Don't forget the healthcare scam. A nation of chronic heart disease, diabetes, & cancer patients, not to mention frankenfood & drug addicts, contributes mightily to GDP.
And mandatory quackcines. Mustn't forget those mandatory jabs!
If we're talking about GDF, let me bring up Shadowstats - an economist building their own estimations of key economic statistics using older methodologies. Site here:
I saw "imputed rent" in your article and immediately thought of Shadowstats. Your point that homemaking and other unpaid services should be imputed is logically consistent. It might be difficult to do properly without having the latest census (so you know how many family units there are and who's in them so that you can count up the unpaid work), but just basing it off overall percentages and using the normal 8-hour day as an estimation could be illuminating.
FIRE sectors can and often do inflate GDP massively. In particular:
Finance has the issue of infinite hypothecation - starting with the fractional-reserve concept of the multiplier, where the reserve ratio controls how much money a bank deposit can theoretically produce, going to derivatives (particularly options) which are essentially bets on markets and prices, and ending with collateralized debt obligations and real estate investment trusts (REITs) which allow the banking houses to profit from both holding the estate and selling shares in the estate. Probably the most fraudulent inclusion into GDP.
Insurance is in theory economy-scale savings - the whole point is to facilitate people socking away money in preparation for a rainy day. I actually think this is less objectionable.
Real Estate kind of middle of the road for me. Land is objectionable in that it's not a product (unless you're reclaiming it/draining the swamp). Buildings in theory should be captured by the sales of all the materials and labor that went into it but for a building to be worth more than the sum of its materials is definitely possible (a sale, for example). Prices can be forced up through demand or a rise in property taxes - this is relatively empty growth, like junk food for economic numbers.
As Alex observes, "GDP" is a classic example of optimizing the metric and not the underlying phenomenon the metric is supposed to score. The result is the real economy suffers while the GDP by which it is scored soars sky high. The same thing happens in science.
We want to know how good a scientist is. Hard to do, but we can count how many papers they produce, and more papers correlate to more science and more productivity. In response to this metric, scientists shave their work down into tinier and tinier slivers. We have more papers than ever, but they are of lower quality and arguably less real science is done because more effort is diverted into the overhead of producing, reviewing, and publishing all the extra papers.
So, we change the metric to take into account how many people CITE the paper (h-scores and similar measures). The result? Scientists make a point of references each other as a way to curry favor with the important, well-cited scientists on peer-review committees while paying less attention to the innovative newcomers who aren't getting citations. Less scrupulous scientists completely game the system by forming cliques that mutually cite each other and boost their scores sky-high.
We were arguably all better off under a system where a few elite gatekeepers were doing the gatekeeping. Sure, they had biases and oversights, but at least we weren't wasting all this bureaucratic effort optimizing the metric.
The bottom line is: you always get more of what you score, not more of what the score is trying to measure.
"The bottom line is: you always get more of what you score, not more of what the score is trying to measure."
I think it was one of the chemical manufacturers which had a policy that Safety is Paramount, and had each plant keep careful statistics on safety-related matters -- but also stated that no bonus would ever be paid and no promotion ever be made based on meeting safety goals. They knew that the moment they tied compensation to the scores, those safety scores would be gamed and would become unreliable.
Underestimating Russia's economic power has to be one of the biggest foreign policy errors in recent times. There is not another country on the planet that could take the sanctions Russia has had inflicted on her. The fact that they really believed their plan to crush Russia economically would work shows how utterly out of touch with reality they are. They truly believe in their GDP bullshit. They can't accept china dwarfs the US, and that Russia is an industrial powerhouse. It doesn't fit the narrative.
I completely concur. The only bigger foreign policy error was shoving Russia into alliance with China in the first place! And yes, they believe their own bullshit and we're all going to pay for that....
There's a data set called "output by industry" at BEA, or Gross Output. GDP only measures final sales. The idea that the economy is 70% consumption is false, but it derives from GDP.
GO measures all economic activity. Example is a car that costs $40,000 gets recorded as $40,000 in GDP, but there are many transactions at the intermediate stages, from mining aluminum to the components and software. GDP is about $27 trillion. GO is $44 trillion. Break it down by industry and you'll see manufacturing is 15% of the GO, more than double information. The govt reports financials and real estate combined are larger than manufacturing, around 20%, but I don't think they should be lumped together. Also, if you go back to 2008 for example, the recession is very shallow, but GO tanked, including the manufacturing sector. That's why manufacturing ISM is important to watch.
