Economic Illiteracy At The WaPo
This is pretty funny. I just spent a few weeks talking to economists about trade and NAFTA, and I couldn’t find a single one that was as enthusiastic as the Washington Post editorial board. But in their haste to praise “free trade” and spank the Democrats for “demagoguery,” they made a wee bit of an error.
Dean Baker explains :
[T]he Post tells us that "Mexico's gross domestic product, now more than $875 billion, has more than quadrupled since 1987." That's not exactly right. If we pay a trick to the IMF website, we find that Mexico's real GDP in 1987 was $1,130 billion. The IMF projects 2007 GDP as $1,895 billion, an increase of 67.7 percent. That is considerably short of quadrupling.
How on earth does the Post get that Mexico’s GDP quadrupled when it actually only grew by 67.6 percent? Well, they may have taken the growth in nominal GDP. If we don’t adjust for inflation then we can conclude that Mexico’s GDP quadrupled over the last twenty years. Of course, no reasonable person would ever assess growth without first adjusting for inflation since it has no meaning. If we don’t adjust for inflation, Zimbabwe’s economy, wracked by hyperinflation of several thousand percent annually, is the fastest growing economy on the planet. If the Post editorial writers use a consistent measure, we can expect to see warm praise for Zimbabwe’s extraordinary growth on the editorial pages in the near future.