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How Britain Calculates Its Hooker "GDP Boost": 60,879 Prostitutes x 25 Clients Per Week x £67.16 Per Visit

Tyler Durden's picture




 

First it was Italy which, as we reported last week, had decided to "boost" its GDP by adding the estimated impact of cocaine and hookers. And now, riding on the coattails of this economics gimmick designed solely to make the economy appear more solvent, it is Britain's turn, whose Office for National Statistics will also add add up the "contribution" made by prostitutes and drug dealers.

According to the Guardian "for the first time official statisticians are measuring the value to the UK economy of sex work and drug dealing – and they have discovered these unsavoury hidden-economy trades make roughly the same contribution as farming – and only slightly less than book and newspaper publishers added together."

How big of a "contribution" by hookers and coke are we talking?

Illegal drugs and prostitution boosted the economy by £9.7bn – equal to 0.7% of gross domestic product – in 2009, according to the ONS's first official estimate.

 

A breakdown of the data shows sex work generated £5.3bn for the economy that year, with another £4.4bn lift from a combination of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines.

Here's the problem: since one can't put down on their tax return form that they have paid sex or deal drugs for a living, the ONS will have to estimate the economic contribution by these illegal professions. This is how it has gone about doing it:

According to the estimates there were 60,879 prostitutes in the UK in 2009, who had an average of 25 clients per week – each paying on average £67.16 per visit.

That's right: there is now an excel model to calculate what the hypothetical GDP boost to a nation is. Making things even more surreal, and confirming the GDP calculation is officially a statistical joke, here is how drugs are accounted for:

The statisticians reckon there were 2.2 million cannabis users in the UK in 2009, toking their way through weed worth more than £1.2bn. They calculate that half of that was home-grown – costing £154m in heat, light and "raw materials" to produce.

The models will need updating: "The ONS will work in the coming months to bring the data more up to date. The figures will then be included in the broad category of household spending on "miscellaneous goods and services" alongside life insurance, personal care products and post office charges."

It is unclear if the ONS will pay for its agents to conduct due diligence in various brothels, or alternatively conduct "inhouse" sessions at the headquarters.

What is clear is that quite soon the largest marginal provider of "growth" not just in Britain but all of Europe will be otherwise illegal activities:

The more inclusive approach brings the ONS into line with European Union rules, and will eventually allow comparisons of the size of the shadow economy in different member states.

 

Joe Grice, chief economic adviser at the ONS, said: "As economies develop and evolve, so do the statistics we use to measure them. These improvements are going on across the world and we are working with our partners in Europe and the wider world on the same agenda.

 

"Here in the UK these reforms will help ONS to continue delivering the best possible economic statistics to inform key decisions in government and business."

"Best possible" indeed.

Some are already using puns to justify the new methodology:

He said the ONS would attempt to "fill in the gaps" left by available studies but it would be impossible to measure illegal activities as accurately as other components of GDP. Other activities are measured using questionnaires but the response rate in the sex and drugs trades are unlikely to be high.

It is indeed unlikely.

Others are already spinning the justification:

Alan Clarke, a UK economist at Scotiabank, said that although the government would not feel the benefit of illegal work in terms of income tax take, there would be a spending boost. "A drug dealer or prostitute won't necessarily pay tax on that £10bn, but the government will get tax receipts when they spend their income on a pimped up car or bling phone."

Others are openly scratching their head at the New Hooker and Blow Normal:

Steve Pudney, professor of economics at the University of Essex, said he was sceptical about the methods used by the ONS to estimate the size of the drugs market.

 

"In my view, the ONS estimate of the size of the drug market is unlikely to be very accurate. It rests on some heroically large assumptions which would be difficult to test, and it also uses a measure of demand that is likely to understate systematically the true scale of drug use."

 

He added: "They are using a demand-side approach which loosely involves multiplying a survey estimate of the number of drug users by another estimate of the amount consumed by the average user.

 

"Average retail prices of drugs come from other sources – mainly police/customs/security service intelligence sources – and, multiplying this by the estimated demand, gives the size of the market in cash terms."

What Steve doesn't seem to get is that at this point all GDP numbers are about as made up as can be, and are merely fabricated on the spot to justify the prevailing economical narrative. Case in point: the history of Q1 2008 GDP revisions over time, as we showed earlier:

 

If nothing, it will certainly provide comedians with fresh joke fodder. This should at least boost their take home pay and result in higher disclosed taxes.

