Saturday, August 17, 2013

Do Not Tell Me "Economic Growth" Has a Limit

"I still contest to this day, a population adequately educated in economics could inoculate itself against recessions. I still contest to this day, that I don't care how "mature" the US economy is, RGDP growth of 7% per year is possible. I still contest to this day that if we mastered economics as a society we could have income per capitas of $250,000 per person and effectively eliminate poverty, not to mention extend life expectancies to unfathomable ages. All these benefits are possible if we just master economics."


Pete Brewster said...

Yeah, well. A people who understood economics would understand why it's not a great idea to let banks who are supposed to be keeping your hard-earned money safe "lend" it to morons to open sports bars and buy trucks and huge houses they don't need and can't afford.

They would also understand why banks do something that dumb in the first place---it's not their money, and the management know that the worst that will happen is they'll have to look for a job at another bank rather than spend three to five upstate, like normal people would if they robbed someone and "lent" the money to their drinking buddies.

That's why most children aren't taught anything resembling real economics in public schools. If people understood how banks really work, they'd have demanded a complete reset of the financial system a long time ago.

Anonymous said...

Really? $250,000 per person? Captain, I think you over estimate capitalism. Sure we might make a living wage, but $250,000 per person is ridiculous. I don't think we would make that much.

White Knight Leo #0368 said...

Anyone who says there are limits to economic growth needs to recall that Thomas Malthus said the same thing, in the 18th century.

His theories were used to justify refusing to lower the tribute to be paid from Ireland to Britain, which lead to the Potato Famine.

Reality has subsequently proven that not only was he wrong, he was SPECTACULARLY wrong, but Thomas Malthus was better educated than most people today who say this.

Amateur Strategist said...

$250,000 is definitely possible, considering if a lot of the stupid things that happened didn't happen and growth was allowed to continue.

I would say we'd get rid of poverty *as we know it today* though, because "the poor will always be with us" in that in this new gilded civilization, "poor" would mean only being able to afford 2 houses. Our current "poor" have flat screens, cell phones and eat every day, very well too.

Anonymous said...

As a skilled professional or entrepreneur, you can start approaching the $100K per capita for at least your own household. What many people don't realize is that earnings per capita can and do increase and can increase spectacularly over time. If one looks at the progress made in the U.S. from pre-revolutionary times to today, then the wealth of our society today was unimaginable in pre-revolutionary times.

What is troubling is that we never seem to learn from progress itself, i.e. the prosperity which resulted from Reagan's policies were set back by Obozzo (and other Democrats), i.e. to the extent that we are now going backwards and reducing the nation's per capita income. Just look at Detroit as an example of how Democrats are intent on taking the nation backwards.

Surely Americans can see what Obozzo is doing to their country!

Anonymous said...

" Our current "poor" have flat screens, cell phones and eat every day, very well too."

I don't have a flat TV, I don't have a cell phone and I don't eat every day.

If you yourself understand economics correctly, you will have to admit that the market economy we are experiencing today is precisely what creates a gap between the rich and the poor.

In a not so distant future, this gap will reduce itself and a lot of people will lift themselves out of poverty by employing non-market solutions.

Self-production for self-consumption by avoiding the market as much as possible.

3D printing, growing your own food, etc.

A strictly market economy does not benefit everybody. We need more options than just the market.

Joe America said...

I was saying that the result of the 2008 recession would be a growing underclass. See masses of single moms and how the state actively encourages this lifestyle. The no responsibility entitlements that we are unwilling to pay for.

I have serious doubts that real world day to day economics will be taught in public schools. My doubtfulness comes from the current California textbooks which are a pile of politically correct fantasies which has no bearing on reality. Self education can make up for the shortfall.

Its true Americans voted for socialism or more accurately the welfare state that pays better. But there are also a minority who are for more libertarian ideas, those are the real people that create wealth.
There is hope out there :)
This is one example:

RM said...

I'm assuming this post was facetious, considering your recent post regarding value and scarcity.
It is impossible to eliminate poverty, and we can't all earn $250,000 a year. If we did, we would be in that world you discussed, where valuing things would be nearly impossible.

Besides, once we get to the point $250,000 is the salary we all earn, you'll need to be earning $300,000 to get what you want in life.

I agree with your premise, life will be better and more beneficial for all if we mastered economics. It would also believe there are no limits to growth - humans have vast untapped potential locked up in our brainpower.

However, we abuse that brainpower in absurd pursuits of power and control rather than using that brainpower to build, manage and expand.

RM said...

The solutions you suggested for lifting people out of poverty, Anonymous, are provided and supported by the market. Working for yourself is a non-market solution? How so? Can you be 100% self-sufficient? Good luck with that.
Market solutions work because they allow you to be as self-sufficient as you choose to be, but the market allows you to leverage others' skills and productivity to your (and their) advantage.

Anonymous said...

No way brosef. The economy grows at 3-5% when the old and unproductive people die instead of being kept alive via redistribution. We could never achieve growth like that without hordes dying off. Libs and Christians won't let that happen.

Anonymous said...

I love reading your blog Aaron.

But would the higher salaries not reduce the work output of workers (as they have more money to spend and hence want more leisure time), thus reducing the total output of the economy bringing it back to a recessionary phase. An example is here.

Anonymous said...

Do you also have a Pdf version of the ebook?

I donot own a kindle...