Rasmus: my last word
The previous post is Jack Rasmus’ return of fire. Here’s my last word.
Rasmus: “YOU REFERENCE ‘IP PRODUCT’ (COPYRIGHTS, MOVIES, ETC.) AS “THE MAJOR CONCEPTUAL CHANGE” IN THE REVISIONS, PROVIDING ONLY MINOR BOOSTS TO GDP. BUT THAT’S NOT CORRECT. IP PRODUCT RELATED CHANGES ONLY ADDED 0.5% OF THE 3.6% IN 2012 UPWARD REVISIONS. AGAIN, THE BIGGEST FACTOR WAS ‘R&D EXPENSING’, NOT IP PRODUCT INCLUSION.”
R&D is part of the new category, “IP Product.” Is it really too much to expect a self-identified “professor of political economy” (though I hear he’s actually nothing of the sort) to read the news release with the definitions? Here it is, straight from the horse’s mouth (News Release: Gross Domestic Product):
In the NIPA fixed investment tables, a new category of investment, “intellectual property products,” consists of research and development; entertainment, literary, and artistic originals; and software.
Carry on, Jack. I don’t know why anyone published your original piece in the first place, but taste is at least as difficult to account for as national income.
LBO News from Doug Henwood 
A final rejoinder: You can quote from government press releases all you want concerning definitions, but the Financial Times global newspaper did an analysis of the recent GDP revisions on August 1, and produced a pie chart for all to see that showed:
R&D expensing as investment: 2.5% of the total 3.6% GDP increase
Entertainment and IP: 0.5%
Pension accrual accounting : 0.1%
Realtors as investment: 0.3%
Other: 0.2%
(I will resist ending on a nasty counter-note about academic ‘pedigrees’, as your last comment apparently just couldn’t resist)
Jack Rasmus
I prepared Public Accounts for a few years for a certain jurisdiction. I can confirm that accounts are revised regularly as new data becomes available and that we experienced zero political interference. Political interference would have risked a scandal of the highest order.
Doug, not to tell you how to run your site or anything, but is there any way you collapse this guy’s stuff so that only a capsule view is visible? Perhaps interested parties could then click on a link to “see more,” or something. His all-caps tirades clutter up the main page, and detract from all the good stuff.
This feels highly political.The U.S. gone to great lengths in recent trade negotiations to defend the IP of its corporations at the expense of every other aspect of the economy. Obama has yammered endlessly about the US being a knowledge based economy, i.e. IP oriented.
So reorienting the calculation of GDP to reflect this part of the economy more positively has to be considered in this context.
R&D may or may not be successful. If it is successful, then it should be counted as part of GDP. If it’s not than it is an expense.
Companies would love it if their R&D always ended up being a net positive. But it doesn’t work that way.
Anyone working for a bureaucracy should understand how the leadership determines the shape and scope of their activities. Otherwise they are next to useless in combating it. Saying their is no influence is like saying the day-to-day work of a teacher or a journalist isn’t influence by politics. Of course it is.
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