ABSTRACT
Detailed analysis of Bureau of Economic Analysis (BEA) methodology and data strongly suggests that US GDP is overvalued on the output side. The ability to generate income without producing real value-added output is a key characteristic of a "rentier economy". Grafting a schematic "rentier economy" onto a simple "free trade unequal exchange" model from Baiman highlights the labor exchange, inequality, and efficiency characteristics of rentier, unequal exchange, and developing country economies. Basu and Foley note that: The US national income accounts, however, treat incomes generated in the financial sector as arising from the production of a fictitious imputed input, "financial services", the value of which is measured by the incomes generated in the sector. When a financial institution pays bonuses to its employees, measured value added in the sector increases. One can conclude that as far as the national income accounts go, financial services are able to add value by adding income.