And since this is just the beginning for a world which is slowly coming to grips with just how insolvent its non-shadow economy is, we eagerly look forward to the next bold move by economist everywhere: estimating the number of undocumented drug dealer and prostitutes and adding them to the monthly nonfarm payroll total. Think of it as a Birth/Death adjustment. Only more like a Blowjob/Drugs adjustment.

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Thu, 05/29/2014 - 21:05 | 4808141 Yes_Questions
Yes_Questions's picture

 

 

and how much if she has good teeth?

Thu, 05/29/2014 - 21:13 | 4808160 Deathrips
Deathrips's picture

If shes a crony...she'll fuck your ass for nothing...WTF?

 

Sigh.

 

RIPS

Thu, 05/29/2014 - 21:16 | 4808166 max2205
max2205's picture

Sin City the movie

Thu, 05/29/2014 - 21:24 | 4808202 DoChenRollingBearing
DoChenRollingBearing's picture

 

What about the blow?  

How are you supposed to compare the UK with Italy if you don't count the blow?!

Thu, 05/29/2014 - 21:26 | 4808211 Stackers
Thu, 05/29/2014 - 21:39 | 4808253 cifo
cifo's picture

Hire escorts, support the economy, grow the facking GDP!

Thu, 05/29/2014 - 21:56 | 4808318 Winston Churchill
Winston Churchill's picture

Who in hell paid you 16 pence Maise ?

All of them.

Thu, 05/29/2014 - 21:55 | 4808316 Crawdaddy
Crawdaddy's picture

Classy people. The key identifier these days is "you know what I'm sayin?" When you hear that, run.

Thu, 05/29/2014 - 23:17 | 4808529 Aussiekiwi
Aussiekiwi's picture

i thought you knew when you were being shafted when you hear the word 'folks' used by a politician in a speech.

Fri, 05/30/2014 - 02:07 | 4808731 Theosebes Goodfellow
Theosebes Goodfellow's picture

67 quid for them doves?!? You must be jokin'!

Fri, 05/30/2014 - 03:29 | 4808761 old naughty
old naughty's picture

you must like Marc Faber's Bangkok.

Thu, 05/29/2014 - 21:47 | 4808279 Kirk2NCC1701
Kirk2NCC1701's picture

Is that with or without "the Tip"? Nudge, nudge, ;-)  ;-),  say no more, say no more.

Is she a goer then?  Eh?  Eh!?  Nudge, nudge, ;-)  ;-)

She into... photography?  Know what I mean, know what I mean?  Nudge, nudge, ;-)  ;-)

https://www.youtube.com/watch?v=jT3_UCm1A5I

Fri, 05/30/2014 - 06:46 | 4808851 TheMadNumismatist
TheMadNumismatist's picture

I do not think dental work would be a problem.

Based on these figures Hookers are just outside being in the top 1% of earners in the entire country, definitely in the top 2%; now that’s what I call equality.

But pretty sure some lefties still want to rescue them from such lives; )

Fri, 05/30/2014 - 08:46 | 4809019 Divine
Divine's picture

The BJ is much better without any teeth......

 

"They calculate that half of that was home-grown.." And another 50% was office grown by the CIA/MI6? I can't really believe the level of idiocity here.

With 400€ equipment you can make 4000-8000€ extra income every 3rd month with very limited skills & input - best thing is in my homecountry you cant really go to jail for growing under a kilo at a time.

Fri, 05/30/2014 - 09:01 | 4809060 mr1963
mr1963's picture

$2500 a week per - cash? Me thinks I need to put together a stable...

Fri, 05/30/2014 - 14:17 | 4810302 Thom_333
Thom_333's picture

Did we get a comment from Krugman on this...? Maybe an op-ed. His ordinary rant the conscience of a liberal...should be the perfect venue.

You know this Italian thing fits perectly well into Keynesianism. Hedonic adjustment and all that.

Thu, 05/29/2014 - 21:06 | 4808144 Smegley Wanxalot
Smegley Wanxalot's picture

25 a week .. means about 1300 per year ... plus a few freebies.

Daddy must be proud.

Thu, 05/29/2014 - 21:15 | 4808165 ihedgemyhedges
ihedgemyhedges's picture

"Daddy must be proud"

Daddy doesn't give a shit most likely and is a John himself boosting GDP.....

Thu, 05/29/2014 - 21:18 | 4808175 max2205
max2205's picture

In the Ussa add in unemployment ebt and free school....kick that gdp up yo!

