Introduction to National Income

Ahmed Maged Badawi Hamza
Supervisor: Prof. Dr. Abd Ali Kazim Al-Fatlawi

Perhaps among the economic information in which recent progress has occurred, there is no branch more useful than studies on national income alone. It was impossible before knowing the numbers on national income to judge the extent of a people’s progress or backwardness in terms of material aspects, but merely obtaining this information does not mean that we have benefited from all the uses of national income data, as it also informs us of what is happening to the various industries of farmers, wage earners, property owners, and owners of liberal professions. We cannot dispense with it when preparing the federal government budgets or when we begin to impose taxes. The tax authorities can correctly calculate the expected proceeds of income taxes if they know, even with an approximation, the amount of income and its distribution method. Finally, this data can also be used to plan future policies. (George, 2018: 10)
Before we stand on how to use national income numbers, we must first know what these numbers are, how to obtain them, and how to collect them. National income numbers appear in the past, present, and future from time to time in the newspapers, and this expression has spread to the point that many people do not realize that it is relatively new. They are ignorant of its true meaning. Before 1919, there were no accurate figures in the United States about the size of national income or the extent of the changes seen yearly. No one knew in detail how this income was formed and distributed. Instead, the term national income itself was not precisely defined. However, the hard work done by specialists and economists during the period between the two wars had the most significant credit for developing this idea and bringing it into existence. A non-governmental research organization called the National Bureau of Economic Research carried out a group of the first works in calculating national income. Then, this work was taken over by the US Department of Commerce, which in 1947 changed the income tables. Due to gaps in the basic statistical materials, it was only necessary to make estimates, so the national income figures usually included a percentage of error. However, many researchers in this field reached results and figures close enough to call for the belief that they were of a sufficient degree of accuracy to qualify them for use for scientific purposes. Whatever the case, they are much better than unfounded speculations and their validity in tracking changes during a specific period. (George, 2018: 11)
Suppose a person wants to be aware of the reality of any project. In that case, he should be guided in this regard by the accountants’ report on its operations, as well as the largest for national income, as methods are used in it that are very similar to the techniques used in accounting and are usually expressed in numbers that reach several million, so that people who need to calculate their income in hundreds or thousands may not be able to imagine them until these vast sums are not all there is to the subject, as the businessman who examines the financial reports of any project does not suffice with looking at what is in or the total income. Still, he carefully examines the account items to know how these numbers were extracted. The same applies to national income, as its sums do not appear except after making detailed calculations that reveal some essential facts about the economy. It is said that the study of national income is a branch of economics similar to anatomy in the study of the human body. In anatomy, it shows the way the organs of the body are formed, their size and composition, and the relationship of the different parts to each other. Every human being has taxes. In anatomy, one can continue studying how these parts work and how they grow.