The cost of rents increasing is not something you want to be padding your gdp (nearly 10%). This only benefits the FIRE sector while making production more expensive, necessitates an increase in wages or greater deprivation, and produces more unearned income and rent seeking.
How exactly is the value of the land I sit on going up productive? I don’t have to do anything to improve it, I can live in a shack, but because the price of the land increases I am somehow engaged in a productive use of capital? The only winner there is myself and the bank, when I sell the property for 10x and the next owner has a 30 year mortgage to live in the same shack. I guess the state also benefits because the fake dollars in rent I pay each month keeps going up and so to does their gdp. None of that is productive.
The land is productive because you are living on it. If you didn’t own the property, you would need to pay rent to live somewhere else, which would be included in gdp.
I’m not making a judgment about whether gdp itself is good or not, but including imputed rent makes sense for consistency’s sake
It is capital that is being put to productive use, I think including it in gdp is fair
Neoclassical economics on hexbear!?
The cost of rents increasing is not something you want to be padding your gdp (nearly 10%). This only benefits the FIRE sector while making production more expensive, necessitates an increase in wages or greater deprivation, and produces more unearned income and rent seeking.
How exactly is the value of the land I sit on going up productive? I don’t have to do anything to improve it, I can live in a shack, but because the price of the land increases I am somehow engaged in a productive use of capital? The only winner there is myself and the bank, when I sell the property for 10x and the next owner has a 30 year mortgage to live in the same shack. I guess the state also benefits because the fake dollars in rent I pay each month keeps going up and so to does their gdp. None of that is productive.
The land is productive because you are living on it. If you didn’t own the property, you would need to pay rent to live somewhere else, which would be included in gdp.
I’m not making a judgment about whether gdp itself is good or not, but including imputed rent makes sense for consistency’s sake