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Satellite Data Strongly Suggests That China, Russia and Other Authoritarian Countries Are Fudging Their GDP Reports (washingtonpost.com) 175

Christopher Ingraham, writing for The Washington Post: China, Russia and other authoritarian countries inflate their official GDP figures by anywhere from 15 to 30 percent in a given year, according to a new analysis of a quarter-century of satellite data. The working paper, by Luis R. Martinez of the University of Chicago, also found that authoritarian regimes are especially likely to artificially boost their gross domestic product numbers in the years before elections, and that the differences in GDP reporting between authoritarian and non-authoritarian countries can't be explained by structural factors, such as urbanization, composition of the economy or access to electricity. Martinez's findings are derived from a novel data source: satellite imagery that tracks changes in the level of nighttime lighting within and between countries over time.

Satellite Data Strongly Suggests That China, Russia and Other Authoritarian Countries Are Fudging Their GDP Reports

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  • by Anonymous Coward

    If I invented a cheap machine that did all your housework and fixed your car for free, GDP would fall. Despite the fact that everybody's lives would be permanently improved.

    Say a person saves his money and lends it to people in another country. He's creating wealth for himself. The other country is getting further into debt. Maybe the money is spent frivolously or invested in a soon-to-collapse bubble. Or it's spent on productive investments. Either way, the effect on GDP is the same. And it goes to the bor

    • GDP rant aside, the fact that they are cheating it is the news here - not how good or bad GDP is something reasonable to judge an economy by. If another measure was commonly used as a yardstick, they would likely cheat that instead.

      • by rtb61 ( 674572 )

        Nothing to do with GDP, this story is a straight up frothy beat up, attack Russia and China story and nothing else, the lamest shite science and the lamest shite journalism, why, https://www.greentechmedia.com... [greentechmedia.com]. So what the fuck are they even talking about. A measure of street lighting is not a measure of GDP, more a measure of tax levels and willingness to pay for street lighting.

        GDP is not a reliable measure of anything because it is gross, heh, heh and not nett. You can be generating all the revenue yo

        • what fucking government doesn't fudge the numbers at election time,

          People are people, all over the world. There's nothing more evil or corrupt about a Chinese or Russian person.

          With that said, some systems take this into account and some don't. If you can lie and get away with it, a lot more people will lie. Sure, some will still lie in societies where the data is open to inspection - but it's going to be a lot less prevalent. In the US you can say "Donald Trump is full of shit" and you can do so on national TV. You can show charts and info-graphics showing why he's full o

  • by JoeyRox ( 2711699 ) on Friday May 18, 2018 @10:46AM (#56632956)
    Real GDP is the net of domestic output minus price changes, ie inflation. Look into how our inflation measurements have been contorted over the years and you'll see how it's "grossly" under-reported, thus GDP is overstated.
    • Re: (Score:3, Informative)

      by ITRambo ( 1467509 )
      What you wrote is not how GDP is calculated. Finance 501 taught me that GDP is the money supply times the velocity of money (how often the average dollar is turned over per year). That's it. The US simply prints more money to show an improving GDP. This was done after 2008 to make the economy appear better than it was. In reality the velocity fell by 50%. So, the money supply was doubled. We Americas went about out merry ways thinking that all is well and getting better. Any country that uses fiat money can
      • nothing was getting better. That's why we turned to a populist (Trump). Sadly so far I don't think it's turned out the way we'd hoped. Our populist put the same Goldman Sach's folks in charge that have run the show since Reagan and now he support's TPP & increases to guest worker programs. His tax cuts expire on us in 10 years but not on the 1%ers. Oh, and the $1 trillion in debt from those tax cuts is already being used as ammo to shoot down Medicare & Social Security, so we're fucked when we got o
      • Re: (Score:2, Insightful)

        by Anonymous Coward

        ummm finance 501? WTF

        OK. Apparently you missed that money supply is NOT really the currency printed. It is the sum of deposits and other money pools that allow for transactions. One could say "AHA! You said it wasn't printed money but cash in a register or bank vault is a money pool for transactions!" Well, this money is not entirely insignificant but it is very small and very constant compared to the amount of deposits. The actual currency printed is only a vehicle to facilitate what is really used to dete

      • by sjbe ( 173966 ) on Friday May 18, 2018 @12:25PM (#56633556)

        Finance 501 taught me that GDP is the money supply times the velocity of money

        Your education is incomplete. There are multiple ways to calculate GDP and they use several of them for official numbers to ensure some amount of consistency. In principle each method should give (roughly) equal results though in practice it isn't always so easy. The Economist has a decent article [economist.com] on how it generally is calculated.

