Report Card for Donald Trump

[Warren Dew]

(01-02-2017, 08:22 AM)Mikebert Wrote:

(01-01-2017, 07:21 PM)Warren Dew Wrote: If a real reduction in cost is achieved with the same production,  real, inflation adjusted, GDP goes up, because everything that was being produced before is still being produced, plus some more.  The average person ends up better off.

A real reduction ins cost means a firm is producing the same output while using less inputs.  Those inputs are someone else's output, which necessarily is lower by the amount of cost saved. This loss would be recovered, by the additional  spending freed up by the cost savings. 

That's not how GDP works.  GDP is a measure of final goods and services; intermediate goods and services used to produce those final goods and services aren't counted.  When technological advances mean some of those intermediate goods and services are no longer needed and their cost can be saved, that in itself doesn't change GDP at all.

It might be worth rereading the last page or two of posts with that in mind.