A complete muddle in today's New York Times, where Lew Daly of the Demos Institute demonstrates that he needs to book up on some basic economics. His motives are OK: he wants to show that the government plays (or at least should play) an important role in enhancing our economic well-being. Alas, he gets just about every concept wrong. To avoid overkill, I'll document just the biggest howlers:
1. GDP is not a measure of well-being. It's a measure of monetary flows through the economy. It was developed to tell us how fully employed our resources are, not how beneficially they are employed. It measures bigness, not goodness.
2. True, government services are recorded at cost. But there are no monetary flows beyond that as there are in the private sector (consumer payments).
3. Complaining that we don't recognize consumer expenditures financed out of transfer payments from the government is bonkers. If you want to do that you should also deduct consumption that would have occurred if not for tax payments. In fact, the economic definition of government spending used in GDP calculation excludes transfer payments, and taxes are measured net of transfers.
4. Economists measure the public capital stock (like publicly owned infrastructure) the same way they measure the private capital stock. (There are lots of data in Piketty about this, for instance.) But GDP is about the flow of income, not the stock of wealth. If you want to get the stock data you have to go to the Flow of Funds accounts assembled by the Federal Reserve. They measure balance sheets.
Well, at least we know that the right doesn't have a monopoly on nonsense. (But why does the right's nonsense cast so many more votes in Congress than the left's?)