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Journalism and other myths.

GDP Down? Take It With a Little Seasoning

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The first revision for Gross Domestic Product (GDP) for the first quarter (1Q15) came out negative. The economy is contracting! Is it time to panic?  The White House attributed the slowdown to weak exports, which are quite well known to be a problem.  But is that all?

As we have commented on at length before, the GDP numbers are full of fudge, so it may be hard to know just what to make of them. A cynic would say, and probably does say, that they the Bureau of Economic Analysis (BEA) is making the numbers up as they go to make everyone happy.

Perhaps you are a bit too diabetic to handle all the fudge, either, but this problem is a bit more savory than sweet. It’s all about the seasoning – or, rather, the “seasonal adjustment”.

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Catching Up on Old Stories

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It’s the end of the month, and the end of a holiday week. What better time to catch up on a few old stories with new updates?

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What is Software Worth?

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When is the value of something not its true value? When you’re adding up Gross Domestic Product (GDP) of course. That may sound ridiculous, given that the rise and occasional fall of GDP is the yardstick by which we measure how we’re doin’ as an economy. Isn’t it just the sum total of all the goods and services that we produce?

The short answer is “no”, but the long answer is “yes”. It depends a lot on what you mean by “goods” or “service” or “produce”. If that sounds like a huge amount of fudge for something so important, you may want to just enjoy the chocolate induced coma for a bit. Because some goods, like computers and software, have been falling in price but increasing in potential and quality dramatically for a while. Hardware is “hedonically adjusted” to take care of this, but software isn’t. And that difference might be extremely important.

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Ireland Stands for Equality

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A storm had been brewing in the North Atlantic, but as of this weekend the clouds had passed over the Irish Sea. As is common with the nasty storms that come from the roiling sea, the landscape was left forever changed – softened, gentler, and deeply appreciative of the all too rare sun.

The storm that passed over Ireland was the debate on whether to enshrine Marriage Equity in the Constitution, a document that has weathered similar storms in the scant 78 years since it was adopted. This time, however, Ireland was changing not just to catch up with the times but to lead them. It’s worth discussing on both sides of the stormy Atlantic and around the world.

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Devouring the Dreams (and Cash)

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Big incentives lure a big employer into town. It’s the dream many rural regions coping with high unemployment and a “brain drain” of their best and brightest long for and have often put up big subsidies to make it happen. Sadly, however, the dream doesn’t last long and many small cities which put their futures on the line saw the big employer move on. We’ve seen this happen for decades, and usually call it “corporate welfare”.

Today is no different, except for one thing – business is moving much faster and the net time from groundbreaking to heartbreaking is only a few years. That was the experience in Dubuque Iowa and Columbia Missouri who spent a total of $84M luring IBM to expand in their towns. Six years on, a struggling IBM has let go of half of their staff in those places.

How effective are these subsidies? And why does this keep happening?

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