Читать книгу Rich Nation / Poor Nation - Robert Genetski - Страница 6

What can be asserted without evidence can also be dismissed without evidence. — Christopher Hitchens

The first step in understanding why some nations are rich and others poor is to measure wealth. We noted how a nation’s wealth results from the ongoing process of creating things other people value. One of the most common measures of this concept is referred to as a nation’s gross domestic product or GDP. GDP provides an estimate of the value of all final goods and services produced in a nation during a specific period of time, such as a year. Instead of the pretentious term GDP, from this point on we will refer to GDP simply as a nation’s output.

Comparing the wealth of one nation to others involves a number of potential problems. Among these is the issue of converting currencies. Since each country reports its output in its own currency, comparing the wealth or output of one country to that of another involves converting information on output into a common currency.

While currency exchange rates can be used for the adjustment, they don’t measure what we want to measure. Exchange rates show how much of one country’s currency we can get for the other country’s currency at a point in time. This doesn’t tell us how living standards or wealth in one country compares to others. For making such comparisons we want to know how many US dollars it would take to purchase a similar basket of goods and services in each country.

For example, if someone in the US can buy a certain basket of goods for $1,000 and someone in another country can buy a similar basket for 500 units of their currency, it means that their currency has twice the purchasing power of a US dollar.

Since the purchasing power of the other country’s currency is twice that of the United States, we have to double their output in terms of the other country’s currency to make it comparable to US dollars. Purchasing power parity (PPP) is the term used to adjust the value of a nation’s output from its own currency into US dollars. Happily, such a calculation exists and is widely recognized in economic analysis. In this book, whenever we compare one nation’s output, or wealth, to that of another nation we will use the PPP adjustment to make the comparison.

The largest economies in the world are those that produce the most goods and services. The following are world leaders in terms of total economic output.

It’s easy to confuse size with wealth. The saying “size matters” doesn’t apply when referring to a nation’s wealth. China and India are two of the largest economies in the world. Neither is wealthy. These countries produce a lot of output, but each has over a billion people. Dividing a nation’s output by its population provides a more meaningful estimate of the wealth of its people.

Output per person, adjusted for PPP, is the most commonly accepted measure for international comparisons of wealth among different countries. It is also a nebulous concept. Few people can relate to it. What most people can relate to are wages or salaries.

For various reasons, it’s possible to use output per person as a rough approximation of the average annual wage in a country. The data appendix explains why this is so. Hence, whenever you see output per person for any country you can think of it as the average annual wage for the country. Some may prefer to consider the median wage (where there are as many workers earning more as earning less). Reducing the average wage by 20% can provide a rough estimate of the median worker’s annual wage.

With this background information we are ready to begin comparing the wealth of various nations.