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I'm no expert here, so maybe there's some justification. But it's not obvious to me that comparing a company's income to a country's GDP makes sense.


Why not?

Sincere question.

A firm's revenues are the monies paid it. A nation's GDP is measured largely as money flows, though Adam Smith (and Simon Kuznets, largely) defined it more specifically as "the annual labour and produce of the nation".

So yes, it's not clear to me that a company which is buying at $n and selling at $n+m should be rated on its revenues. But you'll see that number turning up in GDP as I understand it. See:

"Output can be measured in three (theoretically equivalent) ways: by adding up all the money spent each year, by adding up all the money earned each year, or by adding up all the value added each year. Some economies, including Britain, combine all three methods into a single GDP figure, whereas others, like America, produce different statistics for each. (American GDP is estimated via the spending approach; GDI, or gross domestic income, by the income approach.)"

http://www.economist.com/blogs/economist-explains/2014/03/ec...

(There's a case to be made on that basis that GDP is mismeasured, but it seems it's awfully close to corporate income as defined.)


You're asking why isn't it obvious to me that the two metrics can be meaningfully compared? If I could answer that, I would know whether or not they could be meaningfully compared.

Your post doesn't convince me. Whether that's because I don't know enough to follow the argument, or because the argument doesn't follow, I couldn't say.

I will say that, as I understand it, GDP depends a lot (mostly?) upon things being bought and sold within a country, while a firm's revenues mostly come from sources outside the firm.


No, I'm asking what your reasons for thinking corporate income and GDP aren't equivalent concepts, because I'd like to see and understand your thinking.

As I'd hoped my comment above made somewhat evident, my thinking can go either way on the concept. Your insights might give me a nudge one way or the other.

My quoting the accepted answer doesn't mean I agree with it.

The interrnal production vs. passthrough disttinction has merits. Though what of a mabufacturing company, say, of automobiles of computers?


Generally selling at $n+$m is compensated by having healthy competition in the market.


Can you think of any possible cases in which that logic wouldn't apply?




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