The article discusses a clash between U.S. administration officials and economists regarding how GDP is calculated, emphasizing the role of government spending. Commerce Secretary Howard Lutnick argues that government spending artificially inflates GDP figures and promotes inefficiency. Elon Musk supports this view, suggesting that excluding government spending would yield a more accurate measure of economic activity. The debate centers around whether government expenditures should be included in GDP calculations, as they can skew the perception of economic productivity and output.
A more accurate measure of GDP would exclude government spending. Otherwise, you can scale GDP artificially high by spending money on things that don't make people's lives better.
You know that governments historically have messed with GDP. They count government spending as part of GDP. So I'm going to separate those two and make it transparent.
If the government buys a tank, that's GDP. But paying 1,000 people to think about buying a tank is not GDP. That is wasted inefficiency.
When the government buys a fighter jet, or builds a road, or educates a child, it reflects the production of goods and services.
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