We’ve all heard how Russian GDP is the size of Italy, that Russia is a gas station with nukes, and so on. When the war started, there were countless predictions regarding Russian economy collapsing, and Russia running out of ammunition.
It was a huge surprise for a lot of people in the west when none of these things happened, and it turned out that Russian economy was able to survive the economic war with the west while continuing to produce weapons and ammunition.
What’s more is that now we see that it’s the west that has find ways to ramp up industrial production to keep the war going.
This is a great illustration of why it’s so misguided to use GDP as a general measure for the strength of the economy. What actually matters is productive activity of the country.
The notion of using GDP as a measure has been promoted by neoliberal ideologues who claim that the type of the economy doesn’t matter. The reality is that majority of the GDP in western economies comes from ephemeral things such as law practice, service industry, lobby groups, and so on.
Some of the sectors of the economy are even explicitly harmful to society. A great example of that is the health insurance industry in US. On paper, this is increasing the GDP because it employs a ton of people working in this sector, but in practice it just makes people living in US more poor and lowers their quality of life.
So, what does the actual productive economy in US look like?
We can look at steel production volumes to get an idea of the size of the productive industry in US.
According to official data, US produced 6.8 million metric tons of steel in June this year https://www.trade.gov/data-visualization/us-steel-executive-summary
Meanwhile, Russia produced 5.8 million metric tons https://www.statista.com/statistics/1079878/russia-steel-production-volume/
All of a sudden we can see why the west has trouble keeping up. US is the most industrialized western economy, but turns out it’s steel production is only slightly higher than in Russia. And it’s important to keep in mind that Russia has a much smaller population, so per capita production is far higher than in US.
And then there’s China where 90 million metric tons of steel is produced in a month https://www.reuters.com/markets/asia/china-june-crude-steel-output-up-04-yy-stats-bureau-2023-07-17/
China’s productive industry is a whole order of magnitude larger than US. This shows just how absurd the notion that US could ever have a direct conflict with China is.
It should be noted that when you calculate productivity, you’ve got to take into account the man-hours. And if you only look at steel, then productivity only applies to steel.
So assuming the average steel worker in China and the US works the same amount of hours, and there’s 2M steel workers in China, the average steel worker in China produces 540 T/yr, while the average American steel worker produces 82 T/yr.
That explains why steel from China is so cheap, and why it’s a main talking point for tariffs.
Yeah, cost of production and productivity is a big factor. For example there was a recent NYT article with the following banger in it:
It’s an open admission that cost of production in US is an order of magnitude higher than in Russia which is likely higher than in China.
I’m of the opinion that cost shouldn’t factor into the calculation of productivity, because a big part of cost are wages, and that would imply that you can be more productive by simply paying people less.
That’s why I specified man-hours.
Wtf. USA’s population is more than twice of Russia’s. I had no clue.
It’s kind of incredible when you see the actual numbers isn’t it.
That USA is so populated or that Russia isn’t?
Mostly the latter.
It used to be larger in USSR days, and I don’t mean just due to other republics. 90’s did a number, and the population has been declining for years
Indeed, we produce 40 million cars every year, but at least 30% of the extra production capacity is idle.When chatting with several predecessors , we calculated that we can produce at least 150 million suicide drones a year under the condition of full mobilization.
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