In response to:
Mitchell is wrong about national income accounting (NIA). There are 2 ways to measure national income: production of final goods and services and expenditures on final goods and services. By the NIA identity, they MUST be equal. There is nothing wrong with measuring national income by adding up all the expenditures. In fact the government measures national income both ways. Mitchell is right that there is a problem with the way the media report the data. The media describe changes in expenditure patterns as if they are the cause of changes in total output. That may be right but need not be so. Identities in themselves cannot reveal cause and effect. Did defense production fall because defense production fell or the other way around?
Fighting against statism in Washington is a lot like trying to swim upstream. It seems that everything (how to measure spending cuts, how to estimate tax revenue, etc) is rigged to make your job harder.
A timely example is the way the way government puts together data on economic output and the way the media reports these numbers.
Just yesterday, for instance, the government released preliminary numbers for 4th quarter gross domestic product (GDP). The numbers were rather dismal, but that’s not the point.
I’m more concerned with the supposed reason why the numbers were bad. According to...
And so the 3 legged stool of prosperity. First production, then trade, then asset security. Where these exist, so does prosperity. Insofar as these are hampered or absent, prosperity disappears. Money has litle to do with it.
By the way, there is also the 3 legged stool consisting of capital, labor and raw materials that will also feed into the equation. The arbiter being whether or not someone wants the widget at the price the widget is being offered (cost, overhead and profit). A correction in the quality of the widget may be sacrificed in order to reach an acceptable cost to the purchaser. Unfortunately I do not believe that the statist, Keynesian model is based upon these simple, tried and true concepts.
Capital, labor and materials are the second tier supporting production.