When failed government policies can’t produce a better economy, government liars figure out ways to make figures lie. Take for example the latest changes to measuring Gross Domestic Product (GDP) that are about to take effect. In July, the Bureau of Economic Analysis is going to start counting the cost of research and development along with purchasing creative works as GDP.
They estimate that by reclassifying this data they will add 3% in growth and thus begin showing a rosier economic picture than the one that actually exists with GDP at around .04% which itself is probably an inflated figure.
These changes reflect desperate measures to hide the fact that we are about to go into a deep recession and then experience the collapse of the dollar brought on by government tax and spend policies and interference into free market capitalism. We can see why these are some of the last tricks that can be pulled before we go over the cliff by looking at research and development.
The reason research and development costs are counted as costs of doing business is because they are. When companies engage in research and development they are expending revenue and other resources. Research and development is analogues to digging holes in the ground while searching for treasure. Companies don’t get paid for every shovel full of dirt they extract, but only when they find something of value that people are willing to pay for like an asset or a commodity.
Research and development often produces much more dirt than treasure, and there also usually costs associated with putting the dirt back into the ground. Find the government entertaining so far?
We’ll get a better feeling being entertained by a good movie, but that feeling is an intangible. When we purchase a ticket to a movie no asset or commodity is purchased that adds to our wealth or sustains our growth; it is really more like consumption. And consumption means consuming valuables, like money, and not producing them. No domestic product here, either.
The same goes for creative works like books. A used book may retain some value, but there is still a big loss even there; and increasingly they are purchased and delivered to devices where there is no physical product as an outcome. Consumer activities such as these are exactly that: consumption and not production. Perhaps we will be more entertained when they start counting in the GDP the money we have to spend on our utilities and filling up our gas tanks.
These latest figure manipulations are a desperate effort to hide the plane truth. Our economy is in the most serious trouble it has ever been in under the worst president we have ever had, and his policies are about to prove that America isn’t too big to fail. The only thing that is even more dirt-cheap than the waste associated with purchasing intangibles and dirt extracted during research and development are the antics the government is using to lie to us.