Fri, 05/30/2014 - 00:13 | 4808612 prains
prains's picture

25 a week means in a 5 day week, 5 a day........holy park your car in a ditch, thats a well travelled labia-thon.

 

That's Cha Chi abuse......

Thu, 05/29/2014 - 21:15 | 4808148 buzzsaw99
buzzsaw99's picture

holy fuck that's righteous bucks!

did a scotiabank economist really use the words "pimped up car"? omg lolololol straight out of idiocracy: http://www.youtube.com/watch?v=gzEMGfR_BtQ UpgrayyeDD, two Ds for a double dose of his pimping...

Thu, 05/29/2014 - 22:01 | 4808330 Carl Popper
Carl Popper's picture

A phantom GDP boost from estimated black market activity does little good if they cannot tax it.

Thu, 05/29/2014 - 22:41 | 4808434 thexperience
thexperience's picture

"A pimps love is very different from that of a square"

Thu, 05/29/2014 - 21:10 | 4808152 daveO
daveO's picture

Does this mean we get to tax the CIA for all the drugs it brought out of Afghanistan?

Thu, 05/29/2014 - 21:19 | 4808180 JustObserving
JustObserving's picture

The CIA has the finest printing presses and can print all the dollars it needs:

The American secret service, the CIA, could be responsible for manufacturing the nearly-perfect counterfeit 50 and 100-dollar-notes that Washington pins on the terror regime of North Korea. The charge comes after an extensive investigation in Europe and Asia by the Sunday edition of the Frankfurter Allgemeinen Sonntagszeitung of Frankfurt, and after interviews with counterfeit money experts and leading representatives of the high-security publishing industry.


The U.S.-dollar forgeries designated “Supernotes,” which are so good that even specialists are unable to distinguish them from genuine notes, have circulated for almost two decades without a reliable identification of the culprits. Because of their extraordinary quality, experts assume that some country must be behind the enterprise.

The administration of George W. Bush officially accused Pyongyang of the deed in the autumn of 2005, derailing Six-Party Talks on Pyongyang’s nuclear weapons program. Since then, tensions on the Korean Peninsula have increased considerably. America charges that North Korea is financing its rocket and nuclear weapons program with the counterfeit “Supernotes.”

North Korea is one of the world’s poorest nations and lacks the technological capability to produce notes of such high quality. According to the Frankfurter Allgemeinen Sonntagszeitung, North Korea is at present unable to even produce the won [the North Korean currency]. The sources, which do not wish to be identified, allege that the CIA prints the falsified “Supernotes” at a secret facility near Washington to fund covert operations without Congressional oversight.

http://www.globalresearch.ca/experts-suggest-the-cia-not-kim-jong-il-is-...

 

Thu, 05/29/2014 - 21:27 | 4808214 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

THAT is an interesting story.  

I would have no idea if true or not, but it might explain why "N Korea's" counterfeits (and the country itself?) don't suffer any consequences....

Thu, 05/29/2014 - 21:31 | 4808228 kchrisc
kchrisc's picture

The thugs working for the counterfeiting criminals have their own counterfeiting ring.

 

"I could have built a press, but built a guillotine instead."

Thu, 05/29/2014 - 21:32 | 4808230 Bunders
Bunders's picture

"The administration of George W. Bush officially accused Pyongyang of the deed"

If USGov has accused another nation of doing it then my money is on them doing it themselves.

Fri, 05/30/2014 - 13:14 | 4810002 SamAdams
SamAdams's picture

Projection is a fundamental concept of the Talmud.  If a gentile woman is raped by a Rabbi, the woman is guilty and should be killed.  No bigotry going on here, just religious fundamentals no more different than Sharia Law.  Religion, it sucks...

Thu, 05/29/2014 - 21:36 | 4808242 deflator
deflator's picture

 Why would the CIA need to, "counterfeit" counterfeit? probably over your head, jus sayin

Thu, 05/29/2014 - 22:30 | 4808409 IridiumRebel
IridiumRebel's picture

...and we never heard from JustObserving again.

Thu, 05/29/2014 - 22:32 | 4808413 DeadFred
DeadFred's picture

I worked on a .GOV sponsored project about twenty years ago trying to identify where the supernotes were getting their paper by identifying the DNA residual in the processed cotton fibers. It was one of the strangest points in a very strange career. Lab members got to visit the snake farm and it was never quite sure who we were working for.

Who exactly is funding this?