I hadn't encountered the concept of GO before, thanks for the info. That's fascinating about how if you look at gross output, suddenly consumption isn't 70% of the economy. It seems like GO would also allow you to understand Austrian capital structure in a way that GDP doesn't?
Bad Rulers always create a bad GDP especially the satanic Ones!
IQ 130 - 145 IS AN INTELLECTUAL DANGER ZONE BY CHRIS LANGAN AND SATCHIDANAND These Psychopathic People in charge of Society are a Feature not a Fault Psychopaths are CREATED by the 2000 Trillion Dollar Rothschilds Satanic Phoenician Mega Trillionaires as Presidents and Prime Ministers to Rule the World Psychopathic people are created by the 2000 Trillion Dollar Satanic Phoenician Mega Trillionaires by trauma, drugs and hypnotism from a very early age in order to rule society in such a way that human evolution is prevented mainly by using the other psychopathic tools of Poverty, Media Lullaby Entertainment Professionals, Fake News - Presstitutes, Professors - Fake History , Fake Science, Fake Geopolitics, Police, Pedophilia, Epstein Prostitutes - all them the oldest 10,000 years old Professions.. https://satchidanand.substack.com/p/iq-130-145-is-an-intellectual-danger
I've been grumbling for years about how GDP doesn't include home labor for self. It's not just childcare, it's food, cleaning, entertaining at home, etc.
But the rent aspect is new to me. I feel a twinge of enlightenment.
And then the financial aspect! More reporting things to the government means more consumption! If economic growth is entirely recording things better in order to obey the IRS and assorted regulators, we are supposed to be better off. Make that two twinges of enlightenment.
Question: if I go to the doctor and the insurance company pays for it instead of me, does that still count as consumption?
I had to stop myself before I delved into all of these things. It's not just child care, you're right. I also stopped before delving into things like "pass regulations that require expensive lawyers, and the GDP goes up from legal expenditure".
Whether you or insurance company foots the bill, still counts as consumption. I'm not sure, however, whether they account it as the full or discounted price.
I could see insurance being an added value in the form of predictability, but if you count insurance company payouts AND premiums as consumption you get double counting by definition. Buy doctor help via insurance and you get the same service twice. WHEEEEE!
The USA's Old Republic didn't have this problem. It didn't use a small number of single number headline metrics like GDP. The Old Republic placed far more emphasis on localized data and metrics. Economic health and productivity were assessed through regional and sector-specific data rather than a single national figure. A variety of indicators were used to gauge economic and social well-being, including agricultural output, manufacturing productivity, and labor force participation, and all of these were not just looked at nationally but also regionally and in many cases even locally.
The decentralized nature of the Old Republic's political and economic systems hindered the development of national level powerful special interest groups who and so decision-making was more distributed, reducing the ability of any single entity to control national economic narratives. States and localities had far more autonomy to develop and implement policies designed around their specific circumstances.
Economic health was assessed alongside social and community health. Metrics related to education, public health, and community development were considered important as well. The focus was more on practical economic outcomes alongside real tangible improvements in people's lives rather than abstract figures that are part b.s. and well intentioned but inadvertent fakes. Success was measured by improvements in real outputs, living standards, infrastructure, quality of public services, etc.
I see that others have already mentioned shadowstats.com and simultaneously (a) learning econometrics and (b) learning that it's a bunch of crap.
There is a critique of "global warming" that questions the meaningfulness of the concept of "average global temperature," particularly given the wide, unaccounted-for variation in the circumstances of and methods for the collection of the input data. Econometrics is like a global average temperature model in which half of the thermometers are replaced by surveys of how hot people think it is outside, and another quarter substituted by their recollections of time-and-temperature signs in front of branch banks that they drove past in a dense fog, sometime in the past week.
On the issue of "real GDP" and "purchasing power parity," I'll note that the only book of von Mises' that I kept after my bout of libertarianism twenty years ago was his "Theory of Money and Credit." Most of the issues that he discusses are no more than adjacent to those you raise here, but as I recall, he does point out the problems with the idea that one can somehow calculate a precise, widely applicable "inflation rate" and use it to determine anything meaningful, so as to make quantitative "adjustments" that render observations of different things under varying circumstances somehow commensurate.
