THE CRAZY WORLD OF MR. G.D.P.
Economics is difficult enough without the head games. Speaking about head games, the old comedy routine of Bud Abbott and Lou Costello gives me an idea:
Lou: Bud, I read in the news how the economy is going down.
Bud: Can’t you ever get anything right? It’s going up.
Lou: But I see here the industrial production index went down for the past four quarters.
Lou: But they’re shutting down production and laying off workers.
Bud: So what?
Lou: But that means layoffs and outawork people going broke.
Bud: Listen, knucklehead, don’t you understand it yet?
Lou: Is steel production going up or down?
Bud: It doesn’t matter.
Lou: How about food, can we produce enough?
Bud: It doesn’t matter.
Lou: Whadya mean it doesn’t matter? You have to eat, don’t you?
Lou: Then why doesn’t it matter?
Bud: How many times do I have to explain it to you? The economy is going up because the Gross Domestic Product is going up. If it’s going up, we’re doing well.
Lou: I’m doing good?
Bud: We’re doing well
Lou: Good or well, we’re doing it, right?
Bud: Yes, we’re doing well.
Lou: So we’re in good shape, right?
Lou: Okay, okay, but not so fast! I know I’m not doing good.
Bud: No you’re not.
Lou: Then who’s doing good?
Lou: We’re in good shape.
Bud: That’s right.
Lou: But I’m not doing good.
Bud: That’s right.
Lou: Then who’s the we that’s doing good?
Lou: Just a minute! I’m out of a job. My friends are out delivering pizzas for next to nothing, swimming in student-loan and medical debt. So who’s us?
Bud: Get is through your head. Us is the Gross Domestic Product.
Lou: Gross domestic who?
Bud: The sum of everything that everybody ever sells in the economy.
Lou: That’s us?
Lou: Let me get this straight: I’m broke. My friends are broke, out of work and in debt, but mister domestic whatever you call it is fat and happy, so it means we’re fat and happy.
Bud: That’s right. Now you’re catching on.
Lou: Catching on to what? Take that suit you’re wearing, where does it come from?
Lou: Well, what’s domestic about it?
Bud: I bought it, right? I’m wearing it, right? And where am I standing?
Lou: You’re standing right here.
Bud: And right here ain’t China, is it?
Lou: Right here is the USA.
Bud: There you go. That’s called domestic.
Lou: Wait just a minute! What goes into that suit?
Lou: And what’s happened to all the textile mills here in domesticland?
Bud: They’re all shut down.
Lou: Okay, so then, where’s the product?
Bud: The same place the domestic went.
Lou: Which is right here?
Lou: So again, where’s the product?
Bud: I’m wearing it.
Lou: Okay, then what the heck is going up?
Bud: The gross, dummy.
Lou: This is some sort of trick, right?
Bud: Can’t you ever get anything straight? Every time I explain something to you, it goes in one ear and out the other. Let me explain it again.
Lou: I’m getting a headache.
Bud: Relax! I’m just going to show it to you very slowly and very simply.
Lou: Wait a minute — wait a minute — you’re not going to pull one of your hocus-pocus stunts on me!
Lou: Every time you pull one of your stunts, my cash disappears.
Bud: Relax, will you? This is just an exercise. Now think! You like to play the horses, right?
Lou: Horses, lottery — how else can I make some extra cash?
Bud: Never mind that, Lou. You do bet on the horses, right?
Lou: Bud, if you get a hot tip, whadya supposed to do?
Bud: OK, so what happened to that laptop of yours?
Lou: You know what happened. I had to pawn it to play that hot tip you gave me on that horse that came in seventh, remember?
Bud: That’s exactly my point. How much did you pay for it?
Lou: $200 on sale.
Bud: OK, that’s $200. So then what?
Lou: I got $50 to bet on that dumb horse.
Bud: So now we’re up to $250 of Gross Domestic Product. Where’s the pawn ticket?
Lou: Right here in my pocket.
Bud: Let’s see it. Yes, yes. I see. It’s pretty straight forward. How about I buy it back from you for twenty-five dollars?
Lou: You got twenty-five bucks?
Lou: So what are you talking about?
Bud: For once, get it through your thick skull. You’re going to lend me $25 to buy the pawn ticket.
Lou: I am?
Bud: That’s right. Now I’ll own the laptop and owe you twenty-five dollars.
Lou: What are you talking about? You don’t have twenty-five bucks, and even if you did, all you have is a pawn ticket. You’d still have to get more money to get it out of hock.
Bud: That just goes to show you. You understand nothing about our economy. I suppose you want your laptop back.
Lou: Of course I do.
Bud: Just as a theoretical exercise, let’s say I sell you back the pawn ticket for forty dollars.
Lou: But I don’t have forty bucks!
Bud: Look, Lou, we’ve been friends for a long time. How about I lend you the $40?
Lou: You’re lending me forty bucks?.
Bud: Yes, I just did.
Bud: Through our imaginary ledger.
Bud: All the banks do it.
Lou: They do?
Bud: Sure. They electronically stream it. We can go to a computer and do the same thing right now. So here’s the pawn ticket back. And remember, I owe you twenty five dollars, so that leaves only fifteen that you owe me.
Lou: And I get my laptop back?
Bud: Of course, when you get some more money, and meanwhile, between us, we just added another sixty-five dollars to the Gross Domestic Product. Everybody is doing this every day. That’s what makes that GDP work for us.