Effects of Politics and Crime on Economic Beliefs

Effects of Politics and Crime on Economic Beliefs

 

After the 2008 global financial crisis, government officials meddled with the calculation of GDP most strongly, including prior excluded black market activities, like wild estimates of the revenues created by illicit activities like prostitution and drug trafficking to their annual GDP estimates. It was widely speculated that the inclusion of illicit activities by Italy in their 2014 GDP calculations deferred the need of their politicians to admit that they had entered an economic recessionary period. In fact, the International Monetary Fund (IMF) estimated that inclusion of illicit activity revenues, which many countries started doing after the 2008 global financial crisis, would increase the US GDP by 14% to 16% and increase the GDP in emerging market nations by a whopping 35% to 44%.

So the fact that a nation’s GDP, depending upon factors included in the calculation could be transformed overnight from a depression-like -8.8% to a screamingly positive 9.8%, depending on how it is calculated, is massively problematic as being the basis for whether or not global recession exists.

Finally, since many Western nations now include illicit activities in the calculation of their GDP, a positive GDP rate doesn’t even translate into positive economic conditions as it did many decade ago. If activities like drug trade and human trafficking are being included in the GDP data, obviously the impact upon these activities as a whole in the economy are enormously negative, and many not even be spent in the nations in which the revenues from such activities are being included, if the beneficiaries of these illegal activities do not live in the nations in which they commit crimes, which is often the case.