A Twitter thread by Winston Smith 🇸🇾

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. 1/20 https://t.co/Kukzghxti1

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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 https://t.co/iLRfbRdiL4

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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. 3/20

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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 https://t.co/9ayu3LXyn7

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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. 5/20

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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" 6/20 https://t.co/ABkxIB0qhU

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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 https://t.co/xs9eZp5KH6

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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 https://t.co/jV2fOh8UH4

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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 https://t.co/omBR879nkr

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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 10/20 https://t.co/Hm0vhBy2Kg

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A Twitter thread by Winston Smith 🇸🇾

Part 1