It occurred to me after seeing a video about England’s low GDP per capita, that Income per capita is the amount workers receive (before taxes), so the difference I think, is the amount taken by companies as profit. Am I missing something? Seems right to me
Not quite – it’s even a bit worse than that.
Because ‘income per capita’ still includes the income of CEOs and owners, who also extract their income from actual workers.
I doubt it’s exactly that simple, because the GDP is the sum of monetary values of all transactions in a region/country. The most important aspect is probably that a company’s costs are not subtracted from the GDP. And there’s of course more costs than just the workers’ salaries: materials, insurance, property taxes, sales taxes just to name a few.
One company’s costs are another company’s product or service, so they are included. However it doesn’t include costs from international vendors. I’m sure there’s more I can’t think of
Imports are subtracted from gdp.
I said GDP doesn’t include purchases from international vendors. They’re not subtracted they’re never included to begin with
Subtracting imports is specifically included in the GDP calculation.
I just looked it up and you’re right. I didn’t know that
It’s even worse when you realize that the workforce is only half of the total population, so you can almost double the per capita GDP to get the GDP per worker.
The difference would also include the cost of raw materials, equipment and servicing debt. Arguably the equipment while depreciating is part of the assets of the company, but it isn’t exactly profit unless they liquidate and fold.
The GDP includes all goods and services produced in a time frame. If you buy equipment yes it is a cost but it doesn’t change the equation because that equipment is a product from a vendor that is also included in GDP (unless it’s purchased from an international vendor). I believe servicing debt is a service and included in GDP. I’m sort of trying to back into the correct number using gross figures. The way you are describing, which is the way each company does it, is the correct way to do it.
Yeah i guess you’re right, if you look at it like that it probably is accounting for most reinvestment of profit in a given business because they would have to spend that on something. My gut feeling tells me it can’t be that simple but I have no evidence to suggest why it isn’t, I’m also an engineer not an economist.