Entrepreneurs working to boost GDP (source)
Back in May Italy started a trend by announcing a plan to “boost” its GDP figures through the simple expedient of adding the estimated impact of cocaine and hookers.
(A note to the economically illiterate here, NB Ed Balls, Vince Cable, George Osborne and that bloke who looks like Scooter from the muppets – GDP is not a measure of how well an economy is doing but only of how much money is churning around in it. This is where post Keynesean economics fails, economists are so thick that can believe that by raising taxes to produce £300million revenue, importing a million immigrants and paying then £300 a wee in benefits actually grows the economy by £600million a week.)
Riding on the back of this pros, pimps and pushers economic gimmick to make the economy look better Britain, the – ahem – most successful economy in Europe at the moment – ahem – has decided to get in on the act. The Office for National Statistics will in future also include the “contribution” made by prostitutes, pimps and drug pushers to make its GDP look a little stronger. Really, I wasn’t aware prozzers and pushers had started registering with the Revenue and charging VAT. And as we are talking of Value Added Tax, in the case of commercial sex surely the value is added by the punter and not the vendor after all beauty is in the eye of the beholder.
According to The Guardian “for the first time official statisticians are measuring the value to the UK economy of sex work and drug dealing and they have discovered these unsavoury hidden-economy trades make roughly the same contribution as farming and only slightly less than book and newspaper publishers added together.”
How big of a “contribution” does ONS expect the good, old fashoned “vice” make to that Holy Grail of irrelevant economic statistics, the GDP then? I wan’te Here are some quotes from ONS documents:
Illegal drugs and prostitution boosted the economy by £9.7bn equal to 0.7% of gross domestic product in 2009, according to the ONS’s first official estimate. A breakdown of the data shows sex work generated £5.3bn for the economy that year, with another £4.4bn lift from a combination of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines.
Did you spot the problem? Since one can’t report on a tax return that the source of income is have paid sex or selling illegal drugs, the ONS has to to estimate the economic contribution by these illegal professions. This is how it has gone about doing it:
According to the estimates there were 60,879 prostitutes in the UK in 2009, who had an average of 25 clients per week each paying on average £67.16 per visit.
Really, £67.16? Do prostitutes use per second billing like phone companies?
So complex are the billing methods of those who trade illegally (whatever happened to the cavalier approach to accounting displayed in “The Ling Good Friday” expressed in the line “Give ’em a grand for the inconvenience.”) an excel spreadsheet model has now been created to calculate the hypothetical GDP boost to the nation is. Making things even more surreal, and confirming the GDP calculation is officially a statistical joke, here is how drugs are accounted for:
The statisticians reckon there were 2.2 million cannabis users in the UK in 2009, toking their way through weed worth more than £1.2bn. They calculate that half of that was home-grown costing £154m in heat, light and “raw materials” to produce
The models will need updating constantly, sex and drugs being about the only truly free market activity, cost and prices vary constantly according to supply and demand. The ONS says:
“Our agents will work in the coming months to bring the data more up to date. The figures will then be included in the broad category of household spending on “miscellaneous goods and services” alongside life insurance, personal care products and post office charges.”
It is unclear if the ONS will pay for its agents to conduct due diligence in various brothels, or alternatively conduct “inhouse” sessions at the headquarters. What is clear is that quite soon the largest marginal provider of “growth” not just in Britain but all of Europe will be illegal activities:
Alan Clarke, a UK economist at Scotiabank, said that although the government would not feel the benefit of illegal work in terms of income tax take, there would be a spending boost. “A drug dealer or prostitute won’t necessarily pay tax on that £10bn, but the government will get tax receipts when they spend their income on a pimped up car or bling phone.”
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