By now you’ve probably read “this story”:http://www.wjla.com/news/stories/0904/171981.html about what Dick Cheney said yesterday:
bq. Indicators measure the nation’s unemployment rate, consumer spending and other economic milestones, but Vice President Dick Cheney says it misses the hundreds of thousands who make money selling on eBay. “That’s a source that didn’t even exist 10 years ago,” Cheney told an audience in Ohio. “Four hundred thousand people make some money trading on eBay.”
John Edwards “said this morning”:http://www.qctimes.com/internal.php?story_id=1034852&t=Business&c=31,1034852 that “If we only included bake sales and how much money kids make at lemonade stands, this economy would really be cooking.” I see three possible responses from Cheney.
* Say you’ve changed your mind and that women’s domestic labor _should_ be counted as part of the formal economy. Job-creation problem solved.
* Issue a “corrected transcript”:http://www.prospect.org/weblog/archives/2004/09/index.html#003975 of the speech, with one of the following corrections: “Four hundred thousand“; “trading on eBay NASDAQ”; or “That’s a source that didn’t even exist 10 years ago I just pulled out of my ass right now, because I think you’re “all idiots”:http://maxspeak.org/mt/archives/000761.html.”
* Glance out the window, turn to Scooter Libby and say, “Let them sell tchochkes.”
{ 30 comments }
kevin donoghue 09.10.04 at 3:54 pm
Brad DeLong points out: “Cheney needs a staff who will tell him that the $2.0 billion or so in eBay’s domestic revenues are already included in the Commerce Department’s Bureau of Economic Analysis’s estimates of GDP.”
Matthew2 09.10.04 at 4:05 pm
You obviously don’t understand the supreme power of the New Economy (the Resurrection).
Sebastian Holsclaw 09.10.04 at 4:27 pm
I know two people whose full time job is trading on ebay. You obviously can’t count every person who trades on ebay as a worker on ebay. But those who buy and sell on ebay as a job aren’t any less workers than those who buy and sell out of a store.
Timothy Burke 09.10.04 at 4:43 pm
That’s true, Sebastian. But:
a) some eBay merchants are already being “counted” because they’re connected to brick-and-mortar businesses or are otherwise tracked within current economic statistics.
b) if Cheney’s serious about trying to take account of the informal economy–something I’m not wholly opposed to in my own field, given the importance of the informal economy in African economic life–his staff needs to tell him something else, namely, that the parts of the informal economy that really substantively matter are prostitution, drug trafficking, circulation of stolen goods, and similar illegal or quasi-legal activities. Even if you “counted” full-time eBay traders in any “count” you care to name, they’d amount to virtually zero significance at the national scale.
Kieran Healy 09.10.04 at 5:27 pm
But those who buy and sell on ebay as a job aren’t any less workers than those who buy and sell out of a store.
Which is why they would be counted as ‘self-employed’ when they filed their taxes.
y81 09.10.04 at 5:47 pm
Well, charitably (and what better way is there to be), Cheney might have been advancing, by concrete example, the argument made elsewhere that the divergence between the household and payroll surveys does in fact indicate growing self-employment and entrepreneurship, so that the payroll survey understates aggregate employment. This is a respectable argument. Still, he’ll have to do a better job at it, with Edwards on his case.
John Davies 09.10.04 at 5:51 pm
Or maybe you could spend a few seconds on Google News and come up with a better source for what he actually said and in what context:
http://www.enquirer.com/editions/2004/09/10/loc_cheney10jobs.html
raj 09.10.04 at 6:04 pm
ebay is little more than an example of the “greater fool theory. Typical of auctions. It produces no wealth.
norbizness 09.10.04 at 6:22 pm
Five words: “Real estate. No money down.”
Chance the Gardener 09.10.04 at 6:23 pm
The point really is not how many people he thinks make a living on ebay and then claim to be unemployed, or whatever. The point is, garage sales, even huge online garage sales, which re-sell things, are not something you count as part of a growing economy. Even if your beanie babie goes up in value.
Giles 09.10.04 at 6:50 pm
“Say you’ve changed your mind and that women’s domestic labor should be counted as part of the formal economy. ”
That’s an introductory economics level mis-statement.
Domestic labor is not counted in the formal economy as monetary transactions do not take place; by contrast they do on ebay – hence Cheney’s contention that they could be included.
bull 09.10.04 at 7:35 pm
Chance – Perhaps govt economists don’t account for huge online garage sales as part of a growing economy, but in that case they’re wrong. There’s that problem again of what to do about quality increases. I don’t use e-bay, but I do use other internet sources, such as Amazon and Abebooks, that have increased my utility.
As for Cheney, I do believe he cited e-bay just as an example and not as the only source.
abb1 09.10.04 at 7:49 pm
Didn’t they try to count the fast-food industry as manufacturing a few months ago?
Sebastian Holsclaw 09.10.04 at 8:03 pm
“The point is, garage sales, even huge online garage sales, which re-sell things, are not something you count as part of a growing economy. Even if your beanie babie goes up in value.”
