Elon Musk is wrong about GDP

Context of Musk’s Claim

• Musk argued GDP should exclude government spending, especially in the recession context (e.g., Atlanta Fed projections).
• Some commenters say his point is that deficit‑funded government spending can make a weak economy “look good” in GDP terms.

Government Spending and GDP: Can It Be Separated?

• Several argue it’s practically impossible to cleanly separate “government GDP” from “private GDP” because so much private activity depends on public spending (military towns, defense contractors, etc.).
• Economists in the thread are unanimous that excluding government from GDP undermines the metric’s basic definition and makes the accounting incoherent.

Quality of Government vs Private Spending

• One side: a dollar is a dollar; all spending is economic activity, whether from government or firms; GDP is not meant to judge moral or allocative “worth.”
• Other side: government spending is not priced via voluntary market exchange, is often inefficient and politically driven, and may overstate “true” output if simply counted at cost.
• Counterexamples are given where government is more efficient (e.g., public healthcare, postal services) and where private sector wastes billions too.

Limits and Manipulation of GDP/CPI

• GDP can be “pumped” via deficit spending or war economies, masking underlying weakness (Russia mentioned as example; also China’s infrastructure boom).
• Goodhart’s law: once GDP or CPI are targets, they become less informative; some claim both metrics are now heavily distorted or politically shaped.
• Others respond this is overreach: real GDP adjusts for inflation, and deflators and multi‑indicator dashboards exist; the issue is misuse, not uselessness.

Alternative / Adjusted Metrics

• Proposals: GDP minus public deficit, minus government spending, or adjusted by “haircuts” on government outlays; also incorporating debt accumulation.
• Critics say these adjustments quickly become normative and politicized; better to keep GDP as a neutral accounting identity and use additional indicators (wealth, externalities, inequality, cost‑of‑living indices, etc.).

Views on Musk and the Article

• Many dismiss Musk’s view as “fringe” and economically naive; some frame it as libertarian moral intuition dressed up as analysis.
• Others note the article criticizes Musk but doesn’t deeply explain the accounting issues or fully engage with the debt/deficit concern, and thus feels more like an op‑ed than an educational piece.