01-02-2017, 07:12 PM
(This post was last modified: 01-02-2017, 07:14 PM by Warren Dew.)
(01-02-2017, 05:14 PM)Mikebert Wrote:(01-02-2017, 10:51 AM)Warren Dew Wrote: 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.
The reduction in inputs does reduce the revenues of the source of the inputs, which reduces their employment and income. This in turn negatively impacts aggregate demand, which feeds back in GDP.
That's a different argument than you were making before, and may or may not be true depending on the extent to which the inputs are labor. Reducing the demand for timber for making newsprint due a shift to electronic media, for example, wouldn't result in much if any negative feedback.
And there's still the issue of positive feedback from spending the money that is saved, if it is indeed spent.