Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Ireland’s Bogus 26% GDP Economic Boost

Economics / Economic Statistics Jul 16, 2016 - 12:06 PM GMT

By: MISES

Economics

Jonathan Newman writes: Ireland’s Central Statistics Office updated their 2015 national income figures and revealed a staggering 26.3% increase in real GDP from 2014 to 2015.

Paul Krugman called it “leprechaun economics.”

Joseph Salerno said “that’s unbelievable!”


I say it’s just one more reason to doubt official macroeconomic statistics.

While some initially responded with accusations of duplicitous methods, the CSO assures that the figures were calculated using the standard EU accounting rules, including the reported 34.4% increase in exports and 87.3% increase in industry (!) over the same time period.

The culprit is the large number of corporate inversions and mergers that legally shuffle ownership of taxable revenues and assets to Ireland, where lower tax rates and other laws allow companies like Google keep 94% of their non-US profits from government theft. For comparison, official US corporate tax rates range from 15%–39%, so it’s no wonder why some might prefer to travel on a road with fewer highway robberies.

While many commentators are using this as an opportunity to denounce legal tax avoidance, the main lesson here is that official national income accounting statistics do not portray what many take them to portray.

Most use GDP or GDP per capita to measure how wealthy the citizens of some nation are, how their wealth changes over time, or how wealthy they are compared to other nations. But these applications are spurious for many reasons—no one would say that the average Irish citizen is now 26% wealthier because some multinational corporations filled out some paperwork. No one would say that Ireland actually experienced real economic growth on the order of 26.3%.

What’s more, the large part of the 26% boost to Ireland’s statistics is only possible through a decrease in other countries’ statistics, which calls their data into question, too. Though a few large companies transferring taxable items from the US to Ireland might be a drop in the bucket for the US and a big splash in Ireland, both countries’ GDP figures are going through the same statistical wringer.

In modern times, when the legal ownership of firms and bank accounts can dart across the globe with a simple signature or a press of a button, national income statistics are becoming increasingly meaningless. The problem isn't the globalization, the tax avoidance, or the technology that makes such transfers possible. The problem lies in the figures themselves and their exultation by mainstream economists.

Jonathan Newman is a 2013 Summer Fellow at the Mises Institute and teaches economics at Auburn University. See Jonathan Newman's article archives.

http://mises.org

© 2016 Copyright Jonathan Newman - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in