    • by AvitarX ( 172628 )

      People lways say that, but when I look at my own life, it seems pretty accurate.

      There is perhaps an argument that it under weights necessities vs luxuries and doesn't account for the expected baseline quality of life (as luxuries become closer to utilities in practice), but the numbers seem to check out for me.

    • Not just that. Government spending is inexplicably part of the GDP, so when the economy tanked so many years ago we had a "stimulus" package. A stimulus which magically offset the actual drop in the GDP, making our economy look somewhat steady.

      • It's included because those dollars are in fact spent, and do in fact end up in people's pockets.
        • Re: (Score:2, Insightful)

          ...after being taken from other people's pockets, of course...
          • Ideological arguments about taxation aside, that still is OK when calculating GDP... if you voluntarily gave money to the government and the government spent it, that would not pose a problem - the fact that the "spending" was involuntary doesn't really matter to the GDP calculation. Just make sure that you don't count the payment of taxes as spending so that it is double-counted.

          • You concept of cause and effect is sure fucked.

            You might want to consider this concept of the "arrow of time."

            You propose that stimulus money was given to people after having been taken from other people's pockets.

            It is clear from that that you don't even understand the basic concept of stimulus spending, much less the details of how it was done in a particular case. I can also infer that you know what frequency the local conservative AM radio station is on.

        • It's included because those dollars are in fact spent, and do in fact end up in people's pockets.

          Correct. I should have mentioned that the proper way to handle it isn't to remove government spending but instead to subtract government deficit spending. In other words, if you do a trillion dollar stimulus package and it's financed by debt, it ends up as a wash. If the debt is later paid down (I know, LOL), the money would show up then. It shows up twice if both are part of the GDP.

          To give a simpler example, let's say I make $100,000/year. My household income is $100,000/year. This year I run up $20

    • Every country fudges the formulas in order to make their GDP look better than it is.. If a country's opposition parties are strong enough then the ruling parties will fudge this less while being more open and honest. When the opposition is weak, then the rules are abused or ignored.

    • by Jahta ( 1141213 )

      Real GDP is the net of domestic output minus price changes, ie inflation. Look into how our inflation measurements have been contorted over the years and you'll see how it's "grossly" under-reported, thus GDP is overstated.

      In addition, the usefulness of GDP is oversold. GDP is used as a "magic number" [theguardian.com] (bigger must be better, right?), but in reality it's not the best measure of how well an economy is performing.

  • by DatbeDank ( 4580343 ) on Friday May 18, 2018 @10:50AM (#56632980)

    If you really believe China's GDP numbers have been that hilarious 7% growth for the past few years, I have a presidency to sell you.

    Sincerely,
    Russia /sar

    • by Hasaf ( 3744357 )

      There is also China's Inflation rate to consider. I was teaching Economics in China and we were at the point that were were discussing the ideal inflation rate, which most experts put at 2%. It should come as no surprise that China's inflation rat was 2% and had been 2% for several years.

      Then we compared the prices of a market basket of goods that we were able to find past prices for. I am just going to say that the results were "discomforting."

      For those incapable of reading between the lines, the inflation

      • Was it higher or lower? Was it higher or lower than the corresponding wage increases?
        China targets 3% inflation anyway...
      • Then we compared the prices of a market basket of goods that we were able to find past prices for. I am just going to say that the results were "discomforting."

        For those incapable of reading between the lines, the inflation rate we found was very different from the official inflation rate.

        First wrong assumption: that China is calculating inflation using the CPI method.

        Second wrong assumption: that inflation rate is similar over various product groups.

      • Isn't there some sort of averaging across different products and industries? I don't see restaurants raising prices matching inflation, I see price increases of $0.50-$1.00, often 5-10%. Yesterday, was the first time I saw a restaurant do $0.30 increase on nearly every item. So the rate is different for the $2.29 and $10.29 items.
        • by Hasaf ( 3744357 )

          In economics when we refer to a market basket of goods it is a set of basic goods, called permanent staples. There are goods that are unlikely so change in composition or utility. Yes, it does cross several sectors, even though it may sound that way, they are not all groceries.

    • We did buy one. But unfortunately we didn't opt in for the extended warranty package.

    • by AmiMoJo ( 196126 )

      Having been there I can believe it. The whole country is a giant building site.

      Also, artificial lighting is not a good measuring tool for GDP. In China the culture is just that a lot of public spaces are poorly lit. Even in hotels it's not uncommon not have hallway lights turned off, or at least on occupancy sensors.

    • Sincerely,
      Russia /sar

      In Soviet Russia, sarcasm flags you.

  • by Anonymous Coward

    You say that like the US ain't one too.

