Hacker News Reader

> Why should it scale linearly with GDP? I

GDP per se, maybe not, however we should still expect it to scale with the costs of services and goods that are correlated.

Ex: If the dollar price of rent doubles, then dollar expenditures to keep the elderly from dying in ditches will likewise double, even with no change in population.

View on HN

GDP increases are generally measured in real (i.e. inflation adjusted) terms, so a doubling of rent costs don't imply a larger GDP. If we're talking nominal GDP, then I'd agree we should expect gov expense to increase as well.

Inflation refers to the money supply and is one number applied to everything in the economy. It does not account for things getting legitimately more expensive. Rent can go up faster than inflation, indeed we'd expect it to as presumably buildings are built or improved to higher standards and the surrounding neighborhoods have improvements which make the local real estate more valuable. Likewise for many other goods and services.

Reply on news.ycombinator.com