revenues. In that sense, their production is much like a capital investment, though there’s been no place in the national accounts to score that investment.
Now there is a new category in the quarterly G.D.P. reports called “intellectual property products,” including “entertainment originals.” For example, the production costs of what the B.E.A., a part of the Commerce Department, calls “long-lived TV shows” — ones that provide a steady stream of income, like “Seinfeld” reruns — will for the first time be counted as investment. That’s right — the ultimate show about nothing will now add billions to G.D.P.
Still, if that sounds squishy, that’s because it kind of is. Also, most people may not react well to being told that, according to the B.E.A., we’re all about $1,800 richer on a per-capita basis — but only on paper. Your paycheck’s still your paycheck. Have a nice day.
I have watched and listened as you have argued with Norris over the last few months (seems like years). I have not agreed with some of the things you have said but I must compliment you on this post. In fact, IMHO it is the most intelligent thing that I have ever read from you. I feel that you have hit the nail right on the head. You seem to be intimating that this economy becomes more Alice In Wonderland and less Benjamin Graham everyday and I could not agree more........good job.......you've noticed that the Red Queen is talking backwards.......most people don't seem to even be able to recognize that anymore......do you find this as frightening as I do????????