    • by rogoshen1 ( 2922505 ) on Friday May 18, 2018 @10:55AM (#56633022)

      Tell that to someone who grew up in the USSR or GDR -- and try to keep a straight face. It's certainly a cause for concern here and getting worse; but no - we're no where NEAR a true authoritarian regime.

      • by washort ( 6555 )

        I have. My friends who grew up in the USSR agree that the USA is more oppressive in many respects.

        • by Anonymous Coward on Friday May 18, 2018 @01:14PM (#56633878)

          When I was in the USSR, a Ukranian told me that he was just as free as I. He said I could go stand in front of the White House and yell, "George Bush is a fool!" with no recourse. He said he could also go stand in the middle of Red Square and shout, "George Bush is a fool!" with no recourse too.

  • US does as well (Score:5, Insightful)

    by crypticedge ( 1335931 ) on Friday May 18, 2018 @10:54AM (#56633008)

    The US has as well ever since it made financial entity transactions part of GDP, something no other nation does.

    • by Anonymous Coward

      You say that as though you don't consider the US to be an authoritarian country.

  • Any inconvenient data is probably fudged.
    pollution data
    military spending
    number of people in prison
    healthcare quality
    surveillance of the general population
    election integrity

  • by Anonymous Coward on Friday May 18, 2018 @11:05AM (#56633082)

    I read the introduction of the working paper. As someone with PhD, I have to call this research to be pure bullshit. If modern economists are as what this researcher, then I will call modern economics to be full of bullshit as well.

    From the working paper, here is the main methodology..

    " I study whether the mapping of night lights to GDP differs systematically by regime type. That is to say, I examine whether the same amount of growth in nighttime light translates into more GDP growth in autocracies than in democracies"

    This methodology does not make sense for obvious reasons and non-obvious reasons. GDP is NOT night time light volume. A city with street lights but no people do not produce GDP. On the other hand, a factory that only works in the daytime, like in industrialized countries such as western europe and east China, do not have light volume at night. I cannot believe this bullshit research gets publicized by Bezos' fake news Washington Post. Maybe these news reporters deserve to starve and their newspapers shut down due to their inability to notice fake research?

    • by ShanghaiBill ( 739463 ) on Friday May 18, 2018 @11:42AM (#56633334)

      GDP is NOT night time light volume.

      Of course not. But it is a rough proxy for GDP. Why would it systematically differ between authoritarian and non-authoritarian countries? An obvious answer is data fudging.

      A city with street lights but no people do not produce GDP. On the other hand, a factory that only works in the daytime

      Why would these differ between authoritarian and non-authoritarian countries?

      China is known for "ghost cities", but they were never really that common, many of them are now occupied, and they would lead to under reporting of GDP, not the over reporting actually observed.

      • A really wealthy, civilized culture would shed virtually no light upwards at night time. It's wasteful and stops you seeing the stars - which, to a civilized person, is far more important than gold-plated taps or a 28-cylinder car.

      • by dj245 ( 732906 )

        GDP is NOT night time light volume.

        Of course not. But it is a rough proxy for GDP. Why would it systematically differ between authoritarian and non-authoritarian countries? An obvious answer is data fudging.

        Data fudging, maybe. Cultural differences, developmental differences, and about 100 other factors are probably better proxies. The light pollution methodology IS bullshit. Especially when we are talking about small changes in GDP like 3-7% growth.

        Just as one example, in the US a substantial source of light pollution is car sales lots, which are lit up like daytime 365 nights a year. Countries in Europe don't generally have as many lots- they often order their cars from the factory. In Japan, theft i

    • If modern economists are as what this researcher, then I will call modern economics to be full of bullshit as well.

      You are quite right: modern economics is little more than a huge pile of bullshit. That's mainly because its assertions cannot be tested, so no one knows whether what economists say is true.

      That being so,street-smart economists say what the rich and powerful like to hear - and get lucrative professorships, book contracts, government jobs, sponsorship, etc.

      If you want to learn something about real economics, read Michael Hudson or Steve Keen. There's still a lot of truth in Adam Smith, Jean-Baptiste Say, Dav

      • Clueless (Score:4, Insightful)

        by sjbe ( 173966 ) on Friday May 18, 2018 @12:32PM (#56633592)

        You are quite right: modern economics is little more than a huge pile of bullshit.

        I'm sure you really believe that too even though that statement makes it clear you haven't actually studied economics and are substituting ideology for evidence.

        That's mainly because its assertions cannot be tested, so no one knows whether what economists say is true.

        That is not even remotely true for a wide array of economic research. They have testable models which are used all the time. Heck there is money to be made by making testable models - do you really think all the investment banks would spend so much money on quantitative analysis if it didn't provide actual results?

