If only there were an economist about

I confirm that they do just that. As I noted recently, corporate profits make up 67% of the GDP of the Isle of Man. For comparison, they make up 21% of the profit of the United Kingdom, which might reasonably be used as a benchmark.

Eh?

Corporate profit as a % ge of GP is to be compared to corporate profit as a % ge of profit?

Whut?

No doubt we’ll be told that corporate profits are 21% of UK GDP, it’s just a typo. But even that’s not true, that’s the capital share in the economy. Which isn’t, really isn’t, the same as the corporate profit share.

7 comments on “If only there were an economist about

  1. Shouldn’t he be using GDP per head as well, given that the IoM population is so much smaller than UK that the international businesses make a far greater proportion of the profit/capital share than they do in the UK?

  2. Wouldn’t saying corporate profits being 21% of the GDP be mean that companies are making, on average *more* than 21% profit margins?

    GDP is roughly equivalent to business turnover, right? So that saying corp profits are 21% of turnover? If so – assuming I’m not screwing up definitions here – that shouldn’t even pass the smell test.

    The only places I know of that routinely get near 20% profit margins are convenience stores.

  3. Murphy’s relationship with figures is best described as “troubled”. He’s too full of Dunning-Kruger to know what he doesn’t know.

  4. BiCR, Dick Tater doesn’t have a relationship with figures as such. It’s like a geeky bloke with a supermodel – lovely to look at but once he gets too close he hasn’t a clue what to do next.

  5. Aga

    “GDP is roughly equivalent to business turnover”

    No, you can see this by imagining an economy with two firms (eg a car manufacturer and a steel plant that supplies them) and thinking through what happens if they merge. The integrated firm has a lower turnover (revenue) than the total of the two separate turnovers even though economic activity is unchanged. Same value-added though, which is one of the ways GDP can be measured.

  6. No, GDP is value added. Which, when we look at companies, is approx and roughly profits plus wages paid (because another way we can measure GDP is “all incomes”).

    One of Murph’s errors is to equate “corporate profits” to capital share. Which includes interest, rents, non-corporate profits etc. It also includes depreciation. They’re just not the same things at all.

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