My sense is that the Austrian economists like Mises are much closer to right than anything produced by Neoclassical economists. I think George Reisman, who synthesized Classical and Austrian, is my favorite economist, though I disagree with him on free trade and a few other points.
The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics. -Thomas Sowell
I remember sitting in macro class thinking half of this stuff doesn’t make sense. I just had to force myself to memorize it anyways just to get a good grade.
Not all of it was bullshit but all the neoliberal economics were based on assumptions that have no basis in reality. It was made up.
Another book I liked is economyths. Not perfect but gets much right.
The GDF (i.e. Gross Domestic Fraud ) is a Mammoth Case of 'Play Stupid Games, Win Stupid Prizes!' a la how Rampant & Definitive the Damage to the Real, Physical Economy has been these past few decades or so. As America's Final War approaches, Economists will continue to lead the American people off a cliff and into the Maw of the DOOM-ed Nuclear Hellscape. If there are Future polities on the Desolated CONUS, they will have Capital Punishment Laws (de Jure & de Facto) against practising any & all "Economics"... now formally dubbed 'Magical Thinking & Numerology.'
Growing up we all saw the videos of the starving children of Africa and the announcer saying that "On less that $1/day, little Umbumbwue here can eat, go to school, and heat his home in the winter."
If a man tried doing that anywhere in the United States, he'd starve.
Why does a dollar have such a different purchasing power in the US vs abroad?
That's a good question. There seem to be two reasons. The first is the cost of rent for land; obviously when land rent is more expensive everything is more expensive that takes place on that land. The second is the Baumol Effect. The latter is less well-known. It is "the tendency for wages in jobs that have experienced little or no increase in labor productivity to rise in response to rising wages in other jobs that did experience high productivity growth. In turn, these sectors of the economy become more expensive over time, because their input costs have increased while productivity has not. Typically, this affects services more than manufactured goods, and in particular health, education, arts and culture."
It seems that the inexorable conclusion is that a USD spent domestically does not equal a USD spent abroad, and thus comparing USD domestic to USD foreign is not apples to apples comparison.
One more question, if I may:
There's also the issue of Russia reported to have a military budget of about 80 Billion (Estimates by World Bank) and the US aid to Ukraine has been 175 Billion all in USD (from CFR).
This could mean many things:
1. Corruption - Much(most) of that money never made it to front lines.
2. Money isn't a good indicator of war ability.
3. The Russians are more efficient at war than the US (they get more bang for $).
4. There is something wrong with using USD to compare Russian and US spending.
There are also a bunch of other possibilities that I've not thought of. And why not all of these together?
1. Correct. It is definitely the case that much of the aid is not going towards military expense.
2. Correct. Industrial capacity matters much more. And you have to account for purchasing power parity.
3. Correct. In general, US war gear is "over designed" compared to Russian war gear. The Russians will tolerate more discomfort and higher casualties if it means more firepower for the dollar.
4. Correct. US defending spending has become incredibly inefficient as our industry has stagnated. Vast sums are wasted.
Check out my "World War Next" series for more details on all of the above
Don't forget the healthcare scam. A nation of chronic heart disease, diabetes, & cancer patients, not to mention frankenfood & drug addicts, contributes mightily to GDP.
And mandatory quackcines. Mustn't forget those mandatory jabs!
Truth! Why, if only we'd all get sicker, the healthcare sector GDP would skyrocket!
Indeed, and all the government job creation that eventually makes it into GDP.. Question, how does inflation get calculated into GDP?
BTW, I just came across your excellent blog, and left my first comment here, regarding your AI article. I would be curious to hear your thoughts on that comment...https://treeofwoe.substack.com/p/world-war-100/comment/66324604
I did so just now!
Cheer up...just take 2 Dr. Fraudci jabs & GDP will be better in the morning!
If we're talking about GDF, let me bring up Shadowstats - an economist building their own estimations of key economic statistics using older methodologies. Site here:
https://www.shadowstats.com/
For more information on how he calculates things vis-a-vis how the USG calculates things, that's on this page of the site:
https://www.shadowstats.com/primers-and-reports
Shadowstats is excellent - thank you for sharing the link!
I saw "imputed rent" in your article and immediately thought of Shadowstats. Your point that homemaking and other unpaid services should be imputed is logically consistent. It might be difficult to do properly without having the latest census (so you know how many family units there are and who's in them so that you can count up the unpaid work), but just basing it off overall percentages and using the normal 8-hour day as an estimation could be illuminating.
