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"Prostitution does not stimulate the economy"

In the past few days there have been increasing reports that some EU countries will in future include drug trafficking and prostitution in the calculation of their gross domestic product (GDP). Italy apparently hopes that this will give more leeway in budget planning, speculates, for example Focus Online. But that's not the case. Whether Italy, Great Britain or Belgium: They all only implement one EU regulation. From September on, in addition to drug trafficking, prostitution and tobacco smuggling, buying tanks will increase the GDP of all EU countries. The European Union wants it that way in order to make the figures more comparable. There are countries where drugs are banned but alcohol is allowed and countries where it is the other way around. In some European countries only certain drugs are banned, while others are legal.

Also sales from Tobacco smuggling will flow into the gross domestic product in most EU countries. Not so in the Grand Duchy. «Smuggling is relatively irrelevant in Luxembourg. Luxembourg is the starting country. Tobacco that is later smuggled is legally bought here, ”explains John Haas from Statec.

"Unfortunately, some countries ran into the car," explains John Haas from Statec in Luxembourg, "so it looked like going it alone. It would have been better if all states had implemented the new ESA (European System of National Accounts) at the same time, ”the economist told L’essentiel.

Regulation actually not new

In Luxembourg, the new calculation method will only be applied from the latest possible date, September 30th. But what exactly is changing? "Sales from illegal activities have been part of the GDP since 1999," reports Haas, head of the Macro-Statistics department at Statec. But since the countries were divided at the time as to how such sales should be recorded, it was agreed not to include them in GDP - which measures the value of all goods and services produced within a year. Under the umbrella of Eurostat, statisticians and economists - two of them from Luxembourg - have jointly developed methods for over five years so that sales can now be taken into account.

But what exactly does it look like, how do you measure illegal cash flows, for example in the sex trade? “We first looked at how many prostitutes there were in the Grand Duchy,” explains John Haas, “to do this, we worked with pretty much everyone who had statistics - whether with the police or non-profit organizations”. The prostitutes would be classified into four categories in which the sales differ: street prostitution, cabaret, massage parlor and escort service. The amount that flows into GDP is then derived from these figures.

A similar approach was taken with the drug trafficking estimates. Statistics from the police, state institutions and non-profit organizations were also collected there. But studies that allow conclusions to be drawn about drug consumption based on cannabis residues in wastewater were also used.

GDP as an indicator of prosperity is controversial

Is smoking weed now about the economy, how Süddeutsche Online headlined a few days ago? Sex and drugs are helping Europe's growth kick-start like this Economic sheet writes? "No! That's wrong! ”Explains John Haas very clearly. “The level of GDP is increasing”, in Luxembourg by around 0.2 percent. Since the sales from drug trafficking and prostitution are relatively constant, "they do not increase the growth rate". A GDP growth of 0.2 percent results at most "a growth rate three digits behind the decimal point."

The method change was discussed for a long time in the professional world. The USA and Australia have already implemented a similar procedure. Still, doubts remain. The purchase of warships, military aircraft, tanks or missile carriers will in future be considered an investment, according to the EU regulation. Reason: Military weapon systems served to keep the peace. But the fact that weapons can also destroy and thus reduce prosperity is left out. The innovations are therefore likely to intensify the dispute about the sense and nonsense of GDP as an exclusive indicator for prosperity.

(Philip Weber / L'essentiel)

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