        There's also a lot of truth and valuable ideas in Karl Marx,

        Yeah you just shot yourself in the foot there if you think Marx is any sort of a refutation of modern economic research.

      • by swb ( 14022 )

        That being so,street-smart economists say what the rich and powerful like to hear - and get lucrative professorships, book contracts, government jobs, sponsorship, etc.

        I'm not sure all of economics is untestable, but it's occasionally hard not to see some aspects of it as a variation on confirmation bias, justifying the outcomes of the economic elite through a quasi-scientific basis.

        Surely the economists who create theories and rationales which justify capitalists' economic behaviors wind up with more and better employment opportunities than those who would criticize them. It also doesn't help that economists like to reflexively claim a non-ideological/non-judgemental po

      • Smith assumed that the government and their peers would smack them down, and that nobody would be so vile as to act against their own interests in such a stupid-greedy way.

        It was like pointing out that people don't stick their bare hand into the beehive to get a taste of honey.

        It turns out, not all governments are capable of self-interest. This was a surprise result. But it changes little of his analysis; it just changes the wording of some things.

        Marx starts from quoting Smith's presentation of the basic p

    • by Baloroth ( 2370816 ) on Friday May 18, 2018 @12:04PM (#56633444)

      It's obviously not a perfect measure of GDP, but actually people have done the research [aeaweb.org] and shown a strong link between the two. If, as you claim, you have a PhD (and it's in a relevant field: sorry, an English PhD gives you zero qualifications here), you're not only free, but should have the capability to put out your own research disproving this work. Of course, given the quality of logic in your post, I suspect you don't have that capability. For example:

      A city with street lights but no people do not produce GDP.

      The entire point of both a city and street lights is to have people. It's true that China has been building "ghost cities [wikipedia.org], but all that does is suggest that in fact the light-based estimate overestimates economic activity, which just makes the point in TFA that much stronger.

      On the other hand, a factory that only works in the daytime, like in industrialized countries such as western europe and east China, do not have light volume at night.

      Have you seen a factory at night before? Or even seen a factory in a movie at night? Most of them absolutely put out light at night (they're usually glittering beacons of light, in fact). In fact if they have smokestacks or chimneys they're required to or they're a huge safety risk to aircraft. Also lots (most?) factories in most climates run in mornings and evenings before/after sunrise, and it's not uncommon for them to run overnight: downtime is a huge waste of money when you have an expensive factory. In fact, factories not running overnight would be an indicator of economic weakness, such as happened to the US auto industry in the 2000s.

      • by dj245 ( 732906 )

        Have you seen a factory at night before? Or even seen a factory in a movie at night? Most of them absolutely put out light at night (they're usually glittering beacons of light, in fact). In fact if they have smokestacks or chimneys they're required to or they're a huge safety risk to aircraft. Also lots (most?) factories in most climates run in mornings and evenings before/after sunrise, and it's not uncommon for them to run overnight: downtime is a huge waste of money when you have an expensive factory. In fact, factories not running overnight would be an indicator of economic weakness, such as happened to the US auto industry in the 2000s.

        Not necessarily. Our manufacturing facility has about a dozen CNC machines. We load the machines up in the afternoon and let them run all night until they either complete the part or run into some kind of fault. Everybody leaves by 4:30PM. Not all manufacturing businesses are like this, but there are plenty of them, and likely more in 1st world countries than in 3rd world ones.

        • But do you leave the lights on? Most industrial facilities I have been in are lit up when in operation regardless of the work schedule, so if someone has to show up in the middle of the night they can instantly assess what is going on.
        • China is 2nd world, so comparing 1st or 3rd is perhaps mistaken.

      • Have you seen a factory at night before? Or even seen a factory in a movie at night?

        You obviously don't know about Chinese factories. In the US, if you look at an office building and a factory side-by-side, they look totally different.

        In China, an office building and a factory are not different buildings. The corporate headquarters is not in a fancy building. It is in the same building as the factory. And it looks like a rundown office building in a poor city in the US! 6 floors, all the same height, with exactly the same rows of windows on every floor. You can't really even tell from the

    • Privet, drug, kak dela?

    • by taustin ( 171655 )

      I cannot believe this bullshit research gets publicized by Bezos' fake news Washington Post.

      Why would that surprise you? WaPo is just shy of publishing Bat Boy stories. Random word generators are more likely to be true.

    • North Korea is a special case.

      As I understand it, since the Korean "police action" (a.k.a. "Korean War"), North Korea has had continuous WW II-style, nighttime blackouts (for fear of bombing and/or to keep the population propagandized about external threats.)