FIRE sectors can and often do inflate GDP massively. In particular:
Finance has the issue of infinite hypothecation - starting with the fractional-reserve concept of the multiplier, where the reserve ratio controls how much money a bank deposit can theoretically produce, going to derivatives (particularly options) which are essentially bets on markets and prices, and ending with collateralized debt obligations and real estate investment trusts (REITs) which allow the banking houses to profit from both holding the estate and selling shares in the estate. Probably the most fraudulent inclusion into GDP.
Insurance is in theory economy-scale savings - the whole point is to facilitate people socking away money in preparation for a rainy day. I actually think this is less objectionable.
Real Estate kind of middle of the road for me. Land is objectionable in that it's not a product (unless you're reclaiming it/draining the swamp). Buildings in theory should be captured by the sales of all the materials and labor that went into it but for a building to be worth more than the sum of its materials is definitely possible (a sale, for example). Prices can be forced up through demand or a rise in property taxes - this is relatively empty growth, like junk food for economic numbers.
Yes, agreed.
Remember, one American divorce lawyer contributes more to the GDP than a thousand Russian home gardens!
One may ask which one is more useful in a war..
I think you just summarized my entire article in one sentence and I'm not sure if I should applaud or cry
I loved the article. It gave me a lot more rhetorical fuel for my personal anti-gdp crusades.
*fist bump*
Washington DC has the largest GDP in the country. I wonder what marvels they manufacture for the rest of the nation.
As Alex observes, "GDP" is a classic example of optimizing the metric and not the underlying phenomenon the metric is supposed to score. The result is the real economy suffers while the GDP by which it is scored soars sky high. The same thing happens in science.
We want to know how good a scientist is. Hard to do, but we can count how many papers they produce, and more papers correlate to more science and more productivity. In response to this metric, scientists shave their work down into tinier and tinier slivers. We have more papers than ever, but they are of lower quality and arguably less real science is done because more effort is diverted into the overhead of producing, reviewing, and publishing all the extra papers.
So, we change the metric to take into account how many people CITE the paper (h-scores and similar measures). The result? Scientists make a point of references each other as a way to curry favor with the important, well-cited scientists on peer-review committees while paying less attention to the innovative newcomers who aren't getting citations. Less scrupulous scientists completely game the system by forming cliques that mutually cite each other and boost their scores sky-high.
We were arguably all better off under a system where a few elite gatekeepers were doing the gatekeeping. Sure, they had biases and oversights, but at least we weren't wasting all this bureaucratic effort optimizing the metric.
The bottom line is: you always get more of what you score, not more of what the score is trying to measure.
Amen.
> As Alex observes, "GDP" is a classic example of optimizing the metric and not the underlying phenomenon the metric is supposed to score.
Don't worry. Given how complicated the system and lack of feedback on individual actions, people aren't even optimizing the metric.
Sadly, true!
"The bottom line is: you always get more of what you score, not more of what the score is trying to measure."
I think it was one of the chemical manufacturers which had a policy that Safety is Paramount, and had each plant keep careful statistics on safety-related matters -- but also stated that no bonus would ever be paid and no promotion ever be made based on meeting safety goals. They knew that the moment they tied compensation to the scores, those safety scores would be gamed and would become unreliable.
Elon Musk has approximated the notion with his statement that he values actually doing good over the appearance of doing good while doing evil.
Underestimating Russia's economic power has to be one of the biggest foreign policy errors in recent times. There is not another country on the planet that could take the sanctions Russia has had inflicted on her. The fact that they really believed their plan to crush Russia economically would work shows how utterly out of touch with reality they are. They truly believe in their GDP bullshit. They can't accept china dwarfs the US, and that Russia is an industrial powerhouse. It doesn't fit the narrative.
I completely concur. The only bigger foreign policy error was shoving Russia into alliance with China in the first place! And yes, they believe their own bullshit and we're all going to pay for that....
> There is not another country on the planet that could take the sanctions Russia has had inflicted on her.
Please. Have sanctions ever worked?
Worked for what?
What country could take the sanctions Russia has?
Given how effective sanctions tend to be just about any county.
Effective for what?
And the answer is no country.
Like I said, name a country were sanctions have been effective.
Turkiye back in 2016 I believe
This conversation is going nowhere and I have a life. Thanks for the stimulating conversation, but I'll leave you to it.