Think of us a consortium of agencies. Treasury, Secret Service, NSA, CIA, pretty much everybody but the FBI.

Why not the FBI, they have a pretty good DNA lab

We don't trust them.

Technicians came and installed 'programs' of some sort on the University's computers and they never worked the same afterward. We had drawers of shredded conterfeits and sheets of partially printed FRN 100s.

We quit the project after we determined it was possible to ID the DNA because there was just so much red tape that the small amount of funding wasn't worth it. I look back at the experience as the point when DeadFred started to change from a red blooded lifelong Republican patriotic type to the "pull the pillars down and end this Ponzi scheme" guy that I am today. Should I be grateful or sad that I got to see a bit of underbelly of the USA? You could make a case for either side.

 

Thu, 05/29/2014 - 23:28 | 4808554 HardAssets
HardAssets's picture

@DeadFred - be grateful.

 

Like many others, you had an experience which opened your eyes. Without this, real freedom is impossible. With this, even if imprisoned, you won't be a slave.

Thu, 05/29/2014 - 21:13 | 4808161 williambanzai7
williambanzai7's picture

This is a wash. Previously these figures were classified under lawyers and politicians.

Thu, 05/29/2014 - 21:18 | 4808177 IridiumRebel
IridiumRebel's picture

All of which are the oldest professions of the world, eh Ol' chap?

Thu, 05/29/2014 - 21:42 | 4808269 LawyerScum
LawyerScum's picture

My attorney brethren and I have proudly been contributing to the cocaine and whores sector of the economy for many generations.

Thu, 05/29/2014 - 21:17 | 4808170 IridiumRebel
IridiumRebel's picture

Oh Lord Cockmire, have you received the quarter one report on Hadley Street prostitution?

Thu, 05/29/2014 - 21:17 | 4808171 gimli
gimli's picture

.....by hook-er by crook ......?

 

Thu, 05/29/2014 - 21:18 | 4808176 alexcojones
alexcojones's picture

WOW . . BY this Calculation, Brazil should be a World Class, Economic Superpower.

Just returned from a couple months there in Rio. Only able to $pend a little time with the working girls.

Here is a link you might find "Educational," from an Economical POV of course.

Garotas de Programa Rio de Janeiro - ScortRIo
Thu, 05/29/2014 - 21:18 | 4808178 user2011
user2011's picture

Amazing...... how pathetic British has become.

Fri, 05/30/2014 - 06:00 | 4808828 tonyw
tonyw's picture

The reason is that the "black" economy should now be measured according to European Union rules.

Incidentally prostitution is not illegal so it is perfectly possible for one to put down on their tax return form that they have paid sex for a living

not that much is probably declared to the tax man.

Thu, 05/29/2014 - 21:19 | 4808181 orangegeek
orangegeek's picture

Perhaps Fitch and Moody's can create an index to measure this new contribution to GDP similar to PMI and ISM - something like BBI - big ballin' index.

 

 

Thu, 05/29/2014 - 21:20 | 4808185 Devotional
Devotional's picture

the UK and Italy must be really hard up and desperate for some growth,no? 

he said "hard up" ... o_O

Thu, 05/29/2014 - 21:21 | 4808188 oklaboy
oklaboy's picture

Do politicians jerking us off count?

Thu, 05/29/2014 - 21:22 | 4808197 Devotional
Devotional's picture

no, what counts is when they butt fuck us.

Thu, 05/29/2014 - 21:22 | 4808192 darteaus
darteaus's picture

How is it a "boost" when, I assume, hookers were working last year too?

If anything, it's a downturn as disposable income declines.

Fri, 05/30/2014 - 06:01 | 4808831 tonyw
tonyw's picture

increases the size of the economy so that debt becomes a smaller percentage

Thu, 05/29/2014 - 21:23 | 4808198 NOZZLE
NOZZLE's picture

Russia,  looking like a saner place by the day. 

You buy Cocaine or any oother drugs,  a substantial slice of that money goes back to some third world Shitpotle the remainder gets invested in a local dance club or carwash, plus factor in the lost productivity and health care costs and you have a foundation for economic success on your hands. 

Thu, 05/29/2014 - 21:24 | 4808204 franzpick
franzpick's picture

CA's Moonbeam Brown must be rolling himself a fattie as he estimates the pro forma income when the state's biggest cash crop is added to the pot.

Thu, 05/29/2014 - 21:26 | 4808207 kchrisc
kchrisc's picture

Truth being stranger than fiction out does Orwell again.

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