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opendoor · 01-22-2025, 01:21 PM

I think that says more about GDP being a poor measure to judge relative economic prosperity than anything else. Anyone who has been to the poorer US states and also been to the various Canadian provinces could tell you that.

And that's because GDP doesn't measure income, or wealth, or quality of life. It measures economic activity, even if the jurisdiction it's measured in doesn't actually benefit from it. Ireland is a great example. Companies often headquarter their international holdings there because of favourable corporate tax rates, with Apple being the most notable example. So Apple's non-North American business flows through their Irish subsidiary, which creates a huge amount of economic activity that gets booked in Ireland, but the money just flows back out of Ireland again to the company and its investors, with the only real benefit to Ireland being a small amount of corporate tax revenue and then some jobs related to that setup. But the economic activity gets credited to Ireland because that's how GDP is measured.

And it's not even necessarily real money that's driving that. Apple re-domiciled their non-US intellectual property (worth about $350B) to Ireland in 2015 (which was a completely paper transaction). So as a result Ireland's GDP grew by 26% in a year. Obviously the actual economy that Irish residents participate in didn't grow 26%, and income in Ireland didn't grow by that much, because it was simply a paper transactino where holdings were shifted from one country to another. But the Irish GDP grew massively because of it. So jurisdictions with lots of international businesses headquartered there (which the US is a prime example of) will tend to have higher GDPs because the companies' income is credited to that jurisdiction, even if it just flows back out to investors around the world.

So comparing somewhere like Mississippi to Canadian provinces on the basis of GDP per capita is a bit like saying a millionaire who had $0 income in a year because of some tax maneuvers is in the same position as a homeless person. US incomes are still higher than Canadian ones, that's not in question. But GDP is a pretty terrible measure when comparing across jurisdictions.

01-22-2025, 01:21 PM	#243
opendoor Franchise Player Join Date: Apr 2007 Exp:	I think that says more about GDP being a poor measure to judge relative economic prosperity than anything else. Anyone who has been to the poorer US states and also been to the various Canadian provinces could tell you that. And that's because GDP doesn't measure income, or wealth, or quality of life. It measures economic activity, even if the jurisdiction it's measured in doesn't actually benefit from it. Ireland is a great example. Companies often headquarter their international holdings there because of favourable corporate tax rates, with Apple being the most notable example. So Apple's non-North American business flows through their Irish subsidiary, which creates a huge amount of economic activity that gets booked in Ireland, but the money just flows back out of Ireland again to the company and its investors, with the only real benefit to Ireland being a small amount of corporate tax revenue and then some jobs related to that setup. But the economic activity gets credited to Ireland because that's how GDP is measured. And it's not even necessarily real money that's driving that. Apple re-domiciled their non-US intellectual property (worth about $350B) to Ireland in 2015 (which was a completely paper transaction). So as a result Ireland's GDP grew by 26% in a year. Obviously the actual economy that Irish residents participate in didn't grow 26%, and income in Ireland didn't grow by that much, because it was simply a paper transactino where holdings were shifted from one country to another. But the Irish GDP grew massively because of it. So jurisdictions with lots of international businesses headquartered there (which the US is a prime example of) will tend to have higher GDPs because the companies' income is credited to that jurisdiction, even if it just flows back out to investors around the world. So comparing somewhere like Mississippi to Canadian provinces on the basis of GDP per capita is a bit like saying a millionaire who had $0 income in a year because of some tax maneuvers is in the same position as a homeless person. US incomes are still higher than Canadian ones, that's not in question. But GDP is a pretty terrible measure when comparing across jurisdictions.