This thread veered off into the merits of GDP vs. GPI and so on. I
want to put the conversation on a different track.
Jim set me up with the following sentence copied from his final
paragraph below:
In the end, I think we should see "true" economic growth as being the
growth of technical and scientific knowledge, which allows us to
produce more with our labor.
Yes, it "allows" us to produce more, but we (i.e. the US economy)
won't produce more unless somebody buys more. If producing 500 cars
took 100 workers before 2% productivity gains changed that to needing
only 98 workers, two people are newly unemployed. Say's Law said they
wouldn't be, and until about 40 years ago a rough (not fair) sharing
of gains kept demand growing to keep up with productivity
improvements. For the last several decades, more borrowing has
replaced more income as the basis of offsetting productivity gains.
Credit cards, student loans, easier mortgages, home improvement loans,
six year car loans, etc. have been a desperate and now failed attempt
to keep the buying growing.
Productivity gains kill jobs.
So growth needs, and is about, consumption. Growing consumption. But
growing consumption is destroying the environment in multiple
dimensions. Fish are disappearing, but the "democratization of sushi"
expands.
We can prattle all we want about the Genuine Progress Indicator (not
that it isn't a useful discussion tool) but the idea of
dematerializing consumption as a way to save both the economy and the
environment at the same time is utopian. Utopian as in unattainable.
So, what is it? More fiscal and monetary policy to power the
treadmill to the end of the world, or offsetting gains in productivity
(whether from "technical and scientific knowledge" or learning by
doing) with shorter working time?
Gene Coyle
On Oct 1, 2008, at 3:17 PM, Jim Devine wrote:
We have to break with the deeply held belief that growth is somehow
going to save us, that growth will benefit us.
Julio Huato wrote:
Knowing what we know of Dean Baker, he mustn't be referring to growth
of stuff (cum garbage). He must be referring to growth of social
well-being. Growth of social well-being is the solution.
I don't know about Dean, but there's a big problem with the discussion
of "economic growth" (not on pen-l as much as in general).
First, the orthodox economist equates "economic growth" with
(inflation-corrected) real GDP growth per capita. This is either an
error or a matter of definition. Then, a dissenter criticizes this and
rejects "economic growth."
But as Julio points out, economic growth does not have to be the same
as (inflation-corrected) real GDP growth per capita. It can be
measured by something like the Genuine Progress Indicator instead. We
don't have to accept then orthodox definition of economic growth.
In the end, I think we should see "true" economic growth as being the
growth of technical and scientific knowledge, which allows us to
produce more with our labor. That doesn't mean that this force will
always be used for good; it can be used for evil. (we could build a
Death Star.) It also doesn't mean that we should forget other
dimensions of human life besides economics.
--
Jim Devine / "Nobody told me there'd be days like these / Strange
days indeed -- most peculiar, mama." -- JL.
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