GDP Problem #1 – False reporting

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You would think after what happened with the USSR, this would be blindingly obvious.  Communist countries lie about everything – especially their economies.  The Soviets in the 80’s couldn’t keep their grocery shelves stocked with much of anything, and it was not unusual for huge lines to form for basics like bread and and even toilet paper.  Their grocery shelves often had more bare space than products.  Yet you had famous Harvard economist John K. Galbraith saying in 1984:

“That the Soviet system has made great material progress in recent years is evident both from the statistics and from the general urban scene. . . . One sees it in the appearance of solid well-being of the people on the streets . . . and the general aspect of restaurants, theaters, and shops. . . . Partly, the Russian system succeeds because, in contrast with the Western industrial economies, it makes full use of its manpower.”

A Nobel prize winner in Economics from MIT,  Paul Samuelson in 1985:

“What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth. . . . The Soviet model has surely demonstrated that a command economy is capable of mobilizing resources for rapid growth.”

They were far from alone.  So after such a colossal disconnect between the reported figures and the reality, people would learn their lesson, right?  So why is the economic information that China puts out today, by and large, treated as though it were reliable?!?



Written by Jim T

January 27, 2010 at 11:12 pm

Posted in Uncategorized

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