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October 06, 2018


Ahmed Fares

The rise in the CP/GDP ratio is due to globalization.

A greater part of US corporate profits (CP) are foreign. But the ratio is adding in those foreign earnings without adjusting the denominator for the GDP portion of those countries in which those earnings occur. A more accurate denominator would be GNP, which is national in nature.

GDP is domestic production only. One should not divide foreign earnings by the domestic economy. They have nothing to do with each other.

Apples and oranges.


Don't you need to add back dividends paid?


I think the phrase you seem desperate to avoid is 'Crony capitalism'.

It's okay to say it; nothing from the dungeon depths will be conjured into being. It's already here.


as to apples and oranges the Economists like to write as if:

- the national account numbers were quite reliable and not "improved in accuracy" by clever use of adjustments like "hedonics".

- the names of national account categories had their ordinary meanings instead of technical ones.

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