      So, though they may actually have a low GDP, it may not be a horribly low as the "night lighing => GDP" measure would make it seem.

      (I recall, a few years back, the publication of satellite imagery of the Korea-halves, with North Korea almost as dark

  • Unbelievable, countries with regimes that thrive on freedom of information would resort to such propaganda tactics. Satellite imagery was objectively analyzed for detecting WMD in iRaq after all.
  • by Zorro ( 15797 ) on Friday May 18, 2018 @11:07AM (#56633112)

    North Korea wishes to point out its superiority in cloaking devices.

    They only appear to be in the dark.

  • by Chris Mattern ( 191822 ) on Friday May 18, 2018 @11:12AM (#56633138)

    Heinlein was calling them on it (although he probably overstated his case) fifty years ago in "Pravda means Truth" (which you can find in Expanded Universe or the earlier The Worlds of Robert A. Heinlein)

  • by sjbe ( 173966 ) on Friday May 18, 2018 @11:14AM (#56633154)

    China, Russia and other authoritarian countries inflate their official GDP figures by anywhere from 15 to 30 percent in a given year, according to a new analysis of a quarter-century of satellite data.

    This is nothing new. When I was getting my graduate degrees (one of which is in business) 15 years ago it was widely understood that China fudged their official numbers as a matter of routine. No real reason to believe this has changed. Economists who study this stuff are well aware that the numbers out of certain countries are unreliable and they make efforts to correct for the problem to the best of their ability.

  • data suggest
  • What a major fail. Data centres produce no visible light in sattelite imagery. Neither do banks, mines, crops (agriculture in general), I suspect larg portions of saudi oil-filled dessert would also be unlit and VERY few factories working 3 shifts have glass roofs. Large portions of german autobahn is unlit. Large portions of belgian is.

    Some countries chose to fight light pollution. California was amongst the first to start looking into it. Based on this "research" California would also by lying about their

  • Pray for it (Score:5, Informative)

    by Impy the Impiuos Imp ( 442658 ) on Friday May 18, 2018 @11:32AM (#56633266) Journal

    In the 1960s, Robert Heinlein went to the Soviet Union as part of an opening salvo of goodwill between the countries. He looked at the shipping and roads in and out of Moscow and realized there was no way it could support whatever X millions of people they were claiming to he on rough parity with New York.

    It's been estimated it required about 50% of Soviet GDP to even maintain a facade of parity with the US military.

  • News at 11 (Score:4, Interesting)

    by Artem Tashkinov ( 764309 ) on Friday May 18, 2018 @11:39AM (#56633320) Homepage
    Authoritarian regimes lie more than democracies.
  • This finding explains why the USA has been having 12% annual growth in GDP ever since vivid LED street lamps started to come into widespread use.

  • You know that whole "Americans are 14th in reading" thing and all those other allegedly comparable international test score stats? Yeah, because arrogant countries all about self image, especially in Asia, never lie and cheat to inflate those numbers. That tooootally doesn't have any precedent. Other countries lie about everything to make themselves look better. Everyone knows this.
  • My muscles are bigger than yours, therefore I am superior to you!
    I am taller than you, therefore I am superior to you!
    I can run faster, therefore I am superior to you!
    My penis is larger and harder, therefore I am superior to you!
    I am superior to you, therefore more females prefer to mate with me more frequently than with you!
    Our GDP is larger, therefore we are superior to you!

    Our species is still painfully young, not much more evolved than the rest of the animals. We just have better toys.

    Co-operation is more important than competition

    We might just survive long enough to reach that point.

    • Co-operation is more important than competition

      We might just survive long enough to reach that point.

      Too late, as usual. The question is, will enough of us survive to try again, or will it be the cockroaches?

      • You and I are just powerless faces in the crowd who might happen to notice what's going on, and won't be able to affect much of anything. That's in the hands of others, and we'll all be long since dead before the outcome becomes apparent.
  • All governments lie, just about different things.

  • Satellite data also 'strongly suggests' that there is a climate change going on, but nobody cares.
    But if somebody exaggerates his own wealth, it's a problem?
    With THIS Administration?

  • "Duh" seems the most appropriate response.

    Ferret
  • Trump has spent decades lying about his net worth to get on the list of the world's richest people.

    He's an authoritarian personality type, which is why he loves dictators like Putin and Kim Jong Un.

  • The level of democracy for countries is obtained from Freedom House, It has nice maps where Tibet is distinct from China. I know some people advocate for that, but it is the first time I see it on a map.

    I wonder what US people would think is some organization featured a map with Indian reserves as distinct countries.

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