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Comment by pliny | Hacker News Reader

>“Apple’s $1 trillion cap is equal to about 5 percent of the total gross domestic product of the United States in 2018,” said David Kass, professor of finance at the University of Maryland. “That puts this company in perspective.”

The comparison would be Apple net income (~$50B) vs. GDP, not market cap (which has units of USD) vs. GDP (which has units of USD per year).

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Or, the net present value of the US economy plus assets, which is probably pushing a quadrillion dollars.

No, 5 to 1 has been the ratio in recent decades. I know this was true in 1990s when I studied this issue, and it could not have changed that much in 20 years. So 100 trillion would be my assumption.

I wonder how that breaks down into categories. Some quick googling reveals the following:

~30 trillion in residential real estate

~6 trillion in commercial real estate

~30 trillion in pubic company value

Other big buckets I guess would be undeveloped land & private companies.

~100T sounds pretty plausible but I feel like I'm missing a big bucket or two. Not sure what though.

> I feel like I'm missing a big bucket or two. Not sure what though.

Considering how huge an employer the public sector is in the US, it stands to reason there's a huge value to in the government-as-an-enterprise, even if only considering cash value of assets, such as real estate (including natural resources!) and equipment (including military).

Of course, it might be very tough to calculate, if one includes every public entitity down the the local level and takes into account the debt of each entity.

Yeah, that was a real howler. I really hope he was somehow misquoted, because the comparison literally does the opposite of put something in perspective.

Well, I think it accomplishes that. You need USA to put aside 5% of what it can make in a year to buy Apple. That’s a ton of money!

Metric, Imperial, or Shit-ton?

Or one USA to build 20 Apples in a year.

I think it puts it in perspective as a magnitude of money, which I'd assume was all he meant to do. I don't think he was suggesting that Apple actually accounts for 5% of GDP, but was just using it to illustrate how monumental $1T is.

It does put it in some perspective. It's a lot. He didn't say they were directly equivalent. You need 5% of US GDP to buy Apple.

GDP is more like a country's Turnover than Net Profit

I think the analogy holds, unless your bank account reflects your payroll for the year (no costs).

That’s debatable. There are a number of ways to calculate GDP. One is the sum of value added, as in the value of the end product minus the value of input. Another is the total sum of income from labor and assets. Since it includes time spent it is not really net profit but it’s not turnover either. It’s some hybrid but, I would say it is closer to net profit.

Quite a funny hybrid indeed: if I pay you to take my money, and you pay me to take your money, somehow GDP would have increased.

It's a measure of economic activity (of which our little give-and-take game would be an example) and it is meaningful under the assumption that all that activity happens for more rational reasons than just trolling economists. Note that our little give-and-take game would be a very expensive example of such trolling, if somehow the tax-man got involved.

He said it is "equal to" not that it accounts for. I believe the analogy is valid, though can be easily misleading.

The units are different, it would be like saying that my car is half as wide as it is fast.

A particular years GDP isn't a per year unit, is it?

It is implicitly, but this is often obscured because currency is both a medium of exchange and a store of value. Accounting makes the distinction between your income statement (which has a time period attached, usually either quarterly or annually, and is focused on dollars exchanged with other entities) and your balance sheet (which is a snapshot quantity at a particular point in time, and is focused on dollars stored). GDP is part of a country's income statement - it reflects how many goods & services were produced & sold within the country.

The comparison is still valid even if the units don't quite match. For example, if you flip the comparison you get "The US's total gross domestic product for 2018 is equal to 20 times the Apple's total market cap" which is a pretty reasonable statement. If you want to talk about Apple's net income per year, that is a totally different statistic.

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