Le sigh...

First of all, it's not just the EU ("wacky Europeans" narrative), it's the OECD and the UN.

OECD: Measuring the
non-observed economy [PDF] (November 2002)

it is essential that statisticians correctly measure the absolute levels of GDP as well as the growth rates by valuing all economic activities that are to be included in the GDP according to the international standards of the System of National Accounts 1993 (SNA). The challenge that this presents to statisticians has increased in recent years because of the difficulties in valuing new activities, particularly in the services sector, and in valuing activities in the so-called "informal" and "underground" sectors.

The proble is that if you derive income from illegal activities and then spend it on legal activities the system of national accounts may show an inconsistency.

The 1993 System of National Accounts is based on a broad view of economic activity. For example, the SNA production boundary (see Chart 2), which is used to define the GDP, makes no distinction between legal and illegal activities as long as they are willingly engaged in by buyers and sellers. The SNA also requires the national accountant to pretend that certain transactions have occurred - for example that home-owners rent their homes, in their capacity as owners, to themselves in their capacity as occupants, or that farmers who eat some of the food they have grown sell it, in their capacity as producers, to themselves, in their capacity as consumers. Most significantly, the SNA production boundary includes economic activities that are not reported to the tax authorities and government statisticians either through ignorance or deliberate intent on the part of producers or through incompetence or deliberate choice on the part of the authorities.

But you can't expect economic reporting to explain this.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

A few weeks ago it was already announced that the Dutch economy was estimated some 40 billion euro's higher, due to the new accounting. The Dutch Statistics Bureau has provided new figures since 2001. Prostitution and cannabis alone added almost 1,6 billion euros to the 2010 estimate.

Apparently France refuses to include drugs in their new tallies.

Does the economic crisis look suddenly less bad this way?

gk:

"better reflecting the economic environment,"

Let's re-arrange that to:

" reflecting a better economic environment,"

Considering all the skullduggery advocated and subsidised by the Pars-dat-be, it makes a sort of horrid sense.

Certainly in Italy large chunks of the government and the Mafia are indistinguishable.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty