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Comment by laratied | Hacker News Reader

So often I read so many utterly ridiculous economic opinions expressed here by people who should know better and be better educated.

How can a smart, presumably educated person not know that rent counts as economic activity?

To say the world is poorer than in 2008 is just utterly preposterous.

Per capita GPD in China went from 3500 to 12500. India 1000 to 2200.

There is half the world. US, Canada and Europe is only 15% of the population but I don't know how the case can be made we are poorer than in 2008 either.

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> How can a smart, presumably educated person not know that rent counts as economic activity?

Of course it's "economic activity". But if I sublet to someone that sublets to someone that sublets to someone that lives in an apartment, that's a 4x increase in money flow but there's no production of goods or services at all.

It makes sense to have the cost of building and maintaining homes represented somewhere, but rent is a poor proxy for that.

GDP doesn't count all "economic activity." Otherwise, HFTs would cause GDP to explode. It doesn't account for the cost of construction either because that's an intermediate cost. Even home sales aren't counted because they're considered an investment. GDP only considers the value of the final consumed goods and services, and rent is a consumed service. If you're a homeowner, they estimate your rent and use that instead.

> GDP doesn't count all "economic activity."

Right, which is why the insult in the post I quoted is getting things very wrong.

> GDP only considers the value of the final consumed goods and services, and rent is a consumed service. If you're a homeowner, they estimate your rent and use that instead.

I understand that but it's a notably flawed way of going about it. Prices in general can have a loose coupling to value but with rent it's extra bad. A small change in housing stock can trigger a massive swing in rent and GDP even though the service being delivered doesn't change.

https://en.m.wikipedia.org/wiki/Rent-seeking

For the 1000th time, regular rent (e.g. you pay $1000/mo for an apartment) is not the same as rent-seeking.

It's just correlated with ALL sorts of rent seeking:

https://www.propublica.org/article/yieldstar-rent-increase-r...

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