Winston Smith Profile picture
Jul 20, 2022 25 tweets 8 min read Read on X
Ok here we go. "Real economy" time.

The Russia Ukraine war and the resulting sanctions has illuminated something very important about the "global economy"

The "on paper" stats showing economic size and prowess are bunk.

Western commentators and intralexuals mocked Russia for "having an economy smaller than Texas, same size as Italy" assuming that historic sanctions would cripple Russia in weeks etc...

2/20 Image
Sure, on paper Russia's economy is "weak", 144 million people with an economy of $1.4 Trillion USD, technically smaller than for example Italy which has 60 million people and a $1.89 Trillion USD.

But what has actually happened during the war? The Rubble has strengthened, the EU bloc economies have collapsed, with the Euro hitting parity with USD for first time in 20 years. Energy blackouts and food crisis on the horizon for Europe.

4/20 ImageImage
How is it such a small economy ($1.4 T) was able to absolutely WRECK the much bigger eurozone ($23 T) economy?

The answer is in what "GDP" is *composed* of.

GDP is abstract numerical value computed by calculating total value of goods and services produced in a country per year. Much of western GDP figures are counting consumption like sales of retail goods (made in China or Mexico and imported to USA or Europe) as "production"

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But beside that fundamental error, there is another even more important one. Over the last 40 years western economies have undergone a structural transformation into "information and service economies"

7/20 Image
Much of western GDP is derived from "service sector" and much of the service sector is fundamentally "unproductive". Sure, we all want education, pharma drugs, entertainment, loans, and fun apps to play etc...but its all in the parlance of COVID world..."non essential"

8/20 Image
How much of western GDP is derived from Tourism? Hotel, spa, and restaurant services, financial paper trading schemes, debt repackaging "services", revenues from dickpic apps? Charging Chinese students fortune in tuition? Royalties on intellectual property (medicine/media)?

9/20 Image
Lets start fresh, a new methodology of economic weight, strength and importance. Use economic metrics that are in essence, timeless. Things that would make sense to a Soviet central planner, or an American industrialist in the 1930's.

Production of real tangible goods

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Primary goods and industrial manufacturing:
Coal, Iron, Steel, Motor vehicles

Gas, Oil, Electricity

Food and Timber:
Lumber, Wheat, Meat.

Data gathered primarily from Wikipedia, CIA World factbook, and google search, some country specific industry websites.

11/20 Image
We see China crushing everyone, in almost every category of primary industrial goods and manufacturing. 7-8X more coal and iron than USA, 12X more steel than USA. 2X more cars than USA!

Italy, Japan and France show up with 0 production in 2 categories !!😬

12/20 Image
Next: energy
USA looking good on this front clearly ahead in natural gas production, effectively tied with Russia on crude oil, but both pale compared to China on electricity output. Other countries with exception of India/Japan miniscule in global electricity production.

13/20 Image
Again above note France shows up with 0 production in 2 categories here AGAIN. Japan and Germany at least have some natural gas production despite having 0 crude oil production. Canada, Brazil, Iran, and Australia looking good for their size in the energy round.

Lets move onto food and wood.

Russia, US, China and India all competitive. Surprised that small European countries still have decent agricultural and lumber output. Guess EU subsidies+grants for farmers is good for something!

S.Korea and Japan score 0 on 2 categories.

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Here is the whole table.
16/20 Image
Nigeria, Pakistan, Poland at the bottom because although they weren't at the top of my head when originally conducting this research, I saw them pop up enough times in different categories that I believe they should be seen as actual players in the "real" world economy

Here is another thing I did, assigned "points" based on each countries relative strength in each industrial output category with each other. Whichever country was #1 in each category got 100 points, and every other country was benchmarked to that country for that category

18/20 Image
Assuming this point system is a "real GDP" metric not the official paper GDP numbers, you see in terms of real output, China #1, 50% bigger than #2 USA.

But note, USA is only 50% bigger than Russia, quite different than the official GDP of 15X bigger!!

19/20 Image
Here is another important finding,
Canada, Australia, and Brazil all score significantly ahead of France, Germany, Japan, Italy.
Mexico = Japan approximately = Iran = 2X bigger than UK!! Just LMAO at British economy must be propped up wholly by money laundering

Limitations of this new fangled model:

1. Services are totally unaccounted for, but this is intentional.

2. Population sizes are not taken into consideration, this is just raw gross output, not per capita. So bigger countries have advantage.

Postscript 1/4
3. Countries that are diversified get boost, scoring 0 in any category (like Italy, France, and Japan repeatedly do) is severely punished. But maybe that's good. If we are in de-globalizing world, you better be able to take care of yourself along broad spectrum!

ps 2/4
4. Many important categories left out. Perhaps I should have included a "cotton" or textiles and "fruits/vegetables" category. Or maybe an appliance manufacturing or ship building category.

ps 3/4

Italy, UK and France needs to get serious. These rankings reveal how embarrassing and shallow many European economies really are. In the world to come, running hotels and tax arbitrage firms is not going to cut it....

ps 4/4 ImageImage
Interesting anecdote from frog in Russia:

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