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Something else to note. There is an imputation trick here that is part of neoclassical analysis. The authors partition ‘ambiguous’ income (i.e. proprietors) into a capital and labor component, based on the fraction found in the rest of the economy. From a CasP standpoint this is dubious.
Without this imputation, it seems unlikely that any BEA revisions could significantly change the labor share of income. Here, for instance, is employees share of US national income. I think this is an unambiguous definition of ‘labor share’:
It has varied over the last century by 10 percentage points. Now look at Table 1 in the Koh et al paper:
The important numbers here are the original and revised numbers for value added (lines 7 and 9). The addition of own-account IPP changes value add by about 5%, which then changes the employees share of value added by about 2.5%. That’s hardly enough to alter the trends in the Figure above.
So the imputation of the labor share of proprietor income seems to be important. And this imputation, we should remember, is completely neoclassical. It assumes you can attribute a proprietors income to a labor component and a capital component. Pretty silly.
Jonathan, I too am confused about how in-house IPP costs were not originally part of GDP. That said, I find the whole distinction between intermediate and final goods confusing and arbitrary. I would much rather work with distributional accounts that are concerned only with income, not ‘production’.
One final thought. The ultimate test here would be to go back and find vintage data from before the revisions and see how it differs from the modern data.
I’ve been thinking about CasP and the Right for a few days now. The more I think about it, the more scared I become. Most CasP researchers (including me) assume that if you lift the veil of power — talk about it openly — then this automatically leads to a critique of power. But that’s a philosophical assumption, in some sense, tied to liberalism.
Liberals dislike (or at least claim to dislike) concentrated power. But they don’t talk about the realities of power openly. CasP researchers keep this dislike of concentrated power, but care about reality.
The Right, however, increasingly celebrates power openly. It hearkens back to the fascism of the 1930s, or even earlier to feudalism. In the feudal mode of power, power was celebrated as a virtue. Yes, it was mixed with religion. But you could see how if you showed that a king’s income was a function of his power, he would take that as a compliment. ‘Now give me more power please’, he would say.
If CasP is to be a progressive research agenda, then the onus is on us to not only investigate power, but to show its injustices.
A fascinating post, A B. Just wanted to reply with a technical note. For some reason, some of your angle brackets got replaced with html code. Playing around, it looks like this happens when you toggle between ‘text’ view and ‘html’ view. That’s unfortunate. We’re working on getting a preview function for the forum. But for now, be aware that if you toggle between html and visual, some of your code may get wrecked.
Anyway, I manually fixed the problem here.
Looking forward to the discussion.
I’ve ironed out a few bugs in the app. And I’ve added a data download button. Also, if you find some interesting words, you can save the plot image by right clicking. Feel free to upload anything interesting here. I feel like I’m just beginning to explore the data.
Hey everyone,
Thanks for your interest in this post. I’d like to point out two things. First, the data for the post is available at the Open Science Foundation: https://osf.io/afz3p/. I welcome other researchers to see what other results are lurking in the data.
Second, I’m working on an app to visualize the econospeak data. If you have the time, kindly try it out and offer feedback:
https://blair-fix.shinyapps.io/deconstructing-econospeak/
There is something to be said for taking a common term and turning it on its head. I don’t personally use the term ‘rent’ much in my research. It seems to be too tied (for my liking) to the concept of ‘unearned income’. That’s a fundamentally unmeasurable concept.
But I do like, Troy, that you’re experimenting with new ways of grouping income. In the end, its the accounting that matters. What you call it is just semantics. (Although, as Jonathan says, many people will ignore the accounting definition and just respond to how they understand your words.)
