Re: Fundamental Flaw of National Accounting

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

On Mon, 15 Sep 1997 14:00:20 +0200, "Per Gunnar Berglund"
<pgb@xxxxxxxxxxxxxxxxxx> wrote:


Bruce:
>>My guess is that this type of approach is exactly why Keynes
>>thought it was necessary to have a direct measure.  Since, even if
>>you construct your linguistic links, and you have a valuation based
>>on the output measures which you argue is effectively tracking the
>>input categories, *how do you verify it* unless you have a direct
>>measure for comparison?

Per:
>    This was an issue that occupied my own thinking for quite some time.
>The outcome was that there is really no need for verification, since the
>"output--input" link is axiomatic. This is a matter of language, not of
>empirical verification.

        But isn't that one of the basic questions?  What reason is there
to believe that we will benefit from speaking in a language in which the
link that you proposed between output and input is accepted as axiomatic?
The direct reason that you offered was that we accept this in the
income / expenditure accounts, so we should by extension accept this in
factor, inputs / output accounts.  But it is not required to make it
axiomatic in the income / expenditure accounts, it is simply true by
definition of the accounts.  It is *not* simply true by the definition
of the factor & inputs / output accounts in real terms.  So the transfer
that you accept seems like a sleight of hand to try to sneak in the axiom
you need to make your abstract system work.  But if we accept it as
necessary to make your system work, and then we should accept your
system because *if* we accept the axioms, your system says interesting
things about the economy, that is tautological.  So you are still
left with the problem of arguing in favor of the axiom you propose
that we should adopt.  Saying "this is a matter of language, not of
empirical verifiation" does not *excuse* you from arguing -- unless
you are, in fact, arguing from personal authority that we should use
this language because Per says so.

Virtually,

Bruce McFarling, Ourimbah, NSW
ecbm@xxxxxxxxxxxxxxxxxxx