There's a data set called "output by industry" at BEA, or Gross Output. GDP only measures final sales. The idea that the economy is 70% consumption is false, but it derives from GDP.
GO measures all economic activity. Example is a car that costs $40,000 gets recorded as $40,000 in GDP, but there are many transactions at the intermediate stages, from mining aluminum to the components and software. GDP is about $27 trillion. GO is $44 trillion. Break it down by industry and you'll see manufacturing is 15% of the GO, more than double information. The govt reports financials and real estate combined are larger than manufacturing, around 20%, but I don't think they should be lumped together. Also, if you go back to 2008 for example, the recession is very shallow, but GO tanked, including the manufacturing sector. That's why manufacturing ISM is important to watch.
I hadn't encountered the concept of GO before, thanks for the info. That's fascinating about how if you look at gross output, suddenly consumption isn't 70% of the economy. It seems like GO would also allow you to understand Austrian capital structure in a way that GDP doesn't?
IIRC Mark Skousen, an Austrian economist, is where I came across it about a decade ago.
This PDF is a decent intro with a lot of links to articles and papers based on it.
https://entreprenorskapsforum.se/wp-content/uploads/2017/11/WP_52.pdf
Bad Rulers always create a bad GDP especially the satanic Ones!
IQ 130 - 145 IS AN INTELLECTUAL DANGER ZONE BY CHRIS LANGAN AND SATCHIDANAND These Psychopathic People in charge of Society are a Feature not a Fault Psychopaths are CREATED by the 2000 Trillion Dollar Rothschilds Satanic Phoenician Mega Trillionaires as Presidents and Prime Ministers to Rule the World Psychopathic people are created by the 2000 Trillion Dollar Satanic Phoenician Mega Trillionaires by trauma, drugs and hypnotism from a very early age in order to rule society in such a way that human evolution is prevented mainly by using the other psychopathic tools of Poverty, Media Lullaby Entertainment Professionals, Fake News - Presstitutes, Professors - Fake History , Fake Science, Fake Geopolitics, Police, Pedophilia, Epstein Prostitutes - all them the oldest 10,000 years old Professions.. https://satchidanand.substack.com/p/iq-130-145-is-an-intellectual-danger
I've been grumbling for years about how GDP doesn't include home labor for self. It's not just childcare, it's food, cleaning, entertaining at home, etc.
But the rent aspect is new to me. I feel a twinge of enlightenment.
And then the financial aspect! More reporting things to the government means more consumption! If economic growth is entirely recording things better in order to obey the IRS and assorted regulators, we are supposed to be better off. Make that two twinges of enlightenment.
Question: if I go to the doctor and the insurance company pays for it instead of me, does that still count as consumption?
I had to stop myself before I delved into all of these things. It's not just child care, you're right. I also stopped before delving into things like "pass regulations that require expensive lawyers, and the GDP goes up from legal expenditure".
Whether you or insurance company foots the bill, still counts as consumption. I'm not sure, however, whether they account it as the full or discounted price.
I could see insurance being an added value in the form of predictability, but if you count insurance company payouts AND premiums as consumption you get double counting by definition. Buy doctor help via insurance and you get the same service twice. WHEEEEE!
Ditto for those purchased auto warrantees.
A similar dynamic can be seen with EBITDA, which Charles Munger famously called “bullshit earnings.”
I haven't looked into it, but I can well believe it.
An apt and well written post!
The USA's Old Republic didn't have this problem. It didn't use a small number of single number headline metrics like GDP. The Old Republic placed far more emphasis on localized data and metrics. Economic health and productivity were assessed through regional and sector-specific data rather than a single national figure. A variety of indicators were used to gauge economic and social well-being, including agricultural output, manufacturing productivity, and labor force participation, and all of these were not just looked at nationally but also regionally and in many cases even locally.
The decentralized nature of the Old Republic's political and economic systems hindered the development of national level powerful special interest groups who and so decision-making was more distributed, reducing the ability of any single entity to control national economic narratives. States and localities had far more autonomy to develop and implement policies designed around their specific circumstances.
Economic health was assessed alongside social and community health. Metrics related to education, public health, and community development were considered important as well. The focus was more on practical economic outcomes alongside real tangible improvements in people's lives rather than abstract figures that are part b.s. and well intentioned but inadvertent fakes. Success was measured by improvements in real outputs, living standards, infrastructure, quality of public services, etc.
Indeed. *feels nostalgic for a time before he was born*
👍👍👍💪💪💪💯💯💯!!!
GDP ??? Greatly Duped Populace ...
This was excellent; thank you.
I see that others have already mentioned shadowstats.com and simultaneously (a) learning econometrics and (b) learning that it's a bunch of crap.
There is a critique of "global warming" that questions the meaningfulness of the concept of "average global temperature," particularly given the wide, unaccounted-for variation in the circumstances of and methods for the collection of the input data. Econometrics is like a global average temperature model in which half of the thermometers are replaced by surveys of how hot people think it is outside, and another quarter substituted by their recollections of time-and-temperature signs in front of branch banks that they drove past in a dense fog, sometime in the past week.
On the issue of "real GDP" and "purchasing power parity," I'll note that the only book of von Mises' that I kept after my bout of libertarianism twenty years ago was his "Theory of Money and Credit." Most of the issues that he discusses are no more than adjacent to those you raise here, but as I recall, he does point out the problems with the idea that one can somehow calculate a precise, widely applicable "inflation rate" and use it to determine anything meaningful, so as to make quantitative "adjustments" that render observations of different things under varying circumstances somehow commensurate.
My sense is that the Austrian economists like Mises are much closer to right than anything produced by Neoclassical economists. I think George Reisman, who synthesized Classical and Austrian, is my favorite economist, though I disagree with him on free trade and a few other points.
The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics. -Thomas Sowell
Excellent write up!
I remember sitting in macro class thinking half of this stuff doesn’t make sense. I just had to force myself to memorize it anyways just to get a good grade.
Not all of it was bullshit but all the neoliberal economics were based on assumptions that have no basis in reality. It was made up.
Another book I liked is economyths. Not perfect but gets much right.
Economyths: 11 Ways Economics Gets it Wrong https://a.co/d/hNbzGev
The GDF (i.e. Gross Domestic Fraud ) is a Mammoth Case of 'Play Stupid Games, Win Stupid Prizes!' a la how Rampant & Definitive the Damage to the Real, Physical Economy has been these past few decades or so. As America's Final War approaches, Economists will continue to lead the American people off a cliff and into the Maw of the DOOM-ed Nuclear Hellscape. If there are Future polities on the Desolated CONUS, they will have Capital Punishment Laws (de Jure & de Facto) against practising any & all "Economics"... now formally dubbed 'Magical Thinking & Numerology.'
Woe,
Growing up we all saw the videos of the starving children of Africa and the announcer saying that "On less that $1/day, little Umbumbwue here can eat, go to school, and heat his home in the winter."
If a man tried doing that anywhere in the United States, he'd starve.
Why does a dollar have such a different purchasing power in the US vs abroad?
That's a good question. There seem to be two reasons. The first is the cost of rent for land; obviously when land rent is more expensive everything is more expensive that takes place on that land. The second is the Baumol Effect. The latter is less well-known. It is "the tendency for wages in jobs that have experienced little or no increase in labor productivity to rise in response to rising wages in other jobs that did experience high productivity growth. In turn, these sectors of the economy become more expensive over time, because their input costs have increased while productivity has not. Typically, this affects services more than manufactured goods, and in particular health, education, arts and culture."
It seems that the inexorable conclusion is that a USD spent domestically does not equal a USD spent abroad, and thus comparing USD domestic to USD foreign is not apples to apples comparison.
One more question, if I may:
There's also the issue of Russia reported to have a military budget of about 80 Billion (Estimates by World Bank) and the US aid to Ukraine has been 175 Billion all in USD (from CFR).
This could mean many things:
1. Corruption - Much(most) of that money never made it to front lines.
2. Money isn't a good indicator of war ability.
3. The Russians are more efficient at war than the US (they get more bang for $).
4. There is something wrong with using USD to compare Russian and US spending.
There are also a bunch of other possibilities that I've not thought of. And why not all of these together?
I would like to hear your perspective.
1. Correct. It is definitely the case that much of the aid is not going towards military expense.
2. Correct. Industrial capacity matters much more. And you have to account for purchasing power parity.
3. Correct. In general, US war gear is "over designed" compared to Russian war gear. The Russians will tolerate more discomfort and higher casualties if it means more firepower for the dollar.
4. Correct. US defending spending has become incredibly inefficient as our industry has stagnated. Vast sums are wasted.
Check out my "World War Next" series for more details on all of the above