I don’t think you are right about this. Does a collector’s shop count as part of the economy? Does an antiques shop count as part of the economy?
luci phyrr 09.10.04 at 8:50 pm
And that’s not even counting all the preteen girls’ babysitting money!
John Quiggin 09.10.04 at 9:10 pm
I’m surprised no-one here has pointed to the obvious example. Blogging is (I roughly estimate) a billion-dollar a year industry and (apart from a handful of companies with modest revenues) appears nowhere in the National Accounts.
Giles 09.10.04 at 9:27 pm
“Blogging is (I roughly estimate) a billion-dollar a year industry and (apart from a handful of companies with modest revenues) appears nowhere in the National Accounts.”
Surely to be included in the accounts (positively) it must create “value added”?
Which is prabably why Cheny wont be pushing for its inclusion any time soon!
Sebastian Holsclaw 09.10.04 at 9:57 pm
You get paid for blogging? You make money blogging? Good for you!
Tithonia 09.10.04 at 10:21 pm
Hmm…. what about men’s domestic labor?
John Quiggin 09.10.04 at 10:21 pm
Judging by the times at which I see posts and comments going up, lots of people get paid for blogging!
Alex 09.10.04 at 10:28 pm
Kevin, DeLong is only accounting for ebay’s own income from online auctions. Not the receipts from the auctions themselves. It sidesteps Cheney’s [independently questionable] point altogether.
kevin donoghue 09.10.04 at 10:53 pm
Alex, in my innocence (never having had anything at all to do with ebay) I had assumed that the goods auctioned are second-hand, hence already part of some previous year’s GDP?
Unless I am much mistaken, John Quiggin is taking the piss out of the non-economists.
Alex 09.10.04 at 11:58 pm
Well to be fair, kevin many ebay vendors sell new items as well. But as timothy points out above many from this group (and categories like cars and boats) use ebay as a supplement to b&m sales operations, hence the most sizeable receipts I would guess should already be part of the commerce dept. figures.
Daniel 09.11.04 at 12:25 am
In 2003, $24B of merchandise was sold on eBay. Quite a bake sale I must say.
Jim Flannery 09.11.04 at 3:22 am
I must come from a parallel world, but I always thought people selling off their household goods in order to survive was a bad sign.
Perhaps Cheney’s just been taking the subject lines on his spam too seriously.
bellatrys 09.11.04 at 3:24 am
daniel that is missing the point.
The Cheney argument is meant to show us that all this “Increased Productivity” which has somehow made for greater corporate profits but not translated down into raises or increased takehome pay is still really good for us, because the stats showing no increase in takehome pay are missing all the people who are augmenting it with a share of the GDP which isn’t coming from conventional wages or salary.
And technically what he said is true – millions of people are making “some” money from Ebay. “Millions of people” in this country, taken collectively, are also making all of the GDP.
But that doesn’t help Joe Smoe in Podunk, Michigan, who’s sold his baseball card collection to buy his kids asthma medicine because he has no benefits from his day job, while Betsy Devos is taking home a much larger slice of the GDP and telling him that he gets paid too much.
It’s casuistry, the truth that is less honest than lies.
–kieran, that “let them sell tchochkes” line is perfect. I was struggling to come up with a way of making the “let them eat cake” equation all morning.
David Tiley 09.11.04 at 1:16 pm
John Q. – there is a fascinating point inside that joke. I think a heap of the intellectual energy in the blogosphere comes from people like you who are discussing issues that are very close to your professional interests.
A lot of the time to blog and comment comes from people who are not taking a cut lunch to work in the cubicle farm all day. Self employed, students, retired, under employed, shift workers, pensioners of various kinds, managers of businesses around the information industry.. etc.
username 09.11.04 at 3:50 pm
I know a large number of people who make more than 50% of their yearly income on ebay…
And dont pay a dime in fed or state income or sales taxes on any of it to boot.
Tell that to Cheney.
bellatrys 09.11.04 at 4:38 pm
username, I think it’s already established that Cheney needs to mention *all* the illegal activity-related income, if he wants to be *really* accurate. (which of course he doesn’t at all)
–Though this does beg the question, how many traditional bricks-and-mortar fences and pawnbrokers have gone out of business as a result of ebay?
JamesW 09.14.04 at 5:44 pm
Cheney claims that “hundreds of thousands” make money trading on e-Bay. Any evidence? Hundreds of thousands buy and sell stuff – that doesn’t mean any significant number are actually getting any income out of it. I don’t see how anyone can make anything actually trading (buying and then selling) on e-Bay, a very efficient market. If I buy stuff in a garage sale and resell on e-Bay, then I am a trader. But before I could have sold on a street stall. There probably is an increase in income from the new platform not counted in GDP, but not that much.
The main point to make against Cheney is that suddenly adding in all or part of the informal economy doesn’t change the facts about the formal economy you measured before. All the benchmarks change. How does he know the informal economy wasn’t doing well under Clinton and worse under Bush, like the rest?
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