Hacker News Reader

Comment by tonmoy | Hacker News Reader

GDP is a measure of everything produced in a country per year. It makes no sense to compare the value of a company with growth per year.

View on HN

Of course you can compare a rate with a quantity. GP is saying that whole countries take more than a year to create one (proposed) Qualcomm’s worth of value.

Have you never compared your car’s gallon-per-mile rate of fuel consumption with its gas tank’s size in gallons?

I haven't. The operation I suspect you're thinking of is division, not comparison. Division of capacity by consumption gives range, whilst a comparison leaves me scratching my head for a meaningful interpretation. I'm afraid this analogy appears to reinforce the point rather than challenge it.

But by that logic, it makes no sense to compare the cost of a new computer to the cost of rent, because they're different things. GDP is a measure in units of money, and so is stock value, so you can compare them just fine even though they're not related to each other.

That doesn't follow at all... A cost is always an outflow of money. As I mentioned in another thread, GDP counts the "same dollar" being spent multiple times. Even if there was only one dollar in the economy, you could generate millions in GDP by spending that one dollar millions of times in a year. However, you sure as hell aren't going to be making a $10 acquisition proposal with only $1 in the economy.

You're missing the point here, no one is comparing the two as if a country's GDP represents something equivalent to the value of a company. They're just saying something along the lines of "Wow! 3,000,000 gallons of water?!? That's more than the amount of water that flows past my house on the river in a year!" (Obviously made up numbers)

Well if you're going to try to be technical about it, GDP does not represent growth per year. GDP also does not specify that it must refer to a year of time, you have to qualify that. GDP is also frequently measured quarterly.

It makes sense to relate to GDP if what you're looking for is a well understood scale to use as a reference for very large financial numbers.

Since the GP did not mention a time frame I assumed yearly (otherwise it would be most countries instead of some). And when you compare GDP with a the value of a company it sounds like “company X is more valuable than country Y” to most people. I was just trying to mention that this is not the case.

Reply on news.ycombinator.com