"The West" Vs Thailand, Economically

[impulse]

Therefore it isn't fair to compare GDP per capita on a monetary basis.

The GDP per capita can be used in relation with other figures to evaluate the health of an economy.

- public debt per capita / GDP per Capita (the lower the better)

- private debt PC / GDP PC (the lower the better)

- basic local cost of living / GDP PC (the lower the better)

- yearly growth % of GDP

- business creations / closures ratio

- % of unpaid debt

- loan interest rates (anything below 5% indicates a problem - I guess I will have to explain that later, LOL)

I don't necessarily agree with the first sentence. It's a fair comparison because Thailand, Germany and the USA all use their most valuable resource- their people- and create value with that resource. The Thai economy creates about 1/4 the value per person that the other economies produce- and that's adjusted for PPP which takes into account the different cost structures you described. It's even uglier if you look at official exchange rates and don't adjust for PPP.

That's certainly not the only comparison, but it's the most basic, and the foundation of all other meaningful comparisons of one economy against another.

I absolutely agree that the other factors you've listed are very useful. I also like to look at occupancy (or rather vacancy) rates, the cost of a square meter of housing in hours of salary, the square meters of housing per capita, the ratio of rent price vs purchase price for homes, the percentage of population owning cars, the percentage of the population participating in the reported economy, and a host of other eclectic factors. (Can't say I'm a big fan of the Big Mac Index, but I could get behind a Starbucks Index or an IPhone Index)

It's interesting that most of your relevant factors include the term "per capita" (PC), and yet Naam clicked the "like" button, despite his statement in post #5:

"only economic ignorants use "per capita" for any comparison. let me add something to clarify my claim"

I guess some of us are smart enough to have it both ways. Or maybe it's not so much "smart".

Anyway, good post, well articulated and polite- I enjoy the back and forth. Oh, and BTW, welcome to the ranks of the ignorants. The water's just fine.

[manarak]

GDP per capita can be used if you adjust it using another per capita figure, which mathematically eliminates the "per capita" part of the equation - I could have left the "per capita" part out completely.

You say the people are the most valuable resource of the USA and Germany - that's in a way true, but their economic value gets blown out of proportion by all the costs people and companies have to stem in the west. Why does a tooth crown in Thailand cost between 10k THB and 15k THB and in Germany or USA about ten times the amount?

I think it is pretty obvious that a large part of the difference in GDP per capita simply originates in inflation and boost of consumption by credit

Which is similar to what these people say (from Wikipedia):

Austrian School economist Frank Shostak has argued that GDP is an empty abstraction devoid of any link to the real world, and, therefore, has little or no value in economic analysis. Says Shostak:^[32]

The GDP framework cannot tell us whether final goods and services that were produced during a particular period of time are a reflection of real wealth expansion, or a reflection of capital consumption. For instance, if a government embarks on the building of a pyramid, which adds absolutely nothing to the well-being of individuals, the GDP framework will regard this as economic growth. In reality, however, the building of the pyramid will divert real funding from wealth-generating activities, thereby stifling the production of wealth.

So what are we to make out of the periodical pronouncements that the economy, as depicted by real GDP, grew by a particular percentage? All we can say is that this percentage has nothing to do with real economic growth and that it most likely mirrors the pace of monetary pumping. We can thus conclude that the GDP framework is an empty abstraction devoid of any link to the real world.

And BTW, the works of his majesty the King of Thailand on the matter of "sufficient economy" are also an interesting read, and there are parallels with the inadequacy of GDP as a measure of an economy's health or as a measure of a nation's wealth.

Edited August 26, 2012 by manarak

[jombom]

At this stage prices in Thailand are rapidly approaching those in Eastern Europe, if not already surpassed in some cases. This is not a good omen for the future. My contention has always been that wealth will move to Asia, until the east reaches similar levels of price to the west. Who do you think benefits from globalization, the guy on the street, or the Fortune 500 ??

[manarak]

At this stage prices in Thailand are rapidly approaching those in Eastern Europe, if not already surpassed in some cases. This is not a good omen for the future. My contention has always been that wealth will move to Asia, until the east reaches similar levels of price to the west. Who do you think benefits from globalization, the guy on the street, or the Fortune 500 ??

you are joking!

prices in eastern europe have risen rapidly almost to the level of the west - prices in Thailand remained very far behind.

[Naam]

We can thus conclude that the GDP framework is an empty abstraction devoid of any link to the real world.

i arrived at that conclusion more than 20 years ago when i studied the financial lingo of learned gurus and lecturers. a significant example which proves the value, not only per capita but GDP itself, is that weaponry used in wars and their replenishment are adding value to a country's GDP

Edited August 27, 2012 by Naam

[yoshiwara]

We can thus conclude that the GDP framework is an empty abstraction devoid of any link to the real world.

i arrived at that conclusion more than 20 years ago when i studied the financial lingo of learned gurus and lecturers. a significant example which proves the value, not only per capita but GDP itself, is that weaponry used in wars and their replenishment are adding value to a country's GDP

Of course the products of a company such as British Aerospace which produces and exports weaponry contributes to UK GDP. Only those who want to distinguish between socially useful labour and otherwise (in your case finance and weaponry it seems) use their subjective preferences to jettison the measurement indicator as such. And then what follows are the mysticisms of Thai specialness and so on.

[jombom]

Sorry for the empty post, but my option to create a new thread seems to be gone. Why do they do things like this??? Obviously other people have found the magic button, but not me. The order of the day is user-friendly, but no, the nerds have to modify everything. Oh my Buddha!!